Exhibit 2.1
AMERICAN ITALIAN PASTA COMPANY
AND
BESTFOODS
ASSET PURCHASE AGREEMENT
OCTOBER 4, 2000
TABLE OF CONTENTS
Page No.
ARTICLE i DEFINITIONS AND INTERPRETATIONS.................................................1
Section 1.1 Defined Terms..........................................................1
Section 1.2 Terms Defined in the Agreement.........................................2
Section 1.3 Interpretations........................................................4
ARTICLE II PURCHASE AND SALE OF ASSETS...................................................4
Section 2.1 Assets.................................................................4
Section 2.2 Excluded Assets........................................................6
Section 2.3 Assumed Liabilities....................................................6
Section 2.4 Retained Liabilities...................................................7
ARTICLE III PURCHASE PRICE OF ASSETS......................................................8
Section 3.1 Purchase Price.........................................................8
Section 3.2 Adjustment to Cash Consideration.......................................9
Section 3.6 Responsibility for Promotional Items.....................................9
Section 3.4 Allocation of Purchase Price..........................................10
Section 3.5 Earn-Out..............................................................10
ARTICLE IV CLOSING......................................................................11
Section 4.1 Date, Time and Place of Closing.......................................11
Section 4.2 Deliveries by Seller at Closing.......................................11
Section 4.3 Deliveries by Buyer at Closing........................................12
Section 4.4 Effective Time........................................................13
ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER.....................................13
Section 5.1 Existence.............................................................13
Section 5.2 Power and Authority...................................................13
Section 5.3 Execution and Delivery Permitted......................................13
Section 5.4 Consents..............................................................13
Section 5.5 Affiliate Contracts...................................................14
Section 5.6 Ownership of Assets...................................................14
Section 5.9 Contracts.............................................................14
Section 5.10 Intangible Personal Property..........................................14
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Section 5.11 Binding Effect........................................................14
Section 5.13 Litigation and Compliance with Law....................................15
Section 5.14 Taxes.................................................................15
Section 5.15 Licensure.............................................................15
Section 5.16 Customers.............................................................15
Section 5.17 Books and Records; Disclosure........................................15
Section 5.18 Securities Act Matters................................................16
Section 5.19 Broker's Fees.........................................................16
ARTICLE VI COVENANTS OF SELLER..........................................................17
Section 6.1 Performance of Contracts..............................................17
Section 6.3 Conduct of Business...................................................17
Section 6.4 Access to Information.................................................18
Section 6.5 No Sale Negotiations..................................................19
Section 6.6 Confidentiality; Comments.............................................19
Section 6.7 Reporting Requirements................................................20
Section 6.8 Cooperation...........................................................21
Section 6.9 Subsequent Contracts..................................................21
Section 6.10 Transition Services...................................................21
Section 6.12 Manufacturing and Distribution Agreement Variances....................22
Section 6.13 Pasta Products........................................................22
Section 6.15 Continuing Performance................................................23
Section 6.16 Cross-Promotional Activities..........................................23
Section 6.17 Customers.............................................................23
Section 6.18 Removal of Certain Processing Assets..................................23
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF BUYER..................................24
Section 7.1 Corporate Existence...................................................24
Section 7.2 Capitalization........................................................24
Section 7.3 Corporate Power and Authority.........................................24
Section 7.4 Execution and Delivery Permitted......................................24
Section 7.5 Binding Effect........................................................25
Section 7.6 Buyer Common Stock....................................................25
Section 7.7 SEC Reports...........................................................25
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Section 7.8 Resale..................................................................25
ARTICLE VIII COVENANTS OF BUYER.........................................................25
Section 8.1 Buyer Performance.....................................................25
Section 8.2 Confidentiality; Comments.............................................25
Section 8.3 Confidentiality.......................................................26
Section 8.4 Broker's Fees.........................................................27
Section 8.5 Other Actions.........................................................27
Section 8.6 Notification of Certain Matters.......................................27
Section 8.7 Manufacturing and Distribution Agreement Variances....................28
Section 8.8 NYSE Listing Application..............................................28
Section 8.9 Continuing Performance..................................................28
Section 8.10 Insurance..............................................................28
ARTICLE IX CONDITIONS TO CLOSING........................................................29
Section 9.1 Buyer's Conditions to Closing.........................................29
Section 9.2 Seller's Conditions to Closing........................................30
ARTICLE X SURVIVAL AND INDEMNIFICATION.................................................30
Section 10.1 Survival of Representations, Warranties and Covenants.................30
Section 10.2 Indemnification by Seller.............................................30
Section 10.3 Indemnification by Buyer..............................................31
Section 10.4 Time to Assert Claims.................................................31
Section 10.5 Third Party Claim Indemnification Procedure...........................31
Section 10.6 Buyer Acknowledgement..................................................33
ARTICLE XI DISPUTE RESOLUTION..........................................................33
Section 11.1 General...............................................................33
Section 11.2 Negotiation...........................................................33
Section 11.3 Arbitration; Claims Covered; Conclusive Determination.................33
Section 11.4 Arbitration Procedures; Survival......................................34
Section 11.5 Confidentiality.......................................................34
ARTICLE XII ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇...........................................................34
ARTICLE XIIi settlement and release.......................................................34
Section 13.1 Manufacturing and Distribution Agreement..............................34
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Section 13.2 Settlement and Release................................................35
ARTICLE Xiv MISCELLANEOUS................................................................35
Section 14.1 Notices...............................................................35
Section 14.2 Applicable Law........................................................36
Section 14.3 Benefit and Assignment................................................36
Section 14.4 No Third Party Beneficiary............................................36
Section 14.5 Expenses..............................................................36
Section 14.6 Waiver................................................................36
Section 14.7 Equitable Relief; Remedies Cumulative; Interest.......................37
Section 14.8 Further Actions; Transition...........................................37
Section 14.9 Entire Agreement; Amendment...........................................37
Section 14.10 Counterparts..........................................................38
Section 14.11 Termination...........................................................38
Section 14.12 Public Announcements..................................................38
Exhibit A: Arbitration Procedures....................................................
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TABLE OF SCHEDULES
Schedule 2.1 (a) Intellectual Property
Schedule 2.1 (c) Customer Lists
Schedule 2.1 (d) Contracts
Schedule 2.1 (f) UPC Codes
Schedule 2.2 (d) Other Excluded Assets
Schedule 3.1 (a) Closing Consideration Statement Schedule
Schedule 3.1 (b) Terms & Conditions Related to the Shares
Schedule 3.4 Purchase Price Allocation
Schedule 5.4 Seller's Consents
Schedule 5.5 Affiliates
Schedule 5.7 Terminated/Accelerated Contracts
Schedule 5.8 Licenses to Affiliates
Schedule 5.12 Governmental Permits
Schedule 5.13 Customers
Schedule 5.14 Financial Statements
Schedule 5.17 Non-Exclusive Agreements
Schedule 6.2 Conduct of Business
Schedule 6.2 (a)(i) Interim Expenditure Budget
Schedule 6.9 Transition Services
Schedule 7.5 Buyer's Consents
Schedule 9.1 (j) Business protection Closing Condition
Schedule 10.1 Survival of Representations and Warranties
Schedule 11.4 Arbitration Procedures
Schedule 14.12 Press Release
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TABLE OF EXHIBITS
Exhibit 4.2(a) Form of ▇▇▇▇▇ & Kuelthau Opinion Letter
Exhibit 4.2(b) Form of ▇▇▇▇ of Sale
Exhibit 4.2(c) Form of Assignment and Assumption Agreement
Exhibit 4.2(e) Form of Cross Receipt
Exhibit 4.3(b) Form of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Opinion Letter
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into as of October 4, 2000,
by and between BESTFOODS, a Delaware corporation, ("Seller"), and AMERICAN
ITALIAN PASTA COMPANY, a Delaware corporation ("Buyer").
WHEREAS, Seller owns various items of personal and intellectual property
(the "Assets", as more fully defined in Section 2.1) exclusively used in the
manufacture, marketing and sale of the ▇▇▇▇▇▇▇'▇ brand of pasta (the
"Business"); and
WHEREAS, Seller and Buyer are party to that certain Manufacturing and
Distribution Agreement dated as of April 15, 1997, as amended (the
"Manufacturing and Distribution Agreement"), whereby Buyer has agreed to, among
other things, produce and package all of Seller's requirements for pasta
products in connection with the Business and whereby Buyer is authorized to use
certain of the Assets; and
WHEREAS, Seller desires to sell the Assets to Buyer and Buyer desires to
purchase the Assets from Seller in exchange for cash, stock of Buyer, and other
valuable consideration.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements, covenants, representations, warranties and promises set forth
herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
Section 1.1 Defined Terms. Capitalized terms not otherwise defined in this
Agreement shall each have the meaning given in this Section 1.1.
"Affiliate" means any Person that controls, is controlled by, or is under common
control with, a Person.
"Arbitration" means the ongoing arbitration between the parties under the
Manufacturing and Distribution Agreement.
"Buyer's Knowledge" shall mean the actual knowledge of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, assuming the exercise of
reasonable care and due inquiry during their performance of their duties as
executive officers of Buyer and assuming their review of the contents of written
information provided to them or Buyer or its representatives by Seller or its
representatives in the course of the negotiation of the Agreement and the
transactions contemplated hereby.
"Code" means the Internal Revenue Code of 1986, as amended from time to time,
and any successor thereto and any regulations promulgated thereunder.
"Governmental Authority" means any federal, state, local or foreign governmental
or regulatory or administrative department, court, commission, board, bureau,
agency, authority or instrumentality.
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"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvement Act of 1977, as
amended from time to time.
"Lien" means any mortgage, pledge, lien, charge, claim, option, conditional
sales agreement, deed of trust, security interest or other encumbrance,
restriction or limitation of any nature whatsoever.
"Material Adverse Event" means an event that causes or is reasonably likely to
lead to or result in a material adverse effect on, or a material adverse change
in, the operations, business prospects, or condition (financial or otherwise) of
the Business or the Assets or a material adverse effect on the ability of Buyer
or Seller to execute, deliver or perform this Agreement or any of the other
agreements and documents contemplated by this Agreement except for any adverse
effect or change resulting from (a) general economic, financial or market
conditions, and (b) conditions or circumstances generally affecting the industry
in which Seller or Buyer operates.
"Ordinary Course of Business" means the ordinary course of business of the
Business consistent with past custom and practice (including with respect to
quantity, frequency, expense level, personnel resources, promotional and sales
activity, etc.).
"Person" means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization, a Governmental Authority or any other type of
entity.
"Securities Act" means the Securities Act of 1933, as amended from time to time.
"SEC" means the Securities and Exchange Commission.
"Seller's Knowledge" shall mean the actual knowledge of ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇
▇▇▇▇▇▇▇ assuming the exercise of reasonable care and due inquiry during the
performance of their duties as employees of the Business and in preparation of
this Agreement.
"Tax" or "Taxes" means any and all taxes, fees, duties, tariffs, imposts and
other charges of any kind imposed by any Governmental Authority or taxing
authority, including: federal, state, local or foreign income, gross receipts,
windfall profits, severance, property, motor vehicle, ad valorem, value added,
production, sales, use, license, excise, franchise, capital, transfer,
recordation, payroll, employment, severance, stamp, occupation, premium,
environmental (including taxes under Code ss.59A), customs duties, social
security (or similar), unemployment, disability, withholding, alternative or
add-on minimum tax, or other tax or governmental assessment, together with any
interest, additions, or penalties with respect thereto and any interest in
respect of such additions or penalties, whether disputed or not.
Section 1.2 Terms Defined in the Agreement. In addition to the defined
terms in Section 1.1, the following is a list of defined terms used in this
Agreement and a reference to the Section in which such term is defined:
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Defined Term Section in which Defined
------------ ------------------------
Acquired Business ss. 6.12
Acquired Pasta Business ss. 6.12
Agreement Recitals,ss.1.3
Arbitrator Schedule 11.4ss.(a)
Assets Recitals,ss.2.1
Assumed Liabilities ss. 2.3
Business Recitals
Buyer Recitals
Buyer Confidential Information ss. 6.5(b)
Buyer Indemnification Claim ss. 10.2
Cash Consideration ss. 3.1(a)
Closing ss. 4.1
Closing Date ss. 4.1
Claims ss. 11.1
Claiming Party ss. 11.2
Claim Notice ss. 11.2
Common Stock ss. 7.2
Contracts ss. 2.1(d)
Cross Promotion ss. 6.13
Customer Charge Backs ss. 2.4(j)
Customer Lists ss. 2.1(c)
Earn-Out Payment ss. 3.5
Effective Time ss. 4.4
Excluded Assets ss. 2.2
Exclusively ss. 1.3
Financial Statements ss. 5.14
Flavored Pasta Liabilities ss. 2.4(i)
Including ss. 1.3
Indemnification Claim Notice ss. 10.4
Intellectual Property ss. 2.1(a)
Inventories ss. 2.1(b)
Inventory Cutoff ss. 3.2(b)
Make-Whole Amount Schedule 3.1(b)ss.5
Manufacturing and Distribution Agreement Recitals
Onward Sales ss. 3.5
Other Intangible Rights ss. 2.1(h)
Permits ss. 2.1(g)
Plan ss. 2.2(b)
Pre-Closing Coupons ss. 2.4(j)
Procedures ss. 11.3
Processing Assets ss. 2.1(f)
Reimbursable Retained Liabilities ss. 3.3(c)
Release ss. 3.1(c)
Released Parties ss. 13.2
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Representatives ss. 6.5(b)
Retained Liabilities ss. 2.4
SEC Reports ss. 7.7
Seller Recitals
Seller Confidential Information ss. 8.3(a)
Seller Indemnification Claim ss. 10.3
Shares ss. 3.1(b)
Subject Period Schedule 3.1(b)ss.1
Subsequent Contracts ss. 6.8
Trade Loading ss. 6.2(a)(iv)
Transition Business Level Schedule 6.9ss.1
Transition Services ss. 6.9(a)
Transition Period ss. 6.9(b)
Travel Expenses ss. 6.9(e)
Section 1.3 Interpretations. Words used in this Agreement, regardless of
the gender and number specifically used, shall be construed to include any other
gender and any other number as the context requires. Use of the word "including"
throughout this Agreement shall mean "including but not limited to." Except as
otherwise provided in this Agreement in a particular instance, a reference to a
Section, Article, Schedule or Exhibit is a reference to a Section or Article of
this Agreement or a Schedule or Exhibit attached hereto, each of which is
incorporated into this Agreement by reference. The terms "hereof," "herein,"
"this Agreement" and other like terms refer to this Agreement as a whole,
including the Schedules and Exhibits hereto. The titles of the sections of this
Agreement are for convenience of reference only, and are not to be considered in
construing this Agreement. The disclosure of any item on any Schedule attached
to this Agreement shall constitute a disclosure on another Schedule or for
purposes of any representation or warranty contained in this Agreement only if
(i) such other Schedule is specifically cross-referenced on the Schedule on
which the item is intended to be disclosed, (ii) the item being disclosed is
clearly relevant to such other Schedule or representation or warranty or (iii)
it is clearly self-evident that such item should be disclosed on such other
Schedule or with respect to such other representation or warranty. The word
"exclusively" when used in phrases such as "exclusively used in the Business",
"exclusively related to the Assets", and similar phrases, is intended to
indicate only those items, assets or contract rights that are entirely
applicable to or used in the Business by Seller or that are applicable to or
used by Seller outside of the Business only to an insignificant level. In any
event, Buyer shall not be entitled to purchase that part of the Asset that is
not entirely applicable to the Business and to the extent that the transfer of
any Asset related to the Business that is also used outside of the Business
would cause Seller to breach any agreement, contract, contract right,
understanding, commitment or arrangement, Seller shall not be required to
transfer such Asset; provided however, Seller will use its reasonable best
efforts to obtain any consent necessary for the transfer.
ARTICLE II
PURCHASE AND SALE OF ASSETS
Section 2.1 Assets. Subject to the terms and conditions set forth in this
Agreement, Seller shall at the Closing sell, transfer, convey, and assign to
Buyer free and clear of all Liens
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(other than those Liens arising as a result of any act or omission of Buyer),
and Buyer shall at the Closing purchase and accept from Seller all of Seller's
right, title and interest in and to all of Seller's assets whether tangible or
intangible, exclusively used in the Business (the "Assets"), including the
following:
(a) all trademarks, trade names, copyrights, patents (other than
patents related to the Processing Assets (as defined below)), trade
secrets, recipes, logos, marketing materials, designs (including all trade
dress and packaging artwork and logos presently or historically used in
promoting the ▇▇▇▇▇▇▇'▇ brand owned by Seller and the physical plates or
screens owned by Seller that are used to make, manufacture or press the
same), confidential, proprietary information and other intellectual
property (regardless of whether registered with any Governmental Authority)
owned by Seller and exclusively used in the Business including those set
forth on Schedule 2.1(a), and all goodwill associated with each of the
foregoing (the "Intellectual Property");
(b) all product inventories of the Business existing at Closing with
more than ninety (90) days shelf life remaining as of the Closing Date
(other than discontinued items (being those items no longer being actively
marketed by Seller) or inventory related to the Flavored Pasta Liabilities
(as defined below)), regardless of where stored or warehoused (the
"Inventories");
(c) all lists of current and past customers and prospective customers
of the Business, including those set forth on Schedule 2.1(c) which lists
all "▇▇▇▇-to" and "ship-to" purchasers for the period January 1, 1999 to
August 18, 2000, and copies and, if available, electronic versions of all
related files and data (the "Customer Lists");
(d) all agreements, contracts, contract rights, understandings,
commitments and arrangements of Seller exclusively related to the Business,
whether oral or written (the "Contracts"), including the Contracts
(regardless of whether pre-paid) identified or summarized on Schedule
2.1(d) and copies and, if available, electronic versions of all related
files and data, and any and all open customer purchase orders of the
Business taken in the Ordinary Course of Business that have not been
fulfilled as of the Closing Date;
(e) copies and, if available, electronic versions of all historical
operating and financial books and records exclusively related to the
Business, and copies or electronic versions of all business plans and
assessments exclusively related to the Business (Buyer acknowledges that
such copies may be redacted to eliminate any information not exclusively
related to the Business);
(f) all of Seller's other rights and property interests of any nature
which are exclusively used in the operation of the Business, including the
rights to all of Seller's Uniform Product Codes exclusively used in the
Business (the "UPC Codes") including those listed on Schedule 2.1(f)
(collectively, the "Other Intangible Rights"); and
(g) all goodwill and ongoing business and customer relationships of
Seller exclusively associated with the Business.
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The obligation to deliver any files and data or copies of the same as set
forth above includes all files, data, records of correspondence, analysis,
reports, etc. stored on any media regardless of form, including paper
files, print-outs, computer disks, magnetic tapes, CD's, and the like. For
the avoidance of doubt, Seller is permitted to keep copies of Contracts for
which the originals are delivered to Buyer necessary for audit or other
business purposes so long as such Contracts and other data are maintained
in a manner consistent with Seller's confidentiality and other obligations
contained in this Agreement.
Section 2.2 Excluded Assets. Notwithstanding anything to the contrary
contained in Section 2.1, the following rights, properties and assets
(collectively, the "Excluded Assets") will not be included in the Assets:
(a) Current Assets and Cash. All cash, accounts and notes receivable,
and securities of Seller or its Affiliates, regardless of whether related
to the Business;
(b) Employees and Benefit Plans. Any (i) employment contracts, (ii)
benefit plans (within the meanings of the Employee Retirement and Income
Security Act ) sponsored by Seller or to which Seller contributes or has
ever contributed on behalf of its employees (a "Plan"), (iii) any of the
assets thereof, and (iv) any other employee benefit plan or arrangement and
the assets thereof, if any, maintained by Seller or any of Seller's
Affiliates;
(c) Non-Business Assets. All assets of Seller or its Affiliates that
are not exclusively used in or related to the Business, including (i) the
customer service telephone numbers utilized in connection with the
Business, and (ii) intra-company services performed by Seller or its
Affiliates in support of the Business in accordance with any agreements,
contracts, contract rights, understandings, commitments and arrangements
(such as Seller's administrative, marketing, human resources, payroll,
information services, accounting and similar intra-company services);
(d) Other Excluded Assets. Any right, property or asset that is
described on Schedule 2.2(d);
(e) Insurance. Any and all insurance policies maintained by Seller,
and any and all rights and recoveries thereunder; and
(f) Refunds, Rebates, etc. Any and all refunds, rebates or other
payments, or the right to receive any of the foregoing, related to the
operation of the Business at any time prior to the Closing (the "Refunds").
Section 2.3 Assumed Liabilities. As of the Closing, Buyer will assume and
agree to discharge and perform (a) (i) all of Seller's obligations under the
Contracts but only to the extent such contracts are disclosed on Schedule 2.1(d)
and only to the extent that such obligations (x) arise from and after the
Closing or (z) are related to promotional activities (such as advertising, trade
deals, and the like) that occur after the Closing, (ii) any open purchase orders
delivered to suppliers related to the Business for which the goods or services
being purchased by Seller relate exclusively to the Business and are delivered
to Buyer after the Closing, (iii) those open purchase orders received from
customers related to the Business that have not been fulfilled as of Closing,
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and (iv) the prorated portion of the $18,000 renewal fee for the American Heart
Association endorsement agreement, and (b) any and all claims by customers of
Seller directly or indirectly resulting from any pre-Closing act or omission of
Buyer or its agents or employees to the extent that, absent the termination of
the Manufacturing and Distribution Agreement, Buyer would have been liable
therefor ((a) and (b) collectively, the "Assumed Liabilities"). "Assumed
Liabilities" does not include and Buyer shall not assume any liability of Seller
for Seller's tortious or other wrongful action, breach of contract, or
nonperformance of any duty by Seller at any time before or after the Closing.
For the avoidance of doubt, except as otherwise set forth in Article XIII, this
Agreement is not intended to limit or affect the parties' rights to
indemnification under the Manufacturing and Distribution Agreement against
claims by third parties for events occurring in, or attributable to, the period
before Closing. In determining the portion of any items with respect to
(a)(i)(z), above, that are Assumed Liabilities, the allocation of pre-Closing
and post-Closing cost shall be made on the basis of the volume of the affected
products sold during the promotional event in each such period, or, if volume
analysis is not practical, then on such other cost allocation method as the
parties may agree.
Section 2.4 Retained Liabilities. Notwithstanding anything contained in
this Agreement to the contrary, Buyer does not assume or agree to pay, satisfy,
discharge or perform, and will not be deemed by virtue of the execution and
delivery of this Agreement or any document delivered at the Closing pursuant to
this Agreement, or as a result of the consummation of the transactions
contemplated by this Agreement, to have assumed, or to have agreed to pay,
satisfy, discharge or perform, any liability, obligation or indebtedness of
Seller, whether primary or secondary, direct or indirect, other than the Assumed
Liabilities (the "Retained Liabilities"). Seller shall retain and, subject to
Seller's right to dispute its obligation to do so, or any other defense, pay,
satisfy, discharge and perform the Retained Liabilities. Except to the extent
such obligations or liabilities are Assumed Liabilities, the Retained
Liabilities shall include:
(a) all obligations or liabilities of Seller or any Affiliate of Seller in
respect of the Contracts arising from or attributable to the period before
Closing;
(b) all obligations or liabilities of Seller or any Affiliate of Seller in
respect of trade payables, other accounts payable and accrued expenses;
(c) all obligations or liabilities of Seller or any Affiliate of Seller
that relate to any of the Excluded Assets;
(d) all obligations or liabilities of Seller or any Affiliate of Seller
that relate to Taxes arising from or attributable to the period before Closing
or insurance premiums on policies covering the Assets arising from or
attributable to the period before Closing;
(e) all obligations or liabilities for any legal, accounting, investment
banking, brokerage or similar fees or expenses incurred by Seller or any
Affiliate of Seller in connection with, resulting from or attributable to the
transactions contemplated by this Agreement;
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(f) all obligations or liabilities of Seller or any Affiliate of Seller for
any borrowed money, and all obligations or liabilities arising under any letter
of credit or guaranty issued in connection therewith;
(g) all obligations or liabilities of Seller or any Affiliate of Seller
resulting from, caused by or arising out of, directly or indirectly, the conduct
of the Business by Seller, or the ownership or lease of any of the Assets or any
properties or assets previously used in the Business at any time prior to the
Closing, including such of the foregoing as constitute, may constitute or are
alleged to constitute a tort, or violation of any legal requirement, contract or
agreement by which Seller is bound;
(h) all obligations in respect of present or former employees or
independent contractors of Seller or any Affiliate of Seller including (i)
claims for severance, unemployment compensation or insurance, any employee
benefits or other compensation or damages by or on behalf of any present or
former employees or independent contractors of Seller or by or on behalf of any
Governmental Authority in respect of present or former employees or independent
contractors of Seller; (ii) all liabilities and obligations of Seller or any
Affiliate of Seller with respect to present or former employees or independent
contractors of Seller under any Plan; and (iii) all liabilities and obligations
with respect to physical, mental or other health conditions of present or former
employees or independent contractors of Seller;
(i) all liabilities, claims, demands, and other obligations of Seller or
any Affiliate of Seller arising out of or related to the marketing, sale,
distribution or discontinuance by Seller or any of its customers of the
▇▇▇▇▇▇▇'▇ brand "Savory Collection" of pasta products (the "Flavored Pasta
Liabilities") regardless of whether the Flavored Pasta Liabilities arise before
or after Closing; and
(j) all charge backs, claims, offsets, credits and all similar matters
claimed by customers of Seller or any Affiliate of Seller relating to all
periods prior to the Closing (regardless of whether in the Ordinary Course of
Business) (the "Customer Charge Backs") and the costs to redeem coupons to
purchase products of the Business issued by Seller prior to Closing and similar
promotional product discounts issued by Seller prior to Closing ("Pre-Closing
Coupons").
ARTICLE III
PURCHASE PRICE OF ASSETS
Section 3.1 Purchase Price. Subject to the terms and conditions provided in
this Agreement, at the Closing, Buyer shall pay or transfer to Seller the
following consideration in exchange for the Assets:
(a) Cash. Buyer shall pay to Seller by wire transfer of immediately
available federal funds, cash consideration in the amount of
$24,175,718, adjusted as set forth below and reflected on Schedule
3.1(a) at Closing (the "Cash Consideration").
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(b) Stock. Subject to the terms and conditions set forth on Schedule
3.1(b) Buyer shall issue to Seller 686,666 unregistered shares of
Class A Convertible Common Stock of Buyer, par value $.001 per share
(the "Shares").
(c) Release of Claims. At the Closing, Buyer and Seller shall release and
indemnify each other with respect to certain claims against each other
as set forth in Article XIII (the "Release"). Seller shall pay Buyer
$7,450,000 from the Cash Consideration in respect of such claims.
Section 3.2 Inventory Adjustment to Cash Consideration.
(a) Inventory Adjustment. To the extent that the value of the Inventories
determined as set forth below exceeds $6,000,000, there shall be an
increase in the Cash Consideration equal to such excess, and to the
extent that the value of the Inventories is less than $6,000,000,
there shall be a decrease in the Cash Consideration equal to such
deficit.
(b) Determination of Inventory. During the weekend prior to Closing,
representatives of Seller and Buyer shall conduct a physical inventory
of the Inventories in an agreed upon manner as of an agreed upon time
(the "Inventory Cutoff"). The quantities of Inventories observed and
counted during the taking of the physical inventory, upon being agreed
to, shall be final and binding upon the parties. The Inventories shall
be valued based on the actual invoice cost per pound of the relevant
product. Buyer will identify pasta products produced after Inventory
Cutoff with unique or separate lot numbers so as to allow the parties
to easily identify and distinguish products made prior to and after
the Inventory Cutoff.
Section 3.3 Customer Claims.
(a) Claim Payment. The parties acknowledge that after the Closing Buyer
may receive claims for or be subject to offsets related to Customer
Charge-Backs and Pre-Closing Coupons and that Seller may receive
claims from, or be subjected to offsets by customers that relate to
matters for which Buyer is responsible under this Agreement ("Customer
Claims") (Customer Charge-Backs, Pre-Closing Coupons and Customer
Claims all being referred to here as "Post-Closing Claims"). In the
event a party (the "Receiving Party") receives Post-Closing Claims for
which the other party is responsible, it will use its reasonable best
efforts to submit such claims to the other party (the "Paying Party")
on a weekly basis, with supporting documentation related to the
Post-Closing Claims ("Submitted Claims"), and the Paying Party shall
pay the Receiving Party, by wire transfer, the amount of such
Submitted Claims on the third business day following the date on which
it received the Submitted Claims. If such payment is not made timely,
the Receiving Party will be entitled to interest thereon at the rate
of 18% per annum.
(b) Monthly True-up. A Paying Party may, after the end of each calendar
month, conduct an audit of the books and records of a Receiving Party
to confirm the existence of all Submitted Claims and the accuracy of
the calculation of the Submitted Claims and a Receiving Party will
provide a Paying Party and its agents reasonable access to its
9
books and records for this purpose. In the event a Paying Party
reasonably determines that it over paid a Submitted Claim, the
Receiving Party will reimburse the overpayment by wire transfer on the
third business day following the receipt by it of written notice of
overpayment.
(c) Time Limit. The provisions of Section 3.3(a) shall terminate on the
second anniversary of the Closing Date.
Section 3.4 Allocation of Purchase Price. Seller and Buyer shall allocate
the Purchase Price among the Assets in accordance with Section 1060 of the Code,
and the Treasury regulations thereunder. Such allocation shall be established by
mutual agreement of Seller and Buyer and shall be attached to this Agreement as
Schedule 3.4 within 60 days after Closing. The allocations will be used by Buyer
and Seller as the basis for reporting asset values and other items for purposes
of all required returns, statements and reports with respect to taxes, including
any reports required to be filed under Section 1060(b) of the Code and the
Treasury regulations thereunder. Seller and Buyer agree not to assert, in
connection with any audit or other proceeding with respect to taxes, any asset
values or other items inconsistent with the allocations set forth in Schedule
3.4. In the event Seller engages an independent party to appraise the value of
the Shares for purposes of this allocation, Buyer shall pay the lesser of (i)
one-half, or (ii) $5,000, of such appraiser's fee.
Section 3.5 Earn-Out. Subject to the terms and conditions set forth in this
Section, if on or before September 30, 2001, Buyer sells, agrees to sell, or
grants an option to purchase all or substantially all of the Assets in a
transaction or series of transactions to one or more third parties (other than a
sale of inventories in the Ordinary Course of Business) (an "Onward Sale"),
Buyer shall pay Seller an earn-out payment (if any) (the "Earn-Out Payment") as
an addition to the Cash Consideration. The Earn-Out Payment shall be equal to
one half of the excess, if any, of (i) the amount of all consideration received
by Buyer or its Affiliates for the Assets from the Onward Sale over (ii) the sum
of the Cash Consideration plus the aggregate value of the Shares assuming a
value of $30 per share minus $7,450,000. Within 10 days after the Closing of the
Onward Sale, Buyer shall deliver to Seller a calculation of the Earn-Out Payment
and a check for the Earn-Out Payment, if any. If Buyer has any undisputed claims
against Seller under this Agreement, then Buyer may withhold and offset the
value of such claims against any amounts owed hereunder with Seller's consent.
Seller shall have the right to audit the books and records of Buyer to determine
the accuracy of Buyer's calculation of the Earn-Out Payment and Buyer will
provide Seller and its agents access to its books and records for purposes of
allowing Seller to perform its audit. In the event the parties are unable to
agree on the amount of the Earn-Out Payment within ten (10) days of the closing
of the Onward Sale, the dispute will be subject to the provisions of Article XI.
An Onward Sale shall not be deemed to have occurred as a result of any merger or
consolidation of Buyer with another entity, any sale or transfer of all or
substantially all of the assets of Buyer to any other Person or any other
material change in or restructuring of the operations and assets of Buyer.
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ARTICLE IV
CLOSING
Section 4.1 Date, Time and Place of Closing. The consummation of the
transactions contemplated hereby (the "Closing") shall be held on the first
Monday (or if such Monday is not a business day, the first Tuesday) following
the date on which the conditions to Closing in Article IX (other than the
condition in Section 9.1(j)) have been satisfied or waived at a time mutually
acceptable to the parties, but in any event not later than January 8, 2001 (the
"Closing Date"). The Closing shall take place at the offices of ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
or at such other place as the parties agree.
Section 4.2 Deliveries by Seller at Closing. At the Closing, Seller shall
convey, transfer, assign, and deliver all of its right, title and interest in
and possession of the Assets to Buyer, and shall also deliver to Buyer the
following:
(a) An opinion of ▇▇▇▇▇ & Kuelthau, S.C., counsel to Seller, duly executed
by a partner in such law firm and dated as of the Closing Date, in the
form attached hereto as Exhibit 4.2(a) (▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, S.C. shall
be entitled to substitute or rely upon the legal opinion of Bestfoods'
in-house counsel with respect to certain matters as agreed upon by the
parties);
(b) A ▇▇▇▇ of Sale, duly executed by Seller, in the form attached hereto
as Exhibit 4.2(b);
(c) An Assignment and Assumption Agreement, duly executed by Seller, in
the form attached hereto as Exhibit 4.2(c);
(d) Such instruments of conveyance, assignment and transfer, in form and
substance reasonably satisfactory to Buyer, as appropriate to convey,
transfer and assign to, and to vest in, Buyer, good, clear, and
marketable title to the Assets, including a consent or assignment
related to the UPC Codes;
(e) A Cross Receipt, duly executed by Buyer, in the form attached hereto
as Exhibit 4.2(e);
(f) A certified copy of duly adopted resolutions of Seller's Board of
Directors authorizing and approving the execution and delivery of this
Agreement, the consummation of the transactions contemplated herein,
and the performance of the agreements set forth herein;
(g) A certificate of a duly authorized officer of Seller stating that the
representations and warranties of Seller in this Agreement are true in
all material respects as of the Closing;
(h) The waiver, release, consent, certificate or other document of any
Person that is necessary to consummate the transactions contemplated
hereby, and to make the
11
warranties and representations made in this Agreement true in all
material respects, unless the failure to do so would not constitute a
Material Adverse Event;
(j) Wire transfer instructions regarding delivery of the Cash
Consideration;
(k) Originals of all Contracts in Seller's possession; and
(l) Payment of all amounts agreed by the parties as due and owing Buyer
under the Manufacturing and Distribution Agreement for pasta produced from
September 1, 2000 through the Inventory Cutoff. Such amounts, if any, shall be
offset by Buyer against the Cash Consideration and, if so offset, shall be
reflected on Schedule 3.1(a) at Closing.
Section 4.3 Deliveries by Buyer at Closing. Buyer shall deliver to Seller
at Closing:
(a) The Cash Consideration and a certificate or certificates evidencing
the Shares, titled in the name of Seller;
(b) An opinion of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, LLP counsel to Buyer,
duly executed by a partner in such law firm and dated as of the
Closing Date, in the form attached hereto as Exhibit 4.3(b);
(c) An Assignment and Assumption Agreement, duly executed by Buyer, in the
form attached hereto as Exhibit 4.2(c);
(d) A Cross Receipt, duly executed by Buyer, in the form attached hereto
as Exhibit 4.2(e);
(e) A certified copy of duly adopted resolutions of Buyer's Board of
Directors authorizing and approving the execution and delivery of this
Agreement, the consummation of the transactions contemplated herein,
and the performance of the agreements set forth herein;
(f) A certificate of a duly authorized officer of Buyer stating that the
representations and warranties of Buyer in this Agreement are true in
all material respects as of the Closing;
(g) A resale certificate certifying that the Inventories are being
purchased for resale and containing such other information as may be
required to allow Seller to claim an exemption from the payment of any
sales, use or other transfer tax, and any other applicable exemption
certificates relating to any transfer tax, including sales, use,
occupation or intangibles taxes; and
(h) The waiver, release, consent, certificate or other document of any
Person that is necessary to consummate the transactions contemplated
hereby, and to make the warranties and representations made in this
Agreement true in all material respects, unless the failure to do so
would not constitute a Material Adverse Event.
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Section 4.4 Effective Time. Provided the Closing occurs, retroactive to
12:01 a.m. on the Closing Date (the "Effective Time"), Buyer shall be entitled
to possession of, and to exercise all rights arising under, the Assets. The risk
of loss or damage to the Assets by fire, storm, flood, theft, or other casualty
or cause shall be in all respects upon Seller prior to the Effective Time and
upon Buyer thereafter. The provisions of this Section 4.4 shall not, and shall
not be deemed to, amend or otherwise alter or modify the provisions of the
Manufacturing and Distribution Agreement as they relate to risk of loss with
respect to any of the Assets and shall not relieve Buyer of any liability for
any loss or damage to any Asset under the control of, or in the possession of,
Buyer prior to Closing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Buyer to enter this Agreement and to consummate the
transactions contemplated hereby, Seller represents and warrants to Buyer as
follows:
Section 5.1 Existence. Seller is duly organized, validly existing, and in
good standing under the laws of the State of Delaware and is qualified to do
business and is in good standing in all jurisdictions in which it is required to
be qualified to do business as a result of its operation of the Business except
where the failure to be qualified or in good standing would not be a Material
Adverse Event.
Section 5.2 Power and Authority. Seller has the corporate power and
authority to own the Assets, and to carry on the Business as now conducted.
Seller has the requisite corporate power and authority to convey, assign, and
transfer the Assets as set forth in this Agreement.
Section 5.3 Execution and Delivery Permitted. The execution, delivery and
performance of this Agreement will not (i) violate or result in a breach of any
term of Seller's Certificate of Incorporation or Bylaws, (ii) result in a breach
of or constitute a default under any term in any agreement or other instrument
to which Seller is a party that would be a Material Adverse Event, (iii) violate
any law or any order, rule or regulation applicable to Seller, of any
Governmental Authority having jurisdiction over Seller or its properties or (iv)
result in the creation or imposition of any Lien upon any of the Assets. The
Board of Directors of Seller has taken all action required by law and by
Seller's Certificate of Incorporation and Bylaws to authorize the execution,
delivery and performance of this Agreement, together with its Schedules and
Exhibits, and the other agreements executed in connection herewith and to
transfer all of the Assets to Buyer in accordance with this Agreement.
Section 5.4 Consents. Except as set forth on Schedule 5.4, the execution,
delivery and performance of this Agreement and the other agreements executed in
connection herewith, and the consummation of the transactions contemplated
hereby and thereby do not require any filing with, notice to or consent, waiver
or approval of any third party, including but not limited to, any Governmental
Authority or entity other than any disclosure of this Agreement required by
applicable securities laws, regulations and rules, and any filing required under
the HSR Act and the expiration of any applicable waiting period thereunder.
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Section 5.5 Affiliate Contracts. Except as set forth in Schedule 5.5, there
are no material contracts, agreements, commitments, understandings or
arrangements affecting or relating to the Assets to which any Affiliate of
Seller is a party or by which any such Affiliate is bound.
Section 5.6 Ownership of Assets. Seller has good, clear, and marketable
title to the Assets, which title will be transferred to Buyer at Closing, free
and clear of all Liens other than any Liens arising as a result of any act or
omission of Buyer. Seller has the full, absolute and unrestricted right to
assign, transfer and convey to Buyer the Assets, subject only to such consents
and approvals as listed on Schedule 5.4.
Section 5.7 Contracts. The Contracts have been entered into in the Ordinary
Course of Business. Subject to Seller's receipt of any necessary consents,
Seller has full, absolute and unrestricted right to assign, transfer and convey
to Buyer the Contracts. Each Contract is in full force and effect and
constitutes the legal, valid, binding and enforceable obligation of the parties
thereto. Seller and, to Seller's Knowledge, the other parties thereto are
current in all obligations under each Contract. There have been no events of
default, and no state of facts exists that with notice or the passage of time,
or both, would constitute an event of default by Seller under any Contract. To
Seller's knowledge, there have been no events of default, and no state of facts
exists that with notice or the passage of time, or both, would constitute an
event of default under any Contract by any party other than Seller. Except as
set forth on Schedule 5.7, the consummation of the transactions contemplated by
this Agreement will not (and will not give any Person a right to) terminate or
modify any material rights of, or accelerate or increase any material obligation
of Seller under any Contract. A true and complete copy of every written Contract
listed on Schedule 2.1(d) has been made available to Buyer and such Schedule
contains as of the date hereof and at Closing will contain an accurate and
reasonably detailed summary of all oral contracts.
Section 5.8 Intangible Personal Property. Except for licenses granted to
Affiliates of Seller listed on Schedule 5.8, which licenses shall be terminated
within one year after Closing, Seller is not a licensor or licensee in respect
of any Intellectual Property, Customer Lists, or Other Intangible Rights. Buyer
acknowledges and agrees that, prior to the termination of the licenses set forth
on Schedule 5.8, Seller's Affiliates may continue to user the Intellectual
Property licensed to them in accordance with the terms of such licenses. Seller
is not making any royalty or other payments with respect to any Intellectual
Property, Customer Lists, or Other Intangible Rights, and no Person has a right
to any such payments. There is no notice, claim or action by any such Person
pending with respect to any Intellectual Property, Customer Lists, or Other
Intangible Rights. To Seller's Knowledge, Seller is not infringing upon or
otherwise acting adversely to any Intellectual Property, Customer Lists or Other
Intangible Rights owned by any other Person.
Section 5.9 Binding Effect. This Agreement and each other agreement
required to be executed and delivered by Seller in connection herewith, when
executed and delivered, will be the legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms, except as
enforceability may be limited by (i) applicable bankruptcy, reorganization,
insolvency, moratorium and similar laws affecting the enforcement of creditors'
rights generally,
14
and (ii) general equitable principles (regardless of whether enforceability is
considered in a proceeding in equity or at law).
Section 5.10 Litigation and Compliance with Law. Other than the
Arbitration, and those matters previously disclosed to Buyer, and a claim by
iSolve, Incorporated for defective seals in an amount of not more than $6,000,
there are no suits, actions, claims, demands, investigations, complaints, or
other proceedings of any nature whatsoever in law or in equity, that are pending
or, to Seller's Knowledge, threatened against Seller, that materially affect the
Business or any of the Assets, by or before any Governmental Authority
applicable to the Business or the Assets. Seller is not in default or violation
with respect to any order, writ, injunction, garnishment, levy, or decree of any
Governmental Authority applicable to the Business or the Assets, and the use,
ownership, or transfer of the Assets does not constitute a default or violation
thereunder. Other than those items for which Buyer is responsible under the
Manufacturing and Distribution Agreement, Seller's operation of the Business
does not violate in any material respect any federal, state, or municipal law,
regulation or rule, and all Permits are in full force and effect.
Section 5.11 Taxes. Seller has timely filed (or will timely file) all
material federal, state, local and other Tax returns and reports of whatever
kind pertaining to the Assets or the Business and required to be filed by Seller
for all periods up to and including the Closing Date. Seller has paid (or will
timely pay) all Taxes that are due and payable (or that relate to any period up
to and including the Closing Date) or for which assessments relating to any
period up to and including the Closing Date have been levied, the nonpayment of
which could result in a Lien on any of the Assets.
Section 5.12 Permits. To Seller's Knowledge, Schedule 5.12 lists all
material governmental licenses, permits, certificates, approvals and orders
necessary to own the Assets and to conduct the Business consistent with past
practice issued by any Governmental Authority ("Permits") to Seller other than
those owned or held by Buyer. To Seller's Knowledge, Seller is in material
compliance with all requirements and limitations set forth in the Permits.
Section 5.13 Customers. Attached as Schedule 5.13 lists certain major
customers of the Business and the cumulative sales of the products of the
Business to said customers for the periods described thereon.
Section 5.14 Books and Records. Subject to the limitations described in
this Section 5.14 and the assumptions and other items described in the footnotes
to the Financial Statements (as defined below), the books of account and records
of Seller relating to the Business are in all material respects complete and
correct, have been maintained in accordance with good business practices and the
matters contained therein are accurately reflected on the Profit and Loss
Statement of the Business set forth on Schedule 5.14 (the "Financial
Statements"). Subject to the assumptions and methodology described in the
footnotes attached to the Financial Statements (which are hereby incorporated by
reference) the Financial Statements do not contain any untrue factual statement
of material fact, and there is no omission of any material fact from the
Financial Statements necessary to make them not materially misleading, in light
of the circumstances in which they are made, except that the Financial
Statements may not accurately reflect the cost of services provided to the
Business by Seller or its Affiliates. The Financial
15
Statements represent management's compilation of financial data related to the
Business and have not been prepared in accordance with generally accepted
accounting principles.
Section 5.15 Securities Act Matters. Seller is an "accredited investor" as
defined under the Securities Act. Seller is acquiring the Shares hereunder
solely for investment purposes for its own account and not with a view to resale
or distribution except pursuant to an effective registration statement filed
under the Securities Act or an applicable exemption from such registration.
Seller acknowledges that Buyer's issuance of the Shares pursuant to Section
3.1(b) will not be registered under the Securities Act or any other securities
laws, and that accordingly restrictions will apply to Seller's ability to
transfer or sell such securities until such time as Buyer has registered the
Shares as required by this Agreement, and that an appropriate legend to such
effect will be placed on each stock certificate representing any of the Shares.
Seller acknowledges that none of the securities may be resold until their offer
and sale are registered under the Securities Act and applicable state securities
laws, or unless appropriate exemptions from registration are available. Seller
agrees that it will not directly or indirectly offer, transfer, sell, pledge,
hypothecate or otherwise dispose of any of the Shares (or solicit any offer to
buy, purchase or otherwise acquire, or to take a pledge of, any such shares)
except in compliance with the Securities Act and applicable state securities
laws and regulations. Seller acknowledges that it and its representatives have
had an opportunity to examine the financial and business affairs of Buyer and an
opportunity to ask questions of and receive answers from management, and that it
and its representatives have such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of an
investment in Buyer and making an informed investment decision with respect
thereto.
Section 5.16 Broker's Fees. Seller has no liability or obligation to pay
any brokerage or finders fees or commissions with respect to the transaction
contemplated herein.
Section 5.17 Non-Exclusive Agreements, Contracts, etc. Attached as Schedule
5.17 is or will be pursuant to an update provided at or prior to Closing, a
materially complete (including all brokers with non-U.S. sales contributing
$20,000 or more in gross margin through August 31, 2000), a list of agreements,
contracts, contract rights, understandings, commitments and arrangements of
Seller for the sales of products of the Business ("Non-exclusive Sales
Contracts") with brokers and there are no other Non-exclusive Sales Contracts
with any Person not a broker.
Section 5.18 No Material Misstatements, Omissions. None of (i) the
representations and warranties made by Seller in this Agreement or (ii) the
statements made by or on behalf of Seller in any certificate or document
described in Section 4.2 or Schedule delivered or to be delivered in connection
with the transaction contemplated by this Agreement, contains any untrue
statement of material fact, and there is no omission of any material fact
necessary to make such representation or warranty or any such statement not
materially misleading, in light of the circumstances in which they are made. The
items listed or summarized in the Schedules attached to this Agreement
constitute all of the matters required to be shown on such Schedules.
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ARTICLE VI
COVENANTS OF SELLER
Seller covenants and agrees as follows:
Section 6.1 Performance of Contracts. Seller shall, through the Closing,
continue to faithfully, diligently and promptly perform each and every
obligation of Seller, if any, under each of the Contracts and, subject to
Seller's right applicable to such Contract to dispute its obligation to do so or
any other defense against such performance, pay and satisfy each Retained
Liability as they become due.
Section 6.2 Conduct of Business. From the execution of this Agreement
through the Closing, Seller shall operate the Business in accordance with the
Ordinary Course of Business and with at least as much attention and support as
is currently being provided, using its reasonable best efforts to preserve and
maintain its relationships with suppliers and customers and to preserve its
current level of sales volume, shelf space and historical operating margins.
Seller shall consult in advance with Buyer on all decisions not in the Ordinary
Course of Business relating to the Assets or the Business and in the event Buyer
does not object to Seller's proposed action during the course of such
consultations, Buyer shall be deemed to consent to such action and Seller shall
be entitled to take such action without further notice to Buyer. For purposes of
this Section, Buyer acknowledges that Seller may take certain actions with
respect to the Business that are not in the Ordinary Course of Business and, to
the extent such actions are set forth on Schedule 6.2, the taking of such
actions shall not violate or constitute a breach of the terms of this Section
6.2.
(a) In particular, and without limiting the foregoing, with respect to the
Business, Seller shall:
(i) continue to conduct marketing, product pricing, promotional and
advertising activities consistent with historical practices and
without material deviation from the expenditure budget set forth
on Schedule 6.2(a)(i);
(ii) maintain the sales force in a manner consistent with past
practices, including, but not limited to, maintaining the number
of active salespersons assigned to the Business and the payment
of bonus, incentive and other compensation levels;
(iii) continue to purchase and maintain inventories in such quantities
and quality as necessary to operate the Business in accordance
with Seller's historical practice;
(iv) refrain from shipping manufactured pasta ahead of normally
maintained schedules or shipping dates or otherwise accelerating
sales in a manner not in the Ordinary Course of Business ("Trade
17
Loading"), or permitting or tolerating any brokers or other
representatives of Seller to engage in Trade Loading;
(v) continue all customer service and fulfillment levels at
historical levels and maintain all shelf space and promotional
displays at least at the levels in existence as of the date
hereof;
(vi) continue to operate the Business in material compliance with all
applicable local, state and federal laws and regulations; and
(vii) notify Buyer within 2 business days of any termination,
cancellation or material limitation of, or any materially adverse
modification or change in, the business relationship of Seller
with any customer listed on Schedules 5.13 or 5.17.
(b) Further, Seller shall not, other than in the Ordinary Course of
Business, without the express prior written approval of Buyer which
shall not be unreasonably withheld or delayed:
(i) change in any material manner the ownership of the Assets (other
than inventories sold in the Ordinary Course of Business);
(ii) terminate or decrease the rate of compensation or benefits of,
any salesperson responsible for the sale and/or distribution of
products within the Business;
(iii) enter into or commit to enter into any material contract,
agreement or commitment that would be required to be set forth on
Schedules 2.1(d) or 5.5 hereto; or
(iv) cancel or terminate or consent to or accept any cancellation or
termination of any material Contract, amend or otherwise modify
any of the material terms or provisions or give any consent,
waiver or approval with respect to any Contract, waive any breach
of any material terms or provisions or take any other action in
connection with any Contract that would materially impair the
interests or rights of Seller to be transferred to Buyer
hereunder.
Section 6.3 Access to Information. Upon reasonable notice, Seller shall
afford Buyer, its counsel, financial advisors, auditors and other authorized
representatives reasonable access for any purpose consistent with this Agreement
from the date hereof until the Closing or the termination of this Agreement,
whichever occurs first, during normal business hours, to the offices,
properties, books, and records of Seller exclusively related to the Assets and
the Business and shall furnish to Buyer such additional financial and operating
data and other information exclusively related to the Assets or the Business as
Seller may possess and as Buyer may reasonably request.
18
Section 6.4 No Sale Negotiations. Seller and its representatives and agents
shall not solicit, entertain or engage in any negotiations, discussions or
contact with any party other than Buyer, with respect to the sale, transfer or
other disposition of all of the Assets or any material Asset (other than the
sale of inventory in the Ordinary Course of Business), the Business, or any
interest, legal, equitable or beneficial, in any of the above until the earlier
to occur of (i) the exercise of a Volume Termination Right (as defined in
Section 9.1(j)), or (ii) the termination of this Agreement. Buyer acknowledges
that Seller has entered into an agreement to be merged with an affiliate of
Unilever PLC and said merger, or any variation thereof, shall not violate or be
deemed to violate the provisions of this Section.
Section 6.5 Confidentiality; Comments.
(a) Seller shall maintain in strict confidence all Buyer Confidential
Information (as defined below) and shall take all precautions
necessary to prevent disclosure, access to, or transmission of the
Buyer Confidential Information, or any part thereof, to any third
party, except as required by order of any court having competent
jurisdiction or as may be otherwise required by law or the rules of
the New York Stock Exchange or as may be necessary to consult with its
professional advisors in their capacity as such (provided that Seller
shall use its best efforts to ensure that its professional advisors
shall keep the Buyer Confidential Information confidential).
(b) The term "Buyer Confidential Information" means (i) the existence and
the terms and conditions of this Agreement or any related agreement
and the negotiations, discussions and understandings related hereto or
thereto, including without limitation the Purchase Price and any
valuation methodology used in connection with the transactions
contemplated hereunder or thereunder and (ii) after the Closing,
Buyer's Confidential Information shall include Seller's Confidential
Information (as defined in Section 8.3) sold to Buyer or, to the
extent exclusively related to the Business, made available under this
Agreement ("Transferred Seller Information"). The term "Buyer
Confidential Information" does not include any information that (i) at
the time of disclosure by Buyer or thereafter is generally available
to and known by the public (other than as a result of disclosure by
Seller or its Representatives), (ii) was available to Seller or its
Representatives on a non-confidential basis from a source other than
Buyer or Buyer's Representatives, or (iii) has been independently
developed by Seller without violating any of Seller's obligations
under this Section. As used in this Agreement, "Representatives" means
any and all representatives, agents and Affiliates of a party and any
and all shareholders, directors, officers, and employees, agents or
other representatives of a party or any of its Affiliates.
(c) Seller agrees that the Buyer Confidential Information shall be and
remain Buyer's exclusive property and shall not be disclosed to any
third party without Buyer's prior written consent. Seller will be
liable to Buyer with respect to any damages suffered or incurred by
Buyer resulting from or arising out of the disclosure to or use by any
third party of the Buyer Confidential Information that is provided to
any such third party by Seller or its Representatives, which
disclosure or use violates the terms of this Agreement. In the event
that the Seller or its Representatives become legally compelled (by
any legal or similar process) to disclose any of the Buyer
Confidential Information,
19
the Seller shall provide prompt prior written notice of such
requirement so that the Buyer may seek a protective order or other
appropriate remedy and/or waive compliance with the terms of this
Section. The provisions of this Section 6.5 shall expire two years
from the date of this Agreement.
(d) After the Closing Seller agrees that it and its Representatives will
not use any Buyer Confidential Information for any purpose other than
(i) for providing the Transition Services, or (ii) in connection with
enforcing its rights or defending itself in connection with this
Agreement, except that Seller and its Representatives may use the
Transferred Seller Information (x) in connection with any litigation
with any third party related to the Business, (y) in connection with
filing any tax returns or other governmental filings, the preparation
of financial statements and similar matters, or (z) in any other of
Seller's businesses to the extent such Transferred Seller Information
was used in such other businesses as of the date hereof. Seller shall
be responsible for any breach of this Agreement by any of its
Representatives regardless of whether the Representative is a
Representative of Seller at the time of breach.
(e) In the event this Agreement is terminated for any reason prior to
Closing:
(i) Seller will promptly return to Buyer all Buyer Confidential
Information received from Buyer and all copies thereof (in
whatever form) or Seller shall promptly destroy, or cause to be
destroyed, any and all copies of any analyses, compilations,
studies, reports, summaries or other documents prepared by or for
Seller or its Representatives that, directly or indirectly,
utilize or refer to any Buyer Confidential Information received
from Buyer and shall certify the same to Buyer upon request.
(ii) The provisions of this Section shall survive the termination and
remain in full force and effect, and Seller agrees not to use or
disclose (or allow its Representatives to use or disclose) any
Buyer Confidential Information received from Buyer for any
purpose other than the enforcement of this Agreement.
(f) Seller acknowledges Buyer's right, in the event of a breach of
this Section, to obtain an injunction, and any other equitable
relief deemed appropriate by Buyer, restraining Seller and its
Representatives, from disclosing or using, in whole or in part,
any Buyer Confidential Information. Nothing in this Agreement
shall be construed as prohibiting Buyer from pursuing any other
available remedies, either in law or in equity.
(g) Seller shall not make any public disparaging or critical
statements about Buyer or any employee, officer, director or
agent of Buyer.
Section 6.6 Reporting Requirements. Through the Effective Time, Seller
shall promptly notify Buyer of:
(a) Any (i) Material Adverse Event; (ii) material fact that, if known as
of the date of this Agreement, would have been required to be
disclosed to Buyer; (iii) event that causes any representation or
warranty contained herein to be untrue or inaccurate in any
20
material respect; or (iv) event that causes any covenant, condition or
agreement of Seller hereunder not to be complied with or satisfied in
any material respect; and
(b) all actions, charges, orders or other directives that, if adversely
determined, would cause a Material Adverse Event as to Seller, the
Business or the Assets.
Section 6.7 Cooperation.
(a) Seller will use its reasonable best efforts to facilitate and cause
the consummation of the transactions contemplated hereby and to obtain
from all Persons, and take all other actions with respect to, all
material consents or approvals required on the part of such party with
respect to the consummation of the transactions contemplated hereby.
(b) During the period from the date hereof to the Closing, Seller shall
not take any action that would reasonably be expected to, or intended
to, result in any of the conditions to the transactions contemplated
hereby set forth in Sections 9.1 and 9.2 hereof not being satisfied,
or in the satisfaction thereof being delayed.
Section 6.8 Subsequent Contracts. From the date of this Agreement to the
Closing, Seller shall use reasonable best efforts to include in any material
agreements entered into by Seller relating exclusively to the Assets or the
Business ("Subsequent Contracts") a provision permitting the assignment of any
such Subsequent Contract and providing that upon such assignment, the assignee
shall succeed to all of Seller's rights, title and interests thereunder.
Section 6.9 Transition Services.
(a) Upon the terms and conditions set forth in this Section, Seller agrees
to provide to Buyer the services described on Schedule 6.9 (the
"Transition Services").
(b) Seller agrees to provide to Buyer the Transition Services for a period
commencing on the Closing Date and ending ninety (90) days after the
Closing (the "Transition Period"), so long as providing such services
will not unreasonably interfere with or adversely affect any other
operations of Seller or materially affect any employee's other duties
to Seller. During the Transition Period, Seller shall use its
reasonable best efforts to provide the Transition Services, including
(i) making available to Buyer at Buyer's request and expense the
services of Seller's professional service providers and the efforts of
such providers to assist in the transition of such services to Buyer's
professional service providers (except Buyer acknowledges that Seller
shall not be liable to Buyer in the event any third party service
provider refuses to do so notwithstanding Seller's reasonable best
efforts) and (ii) using its reasonable best efforts to retain all
employees reasonably necessary to effectively perform the Transition
Services.
(c) During the Transition Period, Buyer shall have full time access during
normal business hours to the ▇▇▇▇▇▇▇'▇ brand marketing group for
purposes of consulting with Buyer on matters related to the transition
of the Business.
21
(d) Buyer acknowledges that it is responsible for the operation of the
Business after the Closing and the Transition Services are intended to
provide support and assistance to Buyer in the transition of the
Business from Seller to Buyer. In no circumstance shall Seller be
required to operate the Business in any fashion after the Closing, it
being understood that Seller shall merely provide support and
assistance in accordance with the terms of this Section.
(e) Buyer shall be responsible for making adequate arrangements to allow
it to operate the Business after Closing, including, without
limitation, hiring all personnel necessary to allow it to operate the
Business after Closing (including, without limitation, management, and
general and administrative personnel, sales persons and brokers),
entering into agreements with third parties with respect to third
party services deemed necessary by Buyer, providing adequate
infrastructure and other support services and the like.
(f) All requests for Transition Services shall be addressed to ▇▇▇▇▇▇▇
▇▇▇▇ until such time as Seller designates any other person as the
appropriate contact.
(g) Seller agrees that it shall perform the Transition Services with the
degree of care, skill and diligence with which it performs similar
services for itself and its various divisions and subsidiaries,
consistent with past practice provided, however that Seller makes no
other representation or warranty regarding the Transition Services and
hereby expressly disclaims any representation, warranty or other
guarantee of the results of the operation of the Business after the
Closing, including the level of post-Closing sales, profit margin and
the like.
(h) Seller shall provide the Transition Services for no additional
compensation, except Buyer shall reimburse Seller up to $50 per
employee per day for food and other expenses on a monthly basis,
within thirty days after receipt of an invoice from Seller and all
supporting documentation reasonably requested by Buyer. Buyer will
arrange and pay directly for all travel and lodging expenses related
to the provision of the Transition Services by Seller's employees.
Section 6.10 Manufacturing and Distribution Agreement Variances. Variances
payable under the Manufacturing and Distribution Agreement through September 1,
2000 have been settled and no further payments with respect thereto shall be
required. Variances from September 1, 2000 through Closing are hereby waived by
Buyer and Seller. Products manufactured pursuant to the Manufacturing and
Distribution Agreement for the period commencing September 1, 2000 through the
Inventory Cutoff will be charged to Seller at actual invoice cost per pound of
the relevant product.
Section 6.11 Pasta Products. Seller or Seller's Affiliates will not
manufacture, market, sell or distribute any stand-alone branded retail dry pasta
product (other than as an ingredient or component part of another product) for a
period of two years from Closing anywhere in the United States unless such
stand-alone branded retail dry pasta product is manufactured by Buyer. It shall
not be a violation of this Section in the event Seller or any of its Affiliates
acquires a business (the "Acquired Business") that includes as a part thereof
(the
22
"Acquired Pasta Business") the manufacture, marketing, sale or distribution of
stand-alone branded retail dry pasta products in the United States, so long as
(i) the annual sales of the Acquired Pasta Business in the United States are not
more than the lesser of $20,000,000 or 5% of the total annual sales of the
Acquired Business or (ii) Seller or such Affiliate immediately begins reasonable
best efforts to divest the Acquired Pasta Business within 12 months and does in
fact complete such divestiture within 18 months after the acquisition of the
Acquired Business. In addition to any other remedies Buyer may have under this
Agreement, if this clause is violated by Seller or Seller's Affiliates, Seller's
rights under Section 3.5 are immediately terminated and of no further force and
effect.
Section 6.12 Continuing Performance. From the date hereof until the
Closing, Seller shall perform all of its obligations under the Manufacturing and
Distribution Agreement in accordance with the terms thereof.
Section 6.13 Cross-Promotional Activities. If, during the period of one
year after the Closing, Seller determines (in its sole discretion) that it will
cross-promote any of its products, including without limitation ▇▇▇▇▇▇▇▇'▇(R)
mayonnaise, in the United States using dry branded pasta (a "Cross Promotion"),
Seller shall offer Buyer the right to use ▇▇▇▇▇▇▇'▇ brand pasta in such Cross
Promotion. For a period of one year after Closing, Seller shall not engage in a
Cross Promotion with any third party on terms more favorable than those first
offered to Buyer.
Section 6.14 Customers. Within five (5) days after the end of each
fiscal month from the date of this Agreement until Closing, Seller shall provide
Buyer (i) a written list of changes in Schedules 5.17 or (ii) a written
indication that there are no changes.
Section 6.15 Removal of Processing Assets. Seller shall uninstall and
remove (at its own expense; provided, however, that Buyer shall be responsible
for the cost of disconnecting and capping all utilities serving the Processing
Assets) the Processing Assets (as defined on Schedule 2.2(d)) and related assets
owned by Seller but located in Buyer's plant in Excelsior Springs. Seller shall,
provided Buyer provides the Section 8.11 Notice, effect such removal between the
execution date of this Agreement and January 8, 2001 and during a Down Time (as
defined in Section 8.11). Seller shall pay for the repair of any damage caused
by Seller or its contractors to Buyer's plant as a result of the removal of the
Processing Assets.
Section 6.16 Termination of Licenses. Seller shall terminate the
licenses identified on Schedule 5.8 as soon as possible, but in no event later
than one year after the Closing Date.
23
Section 6.17 Transfer of Licenses and Permits. Seller shall use its
reasonable best efforts to assist Buyer with the issuance to Buyer of licenses
and permits necessary to allow Buyer to operate the Business.
Section 6.18 Warehouse Transition. Seller shall continue to provide
warehouse storage of inventories for Buyer at Seller's owned warehouses during
the Transition Period in accordance with Section 8.13.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to Seller to enter into this Agreement and to consummate
the transactions contemplated hereby, Buyer represents and warrants to Seller as
follows:
Section 7.1 Corporate Existence. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Section 7.2 Capitalization. Buyer's authorized capital stock consists of
(i) 75,000,000 shares of Class A Convertible Common Stock, par value $.001 per
share, of which, as of the date hereof, 16,860,686 shares were issued and
outstanding, (ii) 25,000,000 shares of Class B Convertible Common Stock, par
value $.001 per share (collectively, with the Class A Convertible Common Stock,
the "Common Stock"), of which no shares are issued and outstanding and (iii)
10,000,000 shares of Preferred Stock, par value $.001 per share, of which no
shares are issued and outstanding. All of the issued and outstanding shares of
Common Stock have been duly authorized and are validly issued, fully paid and
nonassessable and none have been issued in violation of any Person's preemptive
rights. Except as disclosed in Buyer's SEC Form 10-Q filed July 27, 2000 and for
employee stock options issued in the Ordinary Course of Business, there are no
outstanding or authorized options, rights, warrants, calls, convertible
securities, rights to subscribe, conversion rights or other agreements or
commitments to which Buyer is a party or which are binding upon Buyer providing
for the issuance or transfer by Buyer of additional shares of capital stock of
Buyer.
Section 7.3 Corporate Power and Authority. Buyer has all requisite
corporate power and authority to own its properties and assets, and to carry on
the business in which it is now engaged. Buyer has the corporate power and
authority to execute and deliver this Agreement and perform the respective
covenants of Buyer set forth in, and consummate the transactions contemplated
by, this Agreement.
Section 7.4 Execution and Delivery Permitted. The execution, delivery and
performance of this Agreement will not violate or result in a breach of any term
of Buyer's Certificate of Incorporation or Bylaws or result in a breach of or
constitute a default under any term in any agreement or other instrument to
which Buyer is a party, such default having not been previously waived by the
other party to such agreements, or violate any law or any order, rule or
regulation applicable to Buyer, of any court or of any Governmental Authority
having jurisdiction over Buyer or its properties, or result in the creation or
imposition of any Lien upon any of Buyer's assets or the Shares. Buyer's Board
of Directors has taken all action required by
24
law, and by Buyer's Certificate of Incorporation and Bylaws to authorize the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, including, without limitation, the issuance of
the Shares in accordance with this Agreement.
Section 7.5 Binding Effect. This Agreement and each other agreement
required to be executed and delivered by Buyer in connection herewith, when
executed and delivered, will be the legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms, except as
enforceability may be limited by (i) applicable bankruptcy, reorganization,
insolvency, moratorium and similar laws affecting the enforcement of creditors'
rights generally, and (ii) general equitable principles (regardless of whether
enforceability is considered in a proceeding in equity or at law). Except as set
forth on Schedule 7.5, the execution, delivery and performance of this Agreement
and the other agreements executed in connection herewith, and the consummation
by Buyer of the transactions contemplated hereby and thereby do not require any
filing with, notice to or consent, waiver or approval of any third party,
including but not limited to, any Governmental Authority other than any
disclosure of this Agreement required by applicable securities laws, regulations
and rules, and any filing required under the HSR and the expiration of any
applicable waiting period thereunder.
Section 7.6 Buyer Common Stock. Each of the Shares to be issued as
contemplated by this Agreement has been duly authorized and, when issued in
accordance with this Agreement, will be validly issued, fully paid and
nonassessable, free and clear of any and all Liens, and the issuance of the
Shares will not be in violation of any Persons' preemptive rights or any law.
Section 7.7 SEC Reports . Buyer's forms, reports and documents filed with
the SEC (collectively, the "SEC Reports") have been prepared in accordance with
the applicable requirements of the Securities Act and the Securities Exchange
Act of 1934, as amended and contain all material facts with respect to finances,
operations and management of Buyer, as of their respective dates, and do not
omit to state any material fact required to be stated therein or necessary to
make the statement therein not misleading in light of the circumstances in which
they were made.
Section 7.8 Resale. Buyer is purchasing the Inventories for resale.
ARTICLE VIII
COVENANTS OF BUYER
Section 8.1 Buyer Performance. Buyer hereby covenants and agrees to accept
conveyance of the Assets, and to assume and perform the Assumed Liabilities.
Buyer will use its reasonable best efforts to facilitate and cause the
consummation of the transactions contemplated hereby and to obtain from all
Persons, and take all other actions with respect to, all material consents or
approvals required on the part of such party with respect to the consummation of
the transactions contemplated hereby.
Section 8.2 Confidentiality; Comments. Buyer shall maintain in strict
confidence all Seller Confidential Information (as defined below) gained from
Seller, and shall take all precautions necessary to prevent disclosure, access
to, or transmission of Seller Confidential
25
Information, or any part thereof, to any third party, except as required by
order of any court having competent jurisdiction or as may be otherwise required
by law or the rules of the New York Stock Exchange or as may be necessary to
consult with its professional advisors in their capacity as such (provided that
Buyer shall use its best efforts to ensure that its professional advisors shall
keep the Seller Confidential Information confidential).
Section 8.3 Confidentiality.
(a) "Seller Confidential Information" shall mean any and all information
regarding Seller or its business, operations and affairs, including,
without limitation, the Business and the Assets, disclosed (whether
disclosed prior to, simultaneously with or at any time after the
execution of this Agreement) to Buyer or its Representatives by or on
behalf of Seller, including, but not limited to, processes,
procedures, patents, copyrights, trademarks, trade secrets, supplier
and vendor lists, marketing data, financial records, product
information, customer identification and lists and product pricing
formulas and any information disclosed to Buyer or its Representatives
pursuant to Section 6.3, in all forms (whether oral, written, graphic
or visual or obtained from access to or observation of Seller
facilities). The term "Seller Confidential Information" does not
include any information that (i) at the time of disclosure by Seller
is generally available to and known by the public (other than as a
result of disclosure by Buyer or its Representatives), (ii) was
available to Buyer or its Representatives on a non-confidential basis
from a source other than Seller or Seller's Representatives, or (iii)
has been independently developed by Buyer or acquired by Buyer at the
Closing without violating any of Buyer's obligations under this
Section or Section 8.2.
(b) Buyer agrees that any Seller Confidential Information furnished to
Buyer or its Representatives shall remain Seller's exclusive property
and shall not be disclosed to any third party without Seller's prior
written consent. Buyer will be liable to Seller with respect to any
damages suffered or incurred by Seller resulting from or arising out
of the disclosure to or use by any third party of the Seller
Confidential Information that is provided to any such third party by
Buyer or its Representatives, which disclosure or use violates the
terms of this Agreement. In the event that the Buyer or its
Representatives become legally compelled (by any legal or similar
process) to disclose any of the Seller Confidential Information, the
Buyer shall provide prompt prior written notice of such requirement so
that the Seller may seek a protective order or other appropriate
remedy and/or waive compliance with the terms of this Section.
(c) Buyer agrees that, prior to Closing, it and its Representatives will
not use any Seller Confidential Information for any purpose other than
(i) the evaluation of the possible acquisition by Buyer of the
Business and the Assets, (ii) preparation for the transition of the
Assets and Business to Buyer in contemplation of the Closing, or (iii)
in connection with enforcing its rights or defending itself in
connection with this Agreement. Further, Buyer agrees to limit
disclosure of and access to Seller Confidential Information to only
those Representatives who are required to have access to Seller
Confidential Information for the purpose of said evaluation and who
are, prior to such disclosure or access to Seller Confidential
Information, informed by Buyer of the confidential nature of the
Seller Confidential Information and who agree to be bound by
26
the provisions of this Section 8.3 and not to disclose any Seller
Confidential Information to any Person or use the Seller Confidential
Information for any other purpose. Buyer shall be responsible for any
breach of this Agreement by any of its Representatives regardless of
whether the Representative is a Representative of Buyer at the time of
breach. The provisions of this Section and Section 8.2 shall expire
two years from the date of this Agreement.
(d) After the Closing, Buyer shall not use any Seller Confidential
Information that is not Transferred Seller Information for any purpose
other than (i) the receipt and use of the Transition Services, or (ii)
in connection with enforcing its rights or defending itself in
connection with this Agreement.
(e) In the event this Agreement is terminated for any reason prior to
Closing:
(i) Buyer will promptly return to Seller all Seller Confidential
Information and all copies of Seller Confidential Information (in
whatever form) and Buyer shall promptly destroy, or cause to be
destroyed, any and all copies of any analyses, compilations,
studies, reports, summaries or other documents prepared by or for
Buyer or its Representatives that, directly or indirectly,
utilize or refer to any Seller Confidential Information and shall
certify the same to Seller upon request.
(ii) The provisions of this Section shall survive the termination and
remain in full force and effect, and Buyer agrees not to use or
disclose (or allow its Representatives to use or disclose) any
Seller Confidential Information for any purpose other than the
enforcement of this Agreement.
(f) Buyer acknowledges Seller's right, in the event of a breach of this
Section, to obtain an injunction, and any other equitable relief
deemed appropriate by Seller, restraining Buyer and its
Representatives, from disclosing or using, in whole or in part, any
Seller Confidential Information. Nothing in this Agreement shall be
construed as prohibiting Seller from pursuing any other available
remedies, either in law or in equity.
(g) Buyer shall not make any public disparaging or critical statements
about Seller or any employee, officer, director or agent of Seller.
Section 8.4 Broker's Fees. Buyer shall indemnify and hold Seller harmless
in respect to any claim for brokerage or finder's fees or commissions with
respect to the transactions contemplated herein by anyone claiming to have acted
on behalf of Buyer.
Section 8.5 Other Actions. From the date of this Agreement to the Closing,
Buyer shall not take any action that would, or that would reasonably be expected
to, result in any of the conditions to Closing set forth in Sections 9.1 or 9.2
not being satisfied, or in the satisfaction thereof being delayed.
Section 8.6 Notification of Certain Matters. From the date of this
Agreement through the Closing, Buyer shall promptly notify Seller of the
occurrence of any fact or event that would reasonably be expected (i) to cause
any representation or warranty of Buyer contained
27
in this Agreement to be untrue in any material respect; (ii) to cause any
covenant, condition or agreement of Buyer hereunder not to be complied with or
satisfied in any material respect; or (iii) to be a Material Adverse Event as to
Buyer.
Section 8.7 Manufacturing and Distribution Agreement Variances. Variances
payable under the Manufacturing and Distribution Agreement through September 1,
2000 have been settled and no further payments with respect thereto shall be
required. Variances from September 1, 2000 through Closing are hereby waived by
Buyer and Seller. Products manufactured pursuant to the Manufacturing and
Distribution Agreement for the period commencing September 1, 2000 through the
Inventory Cutoff will be charged to Seller at actual invoice cost per pound of
the relevant product.
Section 8.8 NYSE Listing Application. Buyer shall file any listing
application with the New York Stock Exchange necessitated by the issuance of the
Shares as contemplated by this Agreement.
Section 8.9 Continuing Performance. From the date hereof until the Closing,
Buyer shall perform all of its obligations under the Manufacturing and
Distribution Agreement in accordance with the terms thereof.
Section 8.10 Insurance. For a period of two (2) years after the Closing
Date, Buyer shall maintain a reasonable amount of product liability insurance
with a reputable insurance company and shall cause Seller to be included as an
additional named insured thereon.
Section 8.11 Access. Buyer shall ensure that it has scheduled maintenance
or other non-production time at the plant at which the Processing Assets are
located between the execution date of this Agreement ("Down Time") and January
8, 2001 and shall provide Seller written notice of such Down Time (a "Section
8.11 Notice"), Buyer shall reasonably cooperate with Seller's efforts to remove
the Processing Assets, including disconnecting all utilities serving the
Processing Assets at such a time so as to allow Seller to comply with its
obligations under Section 6.15.Seller's obligation to pay rent with respect to
the space utilized by the Processing Assets shall continue until they are
removed. Buyer shall not utilize the Processing Assets for any purpose after the
date of this Agreement.
Section 8.12 Post Closing Identification. Buyer shall ensure that products
produced after the Inventory Cutoff and any coupons issued after the Effective
Time are distinguishable from products produced prior to the Inventory Cutoff
and coupons and other promotional items issued prior to the Effective Time.
Section 8.13 Warehouse Transition.
(a) Buyer shall use its reasonable best efforts to establish alternative
inventory storage to all inventory storage provided to the Business
directly by Seller prior to the end of the Transition Period. Buyer
acknowledges that Seller will charge Buyer for such storage from and
after the Closing at commercially reasonable rates and that Seller has
no obligation to continue to provide such storage after the Transition
Period. Buyer shall have risk of loss with respect to any such
inventory and shall insure said inventory.
28
(b) With respect to all inventories stored by third parties, Buyer shall
make alternative storage arrangements directly with storage facilities
of its choice to be effective as of the Closing.
ARTICLE IX
CONDITIONS TO CLOSING
Section 9.1 Buyer's Conditions to Closing. The obligations of Buyer
hereunder are subject to satisfaction of each of the following conditions at or
before Closing, the occurrence of which may, at the option of Buyer, be waived:
(a) All representations and warranties of Seller in this Agreement and
each Schedule hereto shall be true in all material respects on and as
of the Closing as if made as of the Closing, and Seller shall have
delivered to Buyer a certificate to such effect dated as of the
Closing Date;
(b) There shall be no Material Adverse Event from the date hereof to the
Closing Date;
(c) Seller shall have performed and complied in all material respects with
all of its obligations under this Agreement which are to be performed
or complied with by Seller prior to or on the Closing Date;
(d) Seller shall be willing and able to deliver all of the items and
documents required to be delivered by it pursuant to Article IV of
this Agreement; (e) The form and substance of the documents delivered
by Seller pursuant to this Agreement shall be reasonably acceptable to
Buyer and Buyer's counsel;
(f) To the extent necessary for Buyer's operation of the Business, Buyer
shall have obtained, either from Seller or directly from the issuing
authority, the Permits;
(g) There shall be no claims, actions or suits pending or threatened
regarding the Assets or that otherwise would restrict or prohibit
Seller from consummating the transactions contemplated herein;
(h) The waiting period under the HSR Act shall have expired or a
notification of early termination of the waiting period shall have
been received by Buyer;
(i) Seller shall have obtained and delivered to Buyer all necessary
consents to transfer the Assets and assign the Contracts to Buyer; and
(j) Seller shall have shipped from any of the warehouses to customers the
volume (in pounds) year-to-date of pasta products as reflected on
Schedule 9.1(j) as of the last week ended prior to the Closing (the
"Volume Termination Right").
29
Section 9.2 Seller's Conditions to Closing. The obligations of Seller
hereunder are subject to the satisfaction of each of the following conditions at
or before Closing, the occurrence of which may, at the option of Seller, be
waived:
(a) All representations and warranties of Buyer in this Agreement shall be
true in all material respects on and as of the Closing as if made as
of the Closing, and Buyer shall have delivered to Seller a certificate
to such effect dated as of the Closing Date;
(b) Buyer shall have performed and complied in all material respects with
all of its obligations under this Agreement which are to be performed
or complied with by Buyer prior to or on the Closing Date;
(c) Buyer shall be willing and able to deliver all of the items and
documents required to be delivered by it under Article IV of this
Agreement;
(d) The form and substance of the documents delivered by Buyer pursuant to
this Agreement shall be reasonably acceptable to Seller and Seller's
counsel; and
(e) The waiting period under the HSR Act shall have expired or Seller
shall have received a notification of early termination of the waiting
period with respect to this Agreement.
ARTICLE X
SURVIVAL AND INDEMNIFICATION
Section 10.1 Survival of Representations, Warranties and Covenants. Except
as set forth on Schedule 10.1, the representations, warranties, covenants,
agreements and indemnification obligations of the parties contained in this
Agreement shall survive the Closing indefinitely. The parties shall be entitled
to rely on the representations and warranties contained herein, notwithstanding
any due diligence investigation conducted by the parties; provided, however,
that if, as the result of any due diligence investigation or otherwise, a breach
of any representation or warranty (i) by Seller comes to Buyer's Knowledge, or
(ii) by Buyer comes to Seller's Knowledge, such party shall use its reasonable
best efforts to promptly inform the breaching party in writing of such breach.
The written waiver (unless otherwise specified in the waiver) of any closing
condition related to such breach by the party intended to benefit therefrom
shall also act as a waiver of such party's right to seek indemnification for
such breach after Closing.
Section 10.2 Indemnification by Seller. Seller agrees to defend, indemnify,
and hold harmless Buyer and its officers, directors, agents, employees, and
Affiliates against and in respect of any and all loss, liability, lien, damage,
cost and expense, (including reasonable attorney fees and expenses of
investigation) (each, a "Buyer Indemnification Claim") incurred or resulting
from:
(a) Except for Assumed Liabilities, any matter or event of any nature
whatsoever relating to Seller or the ownership or operation of the
Assets or the Business which
30
occurred prior to the Closing, and without limiting the generality of
the foregoing, such matters or events shall include all Retained
Liabilities and all Excluded Assets;
(b) any misrepresentation or breach of warranty made by Seller in this
Agreement or in any document, certificate or Schedule delivered
hereunder;
(c) any non-fulfillment of any covenant or agreement by Seller under this
Agreement or any liability related to noncompliance with any bulk
sales laws; or
(d) the negligence or intentional wrongful acts of Seller (or Seller's
employees) during the course of performance of the Transition Services
that directly results in damage to Buyer or injury or death of any
employee of Buyer.
Section 10.3 Indemnification by Buyer. Buyer agrees to defend, indemnify,
and hold harmless Seller and its officers, directors, agents, employees and
Affiliates against and in respect of any and all loss, liability, lien, damage,
costs and expense (including reasonable attorney fees and expenses of
investigation) (each a "Seller Indemnification Claim") incurred or resulting
from:
(a) the ownership or operation of the Assets or the Business from and
after the Closing, or the nonperformance of Assumed Liabilities;
(b) any misrepresentation or breach of warranty made by Buyer in this
Agreement or in any document, certificate or Schedule delivered
hereunder;
(c) any non-fulfillment of any covenant or agreement by Buyer under this
Agreement; or
(d) the negligence or intentional wrongful acts of Buyer (or Buyer's
employees) during the course of performance of the Transition Services
that directly results in damage to Seller or injury or death of any
employee of Seller.
Section 10.4 Time to Assert Claims. Any Buyer or Seller Indemnification
Claims made pursuant to this Article must be asserted by providing written
notice to the party against which the Indemnification Claim is made reasonably
promptly after the asserting party becomes aware of such Indemnification Claim
(the "Indemnification Claim Notice") and, in any event, within 120 days after
the expiration of the survival period set forth in Section 10.1 for the
representation, warranty and/or covenant that has been alleged to have been
breached. The right of a party to be indemnified hereunder shall be waived upon
such party's failure to give such Indemnification Claim Notice within 120 days
after the applicable survival period set forth in Section 10.1. The parties
shall resolve disputes between them regarding Indemnification Claims in
accordance with Article XI.
Section 10.5 Third Party Claim Indemnification Procedure. An indemnified
person shall promptly notify the indemnifying party of the existence of any
Indemnification Claim resulting from a claim made by a third party and shall
give the indemnifying party the opportunity to defend the same at its own
expense and with counsel of its own selection, provided that such indemnified
person shall at all times also have the right to participate fully in
31
the defense of the Indemnification Claim at its own expense. If the indemnifying
party shall, within twenty (20) days after such notice, fail to acknowledge its
indemnification obligation hereunder in writing or thereafter fail to defend
such Indemnification Claim adequately and reasonably, and such indemnified
person is entitled to such defense, such indemnified person shall have the
right, but not the obligation, to undertake the defense of, and to compromise or
settle (exercising reasonable business judgment) such Indemnification Claim on
behalf, for the account, and the sole risk and expense, of the indemnifying
party, except, no such compromise or settlement in any individual case in excess
of $10,000 or in the aggregate in excess of $50,000 shall be made without the
prior written consent of the indemnifying party, which consent shall not be
unreasonably withheld or delayed.
Section 10.6 Limits.
(a) Seller's obligations pursuant to the provisions of Section 10.2 are
subject to the following limitations (other than Seller's obligations
to pay or reimburse Buyer for Retained Liabilities which are not
subject to any limitation or any thresholds):
(i) Buyer shall not be entitled to recover under Section 10.2 for any
claim that does not exceed One Thousand Dollars ($1,000.00).
(ii) Buyer shall not be entitled to recover under Section 10.2 until
the total amount of Buyer Indemnification Claims under Section
10.2 exceeds Five Hundred Thousand Dollars ($500,000.00) after
which Buyer shall be entitled to recover only those indemnified
amounts in excess of Five Hundred Thousand Dollars ($500,000.00)
amount.
(iii) Buyer shall not be entitled to any recovery under Section 10.2
to the extent that Buyer's recovery exceeds $37,225,698 plus or
minus an amount equal to the inventory adjustment set forth in
Section 3.2(a) as the case may be. The cost of attorney's fees
and expenses of investigation shall not be included in the amount
subject to limitation.
(iv) BUYER SHALL NOT BE ENTITLED TO RECOVER UNDER THIS ARTICLE X ANY
CONSEQUENTIAL DAMAGES, INCLUDING, WITHOUT LIMITATION,
CONSEQUENTIAL DAMAGES CONSISTING OF BUSINESS INTERRUPTION OR LOST
PROFITS, OR SPECIAL, INCIDENTAL OR PUNITIVE DAMAGES.
(v) Buyer shall not be entitled to recover for any Indemnification
Claim to the extent it is based upon any act or omission of Buyer
for which Seller is entitled to indemnification for Buyer's
performance under the Manufacturing and Distribution Agreement
attributable to the period prior to Closing.
(vi) The amount of any recovery by Buyer shall be net of any insurance
proceeds received by Buyer with respect to the damages claimed.
(b) Buyer's obligations pursuant to the provisions of Section 10.3 are
subject to the following limitations:
32
(i) Seller shall not be entitled to recover for any Indemnification
Claim to the extent it is based upon any act or omission of
Seller for which Buyer is entitled to indemnification for
Seller's performance under the Manufacturing and Distribution
Agreement attributable to the period prior to Closing.
(ii) SELLER SHALL NOT BE ENTITLED TO RECOVER UNDER THIS ARTICLE X ANY
CONSEQUENTIAL DAMAGES, INCLUDING, WITHOUT LIMITATION,
CONSEQUENTIAL DAMAGES CONSISTING OF BUSINESS INTERRUPTION OR LOST
PROFITS, OR SPECIAL, INCIDENTAL OR PUNITIVE DAMAGES.
(iii) the amount of any recovery by Seller shall be net of any
insurance proceeds received by Seller with respect to the damages
claimed.
Section 10.7 Buyer Acknowledgement. Buyer hereby acknowledges that it is
engaged in the business of producing, marketing and selling pasta products and
has produced substantially all of Seller's requirements for the Business
pursuant to the Manufacturing and Distribution Agreement during the term
thereof. As a result, Buyer is solely responsible for (i) the condition and
quality of the Inventories at the time such Inventories left Buyer's plant and
(ii) the condition of the Processing Assets. Therefore, Buyer hereby agrees that
it shall not be entitled to any recovery pursuant to the terms of this
Agreement, including Section 10.2 hereof, for any claim to the extent the claim
is based on Buyer's performance or failure to perform its obligations under the
Manufacturing and Distribution Agreement.
Section 10.8 Payment with Stock. To the extent that Seller is obligated to
pay to Buyer any amount recovered by Buyer under this Article X, Seller may
transfer to Buyer a number of Shares equal in value to such amount. The Shares
shall be valued at $30 per share for purposes of this Section. This Section does
not apply to payment for Retained Liabilities without Buyer's written consent.
ARTICLE XI
DISPUTE RESOLUTION
Section 11.1 General. All disputes between the parties arising under or in
connection with this Agreement, including Indemnification Claims (as more fully
described below, "Claims"), shall be resolved in accordance with the following
procedures.
Section 11.2 Negotiation. A party with a Claim (the "Claiming Party") shall
give reasonably prompt notice (the "Claim Notice") to the other, specifically
identifying the issue and amount in dispute. Senior executives of the parties or
their representatives shall negotiate in good faith to attempt to resolve the
Claim in the absence of attorneys and other non-employer advisors. During this
process, either party may request that an independent third party be used to
mediate the dispute. If the parties do not resolve the Claim by negotiation
within 60 days after receipt of the Claim Notice, either party may submit the
Claim for binding arbitration.
Section 11.3 Arbitration; Claims Covered; Conclusive Determination. Claims
not settled by negotiation shall be resolved by arbitration in accordance with
the American Arbitration Association procedures for Commercial Arbitration and
any supplemental rules
33
deemed appropriate by the arbitrator (the "Procedures"). The arbitration shall
be conducted in the city of Chicago, Illinois. Claims by either party for
injunctive or other equitable relief, for unfair competition and the use or
unauthorized disclosure of trade secrets, confidential information, or
intellectual property, are not covered by this Section and either party may seek
and obtain relief for such Claims from a court of competent jurisdiction. The
decision of the arbitrator may be entered as a judgment in any court of
competent jurisdiction thereof. Any arbitral award shall be a conclusive
determination of the matter, final and binding upon all parties.
Section 11.4 Arbitration Procedures; Survival. The parties agree that the
procedures and provisions set forth in Schedule 11.4 shall apply to any
arbitration under this Section. This Agreement to arbitrate shall survive the
termination of this Agreement.
Section 11.5 Confidentiality. All aspects of the proceedings provided for
by this Agreement, including the exchange of information during discovery, any
hearings, and the record of the proceedings, are confidential and shall not be
open to the public, except (a) to the extent the parties agree otherwise in
writing, (b) as may be appropriate in any subsequent proceedings between the
parties, or (c) as may otherwise be required by any law, a Governmental
Authority or the rules of the New York Stock Exchange.
ARTICLE XII
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
As promptly as practicable and no later than ten (10) days following the
execution of this Agreement, Seller and Buyer shall complete any filing that may
be required pursuant to the HSR Act. Seller and Buyer shall diligently take, or
fully cooperate in the taking of, all necessary and proper steps, and provide
any additional information reasonably requested in order to comply with, the
requirements of the HSR Act. Each party shall bear its own internal expenses
with respect to this Section. Buyer shall pay the application filing fee.
ARTICLE XIII
settlement and release
Section 13.1 Manufacturing and Distribution Agreement. As of the Closing,
the Manufacturing and Distribution Agreement, shall be automatically terminated
in its entirety by the mutual consent of the parties without further action. For
the avoidance of doubt, Seller shall not be obligated to pay the Termination Fee
under the Manufacturing and Distribution Agreement (as defined therein). From
the Closing, neither Buyer nor Seller will have any obligations to the other
under the Manufacturing and Distribution Agreement except for (i) Seller's
obligation to pay for pasta produced under the Manufacturing and Distribution
Agreement through the Inventory Cutoff in accordance with the provisions of
Section 6.10 hereof, (ii) the parties' continuing indemnification obligations
under the Manufacturing and Distribution Agreement for claims by third parties
arising in or attributable to the period before the Closing, and (iii) Buyer's
obligations under Section 6.5 of the Manufacturing and Distribution Agreement in
the event of a product recall with respect to products produced prior to the
Inventory Cutoff.
34
Section 13.2 Settlement and Release. Except as otherwise provided in this
Section 13.2, as of the Closing, each of Buyer and Seller, for itself and its
Affiliates, successors and assigns, does hereby fully, finally and
unconditionally release and forever discharge the other, the others' Affiliates,
agents, attorneys, employees, directors and officers, and all successors and
assigns, and representatives of each of the foregoing (collectively, the
"Released Parties") and agrees to indemnify and hold harmless the Released
Parties, from any and all debts, claims, obligations, damages, costs, attorneys'
fees, suits, demands, liabilities, actions, proceedings and causes of action, in
each case whether known or unknown, contingent or fixed, direct or indirect and
of whatever nature or description and whether in law or in equity, under
contract, tort, statute or otherwise, which each has heretofore had or now or
hereafter can, shall or may have against the Released Parties arising from acts,
claims or events related to or arising out of the Manufacturing and Distribution
Agreement and any performance or nonperformance thereunder, including, but not
limited to, the Arbitration. Notwithstanding the foregoing, this Section in no
way pertains to or releases any claims related to any of the following:
(a) this Agreement, the other agreements executed in connection with this
Agreement and the transactions contemplated by this Agreement;
(b) Seller's obligations under any of the Retained Liabilities;
(c) the obligation of Seller to pay invoices for pasta in accordance with
the provisions of Section 6.10 hereof;
(d) the obligation of the parties to indemnify each other under the
Manufacturing and Distribution Agreement with respect to claims by
third parties arising in or attributable to the period before the
Closing; and
(e) the ongoing obligations of the parties set forth in Section 13.1(iii).
ARTICLE XIV
MISCELLANEOUS
Section 14.1 Notices. Except as otherwise expressly provided, all notices
or other communications required or permitted under this Agreement shall be made
in writing and shall be deemed given (i) upon delivery, if sent by (A) personal
delivery or (B) courier (e.g., overnight delivery), (ii) 3 days after being sent
by certified mail, return receipt requested, postage and registration fees
prepaid and correctly addressed to a party as set forth below or (iii) upon
sending, if sent by telecopy to a party at the number listed below for such
party (with a telecopy machine generated confirmation sheet retained by the
sender):
If to Buyer: American Italian Pasta Company
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
35
with a copy to: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Seller: Bestfoods
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as Buyer or Seller shall have last designated by notice
to the other party.
Section 14.2 Applicable Law. This Agreement, and the rights and obligations
of the parties hereto, shall be governed by and determined in accordance with
the laws of the State of Missouri, without giving effect to the choice or
conflicts of law provisions thereof.
Section 14.3 Benefit and Assignment. This Agreement shall be binding upon,
and inure to the benefit of, the parties hereto and their respective successors
and permitted assigns. Neither this Agreement nor any rights hereunder may be
assigned or transferred, and no duties may be delegated, by either party without
the prior written consent of the other, except Seller may assign this Agreement
to any entity purchasing all or substantially all of the assets of Seller and
Buyer may assign or transfer its rights and delegate its duties hereunder to any
Affiliate of Buyer so long as Buyer agrees to guarantee the performance of all
of the obligations assigned to its Affiliate in the form of a guarantee
acceptable to Seller and its counsel.
Section 14.4 No Third Party Beneficiary. This Agreement is for the benefit
of, and may be enforced only by, the parties who are signatories hereto and
their respective successors and permitted assigns. This Agreement is not for the
benefit of, and may not be enforced by, any third party.
Section 14.5 Expenses. Except as otherwise provided in this Agreement, each
party hereto shall pay its own expenses incurred in connection with this
Agreement and in the preparation for and consummation of the transactions
provided for herein.
Section 14.6 Waiver. Except as otherwise provided in this Agreement, no
delay or failure on the part of any party hereto in exercising any right, power
or privilege under this Agreement or under any other instrument or document
given in connection with or pursuant to this Agreement shall impair any such
right, power or privilege or be construed as a waiver of any default or any
acquiescence therein, except the failure by either party to request delivery of
a document required to be delivered at Closing under Article IV shall waive such
parties' right to
36
receive such document. No single or partial exercise of any such right, power or
privilege shall preclude the further exercise of such right, power or privilege,
or the exercise of any other right, power or privilege. No waiver shall be valid
against any party hereto unless made in writing and signed by the party against
whom enforcement of such waiver is sought and then only to the extent expressly
specified therein.
Section 14.7 Equitable Relief; Remedies Cumulative; Interest. Both parties
acknowledge that irreparable injury will result to the other in the event of a
breach of this Agreement by the other party. It is therefore agreed that, if
either party breaches this Agreement, the other party shall be entitled, in
addition to its remedies under Article X: (i) to seek an injunction to restrain
the violation thereof by the breaching party, or the shareholders, directors,
agents, servants, employers or employees of the breaching party, and all Persons
acting for or with the breaching party and (ii) to seek to compel specific
performance of the terms and conditions of this Agreement except for Seller's
obligations under Sections 6.1 and 6.2. Except as set forth above or
specifically provided elsewhere in this Agreement, the parties' exclusive
remedies are set forth in Article X of this Agreement. Any party may proceed
with any remedies permitted under this Agreement at the same time and in any
order. The exercise of any one right or remedy shall not be deemed a waiver or
release of any other right or remedy. The parties waive any right they may have
to require, or any obligation on the part of, another party to post a bond in
connection with any equitable remedies. Except as otherwise provided in this
Agreement, each party shall be entitled to interest on any amounts owed by and
not timely paid by the other from the date such amount was first due to be paid
until the date of actual payment thereof at the prime rate of Citibank as
published from time to time in The Wall Street Journal.
Section 14.8 Further Actions; Transition.
(a) If at any time after the Closing any further action is necessary or
desirable to carry out the purposes of this Agreement, each party will
take such further action (including the execution and delivery of such
further instruments and documents) as the other party reasonably may
request, all at the sole cost and expense of the requesting party
(unless the requesting party is entitled to indemnification therefor
under Article X). If any Asset is identified after Closing that should
have been transferred to Buyer as part of this Agreement, Seller shall
promptly transfer the Asset to Buyer.
(b) Seller will refer all customer inquiries relating to the Business to
Buyer from and after the Closing.
(c) In the event that Buyer or Seller receives funds after the Closing
which belong to or are properly payable to the other, the receiving
party shall promptly endorse over or otherwise pay to the other all
such erroneously received funds.
Section 14.9 Entire Agreement; Amendment. This Agreement, the Exhibits and
Schedules attached hereto, the Non-Disclosure Agreement by and between the
parties dated as of May 18, 2000 and the letter agreement dated October 2, 2000
regarding the execution date of this Agreement, contain the entire Agreement of
the parties hereto with respect to the transactions contemplated hereby and
supersede any and all prior agreements, arrangements, and understandings between
the parties with respect thereto. No inducements contrary to the terms
37
of this Agreement exist. No waiver of any term, provision, or condition of this
Agreement, whether by conduct or otherwise, in any one or more instances shall
be construed as a further or continuing waiver of any such term, provision or
condition or any other term, provision or condition of this Agreement. In
connection with the execution and delivery of this Agreement, neither party has
relied on any promise, inducement, representation or warranty of the other
party, whether oral or written, not set forth in this Agreement and its
Schedules. EXCEPT FOR THE WARRANTIES CONTAINED IN ARTICLE V, SELLER DOES NOT
MAKE ANY OTHER WARRANTY, EXPRESS OR IMPLIED, AND HEREBY EXPRESSLY DISCLAIMS, ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. SELLER
EXPRESSLY DISCLAIMS ANY REPRESENTATION, WARRANTY OR OTHER GUARANTEE OF THE
RESULTS OF THE OPERATION OF THE BUSINESS AFTER THE CLOSING, INCLUDING THE LEVEL
OF POST-CLOSING SALES, PROFIT MARGIN AND THE LIKE. This Agreement may not be
modified orally and may only be amended in a writing executed by all parties
hereto.
Section 14.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, but all of which
together shall constitute a single agreement.
Section 14.11 Termination.
(a) This Agreement may be terminated prior to the Closing as follows:
(i) At any time by the mutual consent of Seller and Buyer;
(ii) By either Seller or Buyer, at its sole election, if the Closing
shall not have occurred on or before January 8, 2001;
(iii) By Buyer upon a material breach of any representation, warranty,
covenant or agreement on the part of Seller set forth in this
Agreement; or
(iv) By Seller upon a material breach of any representation, warranty,
covenant or agreement on the part of Buyer set forth in this
Agreement; or
(v) By Seller in the event all of the conditions of Section 9.1 have
been met other than Section 9.1(j) and Buyer has not waived the
condition contained in Section 9.1 (j) on or before the first
Monday following the date on which all other conditions to
closing in Section 9.1 have been satisfied or waived.
(b) In the event of the termination of this Agreement pursuant to
subparagraph (iii) or (iv) above because Seller or Buyer, as the case
may be, shall have willingly or in bad faith failed to satisfy a
condition to the Closing, the other party shall be entitled to pursue,
exercise, and enforce any and all remedies, rights, powers, and
privileges available to it at law or in equity.
Section 14.12 Public Announcements. Buyer and Seller will coordinate with
each other all press releases relating to the transactions contemplated by this
Agreement (not including communication directed solely to the customers of the
Business) without providing the
38
other party reasonable opportunity to review and comment thereon. Buyer and
Seller acknowledge that Buyer will issue a press release in substantially the
form attached as Schedule 14.12 on the date of this Agreement.
[The remainder of this page is intentionally blank.]
39
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
Bestfoods
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Title: V.P. & Treasurer
-------------------------------------
American Italian Pasta Company
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Title: President & CEO
-------------------------------------