STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT is made this 31ST day of May, 2001 (the
"Agreement") among Pinnacle Foods, Inc., a Pennsylvania corporation (the
"Corporation"), the shareholders listed on Exhibit A (collectively the
"Shareholders"), and Smithfield Foods, Inc., a Virginia corporation ("Buyer").
RECITALS:
A. The Corporation wishes to issue 13,003,494 shares of its common stock,
representing 50% of the issued and outstanding shares of common stock of the
Corporation (such shares hereinafter referred to as the "Stock") and Buyer
wishes to purchase such shares of the Stock, on the terms and conditions set
forth herein.
B. The Shareholders agree to the sale of the Stock to Buyer and agree to
provide certain representations and warranties and indemnities to Buyer.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. The terms used herein shall have the following
meanings:
(a) "Buyer" has the meaning set forth in the Introduction.
(b) "Closing" has the meaning set forth in Section 8. 1.
(c) "Corporation" has the meaning set forth in the Introduction.
(d) "Employee Plans" has the meaning set forth in Section
3.24(a).
(e) "Environmental Permits" means governmental permits, approvals
and authorizations, whether federal, state or local, domestic or foreign, which
relate to the environment or to public health and safety or worker health and
safety as they may be affected by the environment.
(f) "Knowledge of the Corporation" means the actual knowledge of
those officers or employees of the Corporation listed on Exhibit B or the
Shareholders.
(g) "Leases" has the meaning set forth in Section 3.19.
(h) "Licenses and Permits" means governmental licenses, permits,
approvals and authorizations, whether federal, state and local, domestic or
foreign, other than Environmental Permits.
(i) "Losses" has the meaning set forth in Section 9. 1.
(j) "March 2001 Balance Sheet" has the meaning set forth in
Section 3.1 1.
(k) "Material Contracts" has the meaning set forth in Section
3.20.
(l) "Xxxxxxxx Agreement" means the agreement by and between the
Corporation and Xxxxxx X. Xxxxxxxx dated November 22, 2000.
(m) "Purchase Price" has the meaning set forth in Section 2.2.
(n) "Related Agreements" has the meaning set forth in Section
8.4.
(o) "Securities Act" has the meaning set forth in Section 5.6
(p) "Shareholders" means those shareholders of the Corporation
set forth in Exhibit A.
(q) "Stock" has the meaning set forth in the Recitals.
(r) "Stock Options" has the meaning set forth in Section 3. 1 0.
(s) "Warrant" has the meaning set forth in Section 8.4(b).
ARTICLE II
PURCHASE AND SALE OF STOCK
2.1 Sale of Stock. Subject to the terms and conditions set forth
herein, the Corporation agrees to sell, convey and issue to Buyer all the Stock
and to deliver to Buyer at Closing (as defined in Section 8.1 below) one or more
duly issued stock certificates for the Stock.
2.2 Purchase Price for Stock. The total amount to be paid by Buyer to
the Corporation in consideration for the Stock shall be $6,000,000 (the
"Purchase Price"), to be paid in cash or other-wise immediately available funds
at Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
The Corporation represents and warrants to Buyer the following:
3.1 Organization of the Corporation. The Corporation has been duly
organized and is validly existing and subsisting under the laws of the
Commonwealth of Pennsylvania. The Corporation has heretofore delivered to Buyer
complete and correct copies of its Articles of Incorporation and Bylaws, as
currently in effect.
3.2 Authority Relative to this Agreement. The Corporation has all
power and authority to execute and deliver this Agreement and the Related
Agreements and to
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consummate the transactions contemplated hereby and thereby. This Agreement and
the Related Agreements have been (a) duly authorized by the Board of Directors
of the Corporation and no other corporate proceedings on the part of the
Corporation are necessary with respect thereto, and (b) when duly executed and
delivered by the Corporation shall be duly executed and delivered by the
Corporation and shall constitute the valid and binding obligations of the
Corporation, enforceable in accordance with their respective terms.
3.3 No Violation. The execution and delivery by the Corporation of
this Agreement and the Related Agreements, and the consummation of the
transactions contemplated hereby and thereby, will not (a) violate or result in
a breach of any provision of the Corporation's Articles of Incorporation or
Bylaws, (b) result in a default or give rise to a right of termination,
modification or acceleration under the provisions of any agreement or other
instrument or obligation to which the Corporation is a party or by which the
Corporation, any of the Corporation's assets or the Stock may be bound, or (c)
violate any law or regulation, or any judgment, order or decree of any court,
governmental body, commission or agency applicable to the Corporation.
3.4 Consents and Approvals. Except as set forth on Schedule 3.4, there
is no requirement applicable to the Corporation to make any filing with, or
obtain the consent or approval of, any person or entity as a condition to the
consummation of the transactions contemplated by this Agreement and the Related
Agreements.
3.5 Insider Interests. Except as set forth in Schedule 3.5, no
officer, director or, to the Knowledge of the Corporation, holder of more than
5% of the common stock of the Corporation (a) engages in or has any direct or
indirect interest in any business entity which engages in the case ready meat
packaging business in any market served by the Corporation on the date hereof or
contemplated to be served by the Corporation hereafter, except for the ownership
of less than 1% of the equity interests in any such entity ("Competes"), (b) has
any agreement of any type with the Corporation, or (c) has any interest, direct
or indirect, in any property, real or personal, tangible or intangible,
including, without limitation, intellectual property, used in or pertaining to
the business conducted by the Corporation, except a shareholder or employee of
the Corporation.
3.6 Finders. No broker, finder or investment banker is entitled to any
fee or commission from the Corporation for services rendered on behalf of the
Corporation in connection with the transactions contemplated by this Agreement
or the Related Agreements.
3.7 Compliance with Laws. The business of the Corporation has been
operated at all times in substantial compliance with all laws and regulations,
federal, state or local, domestic or foreign, applicable to its business.
3.8 Licenses and Permits. The Corporation has all of the Licenses and
Permits required to conduct its business as it is currently being conducted;
such Licenses and Permits are set forth in Schedule 3.8. The business of the
Corporation has been operated in substantial compliance with all of the terms
and conditions set forth in its Licenses and Permits. No notice of a violation
of any such License or Permit has been received by the Corporation or
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either of the Shareholders or has been recorded or published, and no proceeding
is pending, or to the Knowledge of the Corporation, threatened to revoke any of
them.
3.9 Environmental Matters.
(a) The Corporation has obtained all Environmental Permits
required to conduct its business as it is currently being conducted except for
those the failure of which would not have a material adverse effect on the
Corporation, or the business or operations of the Corporation. Schedule 3.9
contains a complete list of all such Environmental Permits, all of which are in
full force and effect.
(b) The Corporation has operated its business in substantial
compliance with all laws and regulations relating to pollution control,
environmental contamination, any other environmental law, and the provisions of
its Environmental Permits, and no investigation or review is pending with
respect to any alleged failure of the Corporation to comply with any of such
laws or regulations or the terms and conditions of any of its Environmental
Permits, and, to the Knowledge of the Corporation, no event has occurred and no
condition exists which can reasonably be expected to give rise to such an
allegation or cause the Corporation to be obligated to take any remedial or
environmental clean-up action.
3.10 Capitalization of the Corporation; Validity of Shares. The
authorized capital of the Corporation consists of 50,000,000 shares of common
stock, $0.01 par value of which 13,003,494 shares of the Common Stock are issued
and outstanding and there are no preferred shares authorized or outstanding. The
Stock is (a) free of encumbrances, liens, mortgages, charges, security interests
and other defects in title, and (b) when issued and the Purchase Price is paid
will be (i) validly issued and outstanding, and (ii) fully paid and
nonassessable. Except for the stock option rights described on Schedule 3. 1 0
(the "Stock Options") and shares which may become issuable pursuant to the
dispute under the Xxxxxxxx Agreement and the shares to be purchased pursuant to
the terms of this Agreement and the Warrant, the Corporation has no commitment
to issue any shares of its capital stock and the Corporation has no commitment
to issue any securities or obligations convertible into or exchangeable for, or
giving any person any right to acquire from it, any shares of its capital stock.
Schedule 3. 1 O-A contains an accurate transcription of the Corporation's
shareholder register as of April 23, 2001. Upon delivery to Buyer of
certificates evidencing the Stock pursuant to this Agreement, Buyer will have
good title to the Stock, free and clear of all encumbrances, liens, mortgage,
charges, security interests and other defects in title generally considered to
be encumbrances other than any created, granted or consented to by Buyer.
3.11 Financial Statements. The Corporation has previously furnished
Buyer with true and complete copies of its audited financial statements,
including the notes thereto, for the years ending December 31, 1999 and 2000,
together with the reports on such statements of the Corporation's auditors, and
its unaudited balance sheet as of March 31 2001 (the "March 2001 Balance
Sheet"). Such financial statements present fairly the financial position of the
Corporation as of their respective dates (and with respect to Operating
Statements, the results of its operations and changes in financial position for
such periods) and have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis, subject in the case of
interim statements to normal year end audit adjustments.
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3.12 Current Information. The Corporation has previously delivered to
Buyer nonpublic information relating to the business and affairs of the
Corporation and will continue to furnish similar information until the Closing.
At the time of delivery thereof, none of such information contained, or will
contain, any untrue statement of a material fact or omitted, or will omit, to
state a material fact necessary in order to make such statements made therein,
in light of the circumstances in which they were made, not misleading.
3.13 Absence of Change.
(a) Except as set forth in Schedule 3.13, since December 31,
2000, there has not been:
(1) Any change or development involving a prospective change
in the Corporation's business or assets, including, without limitation, any
damage, destruction or loss (whether or not covered by insurance) which has had,
or can reasonably be expected to have, a material adverse effect on the
Corporation or its business or assets;
(2)
(3) Any obligation or liability involving more than $50,000
(whether matured, absolute, accrued, contingent or otherwise) incurred by the
Corporation except for purchase orders incur-red in the ordinary course of
business consistent with past practice (except to the extent that any
inconsistency with past practice results from increased amounts of meat
purchases on account of the growth of the Corporation's business);
(4) Any increase in the compensation of the employees of the
Corporation including, without limitation, those required by law or collective
bargaining agreements;
(5) Any increase in the compensation payable to any officer
of the Corporation;
(6) Any amendment to or adoption of an employment agreement
to which any employee of the Corporation is a party;
(7) Any sale or lease of the assets of the Corporation other
than in the ordinary course of business;
(8) Any direct or indirect redemption, purchase or other
acquisition by the Corporation of any shares of the capital stock of the
Corporation;
(9) Any split, combination or other similar change in the
outstanding capital stock of the Corporation;
(10) Any declaration, setting aside or payment of any
dividend (whether in cash, capital stock or property) with respect to the
capital stock of the Corporation; or
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(11) Any issuance by the Corporation of any shares of its
capital stock, or any securities or obligations convertible into or exchangeable
for, or giving any person the right to acquire from it, any shares of its
capital stock other than issuances pursuant to the conversion of debt of the
Corporation outstanding on December 31, 2000.
(b) Except as set forth in Schedule 3.13, since December 31,
2000, the business of the Corporation has been operated only in the ordinary and
usual course and in a manner consistent with past practices.
3.14 Undisclosed Liabilities. Except as set forth in Schedule 3.14,
the Corporation has not incurred any liabilities or obligations which are not
reflected in the March 2001 Balance Sheet other than those incurred subsequent
to such date in the ordinary course of business, and consistent with past
practices and which are not material.
3.15 Tax Matters. The Corporation has filed in a timely manner all
federal, state, local and foreign tax returns, reports and declarations required
of it by applicable law and has paid or made provision for the payment of all
taxes (including, without limitation, income, sales, use, occupation, property,
excise and employment taxes, and interest and penalties thereon) which have or
may become due on account of such filings, except such taxes that are being
contested in good faith as to which adequate reserves have been taken. The
Corporation has not received any assessment for unpaid taxes, knows of no reason
why any such assessment might be made and has not agreed to any extension of
time for the assessment of any taxes. The Corporation has made adequate
provisions for the payment of all current taxes.
3.16 Labor and Employment Matters. Schedule 3.16 sets forth a complete
and correct list of each collective bargaining agreement and each employment
agreement, or other agreement with a current or former employee of the
Corporation, to which the Corporation is a party. There are no labor or
employment controversies, claims or grievances pending or, to the Knowledge of
the Corporation, threatened between the Corporation and any Corporation employee
or labor union representing the Corp oration's employees.
3.17 Litigation. Except as set forth in Schedule 3.17, there are no
actions, suits, claims, investigations or proceedings pending or, to the
Knowledge of the Corporation, threatened against the Corporation, before any
court, governmental body, commission, agency or arbitrator, domestic or foreign.
Furthermore, there are no judgments, orders or decrees of any such court,
governmental body, commission, agency or arbitrator affecting the Corporation
which have not been complied with and satisfied in full.
3.18 Title to Properties.
(a) The Corporation owns no real property. All of the real
property used by the Corporation in the conduct of its business is leased (as
described in Section 3.19).
(b) Except as set forth on Schedule 3.18, the Corporation has
good title, free and clear of encumbrances, liens, mortgages, charges, security
interests and other defects in title generally considered to be encumbrances to
all personal property, tangible or intangible, either (i) owned by it, or (ii)
used in the ordinary course of its trade or business, except for the property
subject to the lease agreements set forth on Schedule 3.19 attached
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hereto. Tangible personal property owned by the Corporation is in good
condition, ordinary wear and tear excepted, and is usable in the ordinary course
of the business of the Corporation as it is currently being conducted.
3.19 Leases. Schedule 3.19 sets forth a complete list of each lease
agreement into which the Corporation has entered, whether as lessor or lessee,
which relates to either real or personal property ("Leases"). Except as set
forth in Schedule 3.19, the Corporation has complied in all material respects
with its obligations under all of its Leases, and no event has occurred and no
condition exists which constitutes or can reasonably be expected to constitute a
breach of the provisions of any Lease by the Corporation, or, to the Knowledge
of the Corporation, any other party thereto. Complete copies of all Leases have
been delivered to Buyer.
3.20 Material Contracts.
(a) Schedule 3.20 sets forth a complete and correct list of each
contract, agreement or commitment of the Corporation, other than Leases, this
Agreement and the Related Agreements ("Material Contracts"):
(1) Upon which any substantial part of the business of the
Corporation is dependent;
(2) Which relates to money borrowed by the Corporation,
other than trade credit;
(3) Which provides for aggregate future payments by or to
the Corporation of more than $50,000;
(4) With any sponsor, organizer or shareholder of the
Corporation that relates to such person's contribution or loan to the
Corporation of goods, services, money or other property;
(5) Which extends more than one year from the date hereof
and is not cancelable by the Corporation on 30 days' notice;
(6) Which provides for the sale, lease or other transfer,
after the date hereof and other than in the ordinary course of
business, of any of the assets of the Corporation;
(7) Which relates to any of the capital stock of the
Corporation or is among the Corporation and any holder of capital
stock of the Corporation or its affiliates;
(8) Which relates to the employment, retirement or
termination of the services of any officer or former officer of the
Corporation or which relates to any employee benefit; or
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(9) Which contains covenants pursuant to which any person
has agreed not to compete with any business conducted by the
Corporation or not disclose to others information concerning the
Corporation.
(b) Except as set forth in Schedule 3.20, the Corporation has
complied in all material respects with its obligations under all of such
agreements and contracts and no event has occurred and no condition exists which
constitutes or can reasonably be expected to constitute a breach of such
contract by the Corporation, or to the Knowledge of the Corporation, any other
party thereto.
3.21 Insurance. Schedule 3.21 sets forth a list of the insurance
polices maintained by the Corporation. The Corporation has not defaulted in any
material respect under any provision of any such policy, nor has it failed to
give notice or present any claim thereunder in a timely manner so as to bar
recovery of any valid claim.
3.22 Accounts Receivable. The accounts receivable of the Corporation
as of April 30, 2001 are reflected in Schedule 3.22. Such accounts receivable
and those acquired by the Corporation subsequent to the date thereof but prior
to the Closing (but not collected prior to the Closing), have or will have
arisen in the ordinary course of business and will have been collected or be
collectible in amounts not less than the aggregate amount thereof (net of
reserves established in accordance with prior practice) carried on the books of
the Corporation. Except as set forth on Schedule 3.22, each such account
receivable, and those acquired after the date hereof but prior to the Closing,
(a) is not and will not be the subject of a pledge or assignment, (b) is and
will be free of encumbrances, liens, mortgages, charges, security interests and
other defects in title generally considered to be encumbrances, and (c) have not
been and will not be placed for collection with any attorney, collection agency
or similar individual or firm.
3.23 Inventory. The term "Inventory" as used herein means raw
materials, work-in-process and finished goods. The Corporation's Inventory is
(a) usable or saleable in the ordinary course of business, (b) is sufficient but
not excessive in kind or amount for the conduct of the business of the
Corporation as it is currently being operated, and (c) is carried on the books
of the Corporation at an amount which reflects valuations not in excess of the
lower of cost or market determined in accordance with generally accepted
accounting principles applied on a consistent basis.
3.24 Employee Benefit Plans.
(a) Schedule 3.24 lists all of the employee benefit plans and
programs, including, without limitation: (i) all retirement, savings and other
pension plans; (ii) all health, severance, insurance, disability and other
employee welfare plans; and (iii) all employment, incentive, vacation and other
similar plans, that are maintained by the Corporation with respect to employees
of the Corporation or to which the Corporation contributes on behalf of the
employees of the Corporation (collectively, the "Employee Plans").
(b) To the Knowledge of the Corporation, the Employee Plans that
are maintained by the Corporation are in compliance in all material respects
with applicable laws
8
and regulations, and the Corporation has administered the Employee Plans in
accordance with applicable laws and regulations in all material respects.
(c) The Corporation has no, and never has had any, 401 (k) plans.
(d) The Corporation has made available to Buyer copies of all
Employee Plans and, where applicable, summary plan descriptions and annual
reports filed within the last three years pursuant to ERISA or the Internal
Revenue Code with respect to the Employee Plans.
(e) Except as shown on Schedule 3.24, there is no suit, action,
dispute, claim, arbitration or legal, administrative or other proceeding or
governmental investigation pending, or, to the Knowledge of the Corporation,
threatened, alleging any breach of the terms of any Employee Plan or of any
fiduciary duties thereunder or violation of any applicable law with respect to
any Employee Plan.
(f) No event has occurred and no condition exists, with respect
to any Employee Plan that could subject Buyer to any tax, fine or penalty. No
event has occurred and no condition exists with respect to any Employee Plan
that has resulted or could result in a lien or other security interest on or
after the Closing under Section 401 (a)(29) of the Internal Revenue Code or
under ERISA with respect to any property of Buyer that would not have been
incurred but for the transactions contemplated hereby.
3.25 Termination of Xxxxxxxx Agreement. The Xxxxxxxx Agreement has
been terminated and the Corporation has no liability thereunder except for a
possible obligation to issue shares of common stock of the Corporation to Xx.
Xxxxxxxx and/or the obligation to repay Xx. Xxxxxxxx the Three Hundred Thousand
Dollars ($300,000) lent by him to the Corporation which is referred to therein.
ARTICLE IV
REPRESENTATION AND WARRANTIES OF THE SHAREHOLDERS
Each of the Shareholders, severally and not jointly, represents and
warrants to Buyer as follows:
4.1 Authority Relative to this Agreement. Such Shareholder has all
power and authority to execute and deliver this Agreement and the Related
Agreements to which he is a party and to consummate the transactions
contemplated hereby and thereby. This Agreement has been duly executed and
delivered by such Shareholder and constitutes the valid and binding obligations
of such Shareholder, enforceable in accordance with its terms. The Related
Agreements to which such Shareholder is a party, when executed and delivered by
such Shareholder, shall constitute the valid and binding obligations of such
Shareholder, enforceable in accordance with their respective terms.
4.2 Insider Interests. Except as set forth in Schedule 3.5, such
Shareholder (a) does not Compete with the Corporation, (b) has no agreement of
any type with the Corporation, and (c) has no interest, direct or indirect, in
any property, real or personal, tangible
9
or intangible, including, without limitation, intellectual property, used in or
pertaining to the business conducted by the Corporation.
4.3 Capitalization of the Corporation; Validity of Shares. The capital
stock of the Corporation owned by such Shareholder is (a) free of encumbrances,
liens, mortgages, charges, security interests and other defects in title, (b)
validly issued and outstanding, and (c) fully paid and nonassessable. Such
Shareholder has no commitment to sell any shares of his capital stock of the
Corporation or any securities or obligations convertible into or exchangeable
for, or giving any person any right to acquire from him, any shares of his
capital stock of the Corporation.
4.4 Litigation. Except as set forth in Schedule 3.17, there are no
actions, suits, claims, investigations or proceedings pending or to such
Shareholder's Knowledge, threatened against the Corporation or such Shareholder,
before any court, governmental body, commission, agency or arbitrator, domestic
or foreign, which seek (a) to prevent, restrict or delay the consummation of the
transactions contemplated by this Agreement and the Related Agreements or (b) to
limit, in any manner, the right of Buyer to exercise the rights purported to be
granted pursuant to this Agreement and the Related Agreements. Furthermore,
there are no judgments, orders or decrees of any such court, governmental body,
commission, agency or arbitrator affecting such Shareholder which have or can
reasonably be expected to have any such effect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Corporation the following:
5.1 Authority Relative to this Agreement. Buyer has the requisite
power and authority to enter into this Agreement and the Related Agreements and
to consummate the transactions contemplated hereby and thereby. This Agreement
and the Related Agreements to which Buyer is a party when duly executed and
delivered by Buyer shall be duly executed and delivered by Buyer and shall
constitute the valid and binding obligations of Buyer, enforceable in accordance
with their respective terms.
5.2 Consents and Approvals. There is no requirement applicable to
Buyer to make any filing with, or to obtain the consent or approval of any
person or entity as a condition to the consummation of the transactions
contemplated by this Agreement or any of the Related Agreements.
5.3 Litigation. No action, suit, claim, investigation or proceeding is
pending or threatened against Buyer which seeks to prevent, restrict or delay
consummation of the transactions contemplated by this Agreement or any of the
Related Agreements.
5.4 No Violation. The execution and delivery by the Buyer of this
Agreement and the Related Agreements, and the consummation of the transactions
contemplated hereby and thereby, will not (a) violate or result in a breach of
any provision of Buyer's Articles of Incorporation or Bylaws, (b) result in a
default or give rise to a right of termination, modification
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or acceleration under the provisions of any agreement or other instrument or
obligation to which Buyer is a party or by which Buyer, any of Buyer's assets
may be bound, or (c) violate any law or regulation, or any judgment, order or
decree of any court, governmental body, commission or agency applicable to
Buyer.
5.5 Finders. No broker, finder or investment banker is entitled to any
fee or commission from Buyer for services rendered on behalf of Buyer in
connection with the transactions contemplated by this Agreement or the Related
Agreements.
5.6 Investment Intent. Buyer is acquiring the Stock for its own
account and not with a view to their distribution within the meaning of Section
2(l 1) of the Securities of 1933, as amended, and the regulations and rules
issued pursuant to that Act (the "Securities Act").
5.7 Independent Investigation. In connection with the transactions
contemplated herein, Buyer has relied solely on independent investigations made
by Buyer, and Buyer has had sufficient time to conduct due diligence it deems
necessary to evaluate the potential benefits and risks associated with such
transactions.
5.8 Stock Not Registered. Buyer acknowledges that the Stock has not
been registered under the Securities Act or under the securities laws of any
state and, therefore, cannot be sold or otherwise transferred unless registered
under the Securities Act and applicable state laws or unless an exemption from
registration is available.
5.9 Stock Ownership of Buyer. Buyer has no legal or beneficial
ownership interest in any shares of capital stock of the Corporation or options,
warrants or other securities convertible into or exchangeable for such shares,
except pursuant to this Agreement and the Related Agreements.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Conduct of Business. From the date hereof until the Closing, the
Corporation will and each of the Shareholders will use reasonable commercial
efforts (which shall include exercising all power and authority each has as an
officer, director and/or shareholder as the case may be) to cause the
Corporation to (a) conduct its business only in the ordinary and usual course
and in a manner consistent with past practices, (b) maintain in good repair
(ordinary wear and tear excepted), at its expense, all of its properties, and
(c) use reasonable commercial efforts to preserve its goodwill and its
relationships with licensors, suppliers, dealers, customers and others having
business relationships with the Corporation. From the date hereof until the
Closing, the Corporation's management will meet with Buyer on a regular and
frequent basis to discuss the general status of the ongoing operations of the
Corporation and any problems relating to its business. From the date hereof
until the Closing, the Corporation will notify Buyer (w) of any emergency or
material change in the normal conduct of the business or operations of the
Corporation, (x) of the threat, or initiation of, any litigation against the
Corporation, of which the Corporation has Knowledge, (y) of the initiation of
any investigation of the Corporation by any party, whether private or
governmental of which
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the Corporation has Knowledge, and (z) of any budget revisions involving the
business of the Corporation, and will keep Buyer fully informed of developments
with respect to such events and afford Buyer's representatives access to all
materials in its possession relating thereto.
6.2 Forbearances by the Corporation. Except as contemplated by this
Agreement and the Related Agreements, from the date hereof until the Closing or
the earlier termination hereof, without written consent of Buyer, the
Corporation will not and the Shareholders will use reasonable commercial efforts
to prevent the Corporation from:
(a) Selling or disposing of any of its assets except in the
ordinary and usual course of business;
(b) Mortgaging, pledging or otherwise encumbering any of its
assets, except in the ordinary and usual course of business;
(c) Amending, terminating or assigning any Material Contract or
Lease;
(d) Making any capital expenditures other than in the ordinary
and usual course of business or incurring any obligation or liability for
borrowed money other than under existing loan agreements;
(e) Merging or consolidating with, or acquiring any or all of the
capital stock or assets of any other person or entity, other than in the
ordinary and usual course of business;
(f) Assuming, guaranteeing, endorsing or otherwise becoming
responsible for the obligations of any other person or entity, or make loans or
advances to any other person or entity;
(g) Entering into any employment agreement, modifying any
existing employment agreement or increasing in any manner the compensation or
benefits of any Corporation employees;
(h) Entering into any contract which will require an expenditure
of more than $ 1 00,000 by the Corporation except for purchase orders incurred
in the ordinary course of business consistent with past practice (except to the
extent that any inconsistency with past practice results from increased amounts
of meat purchases on account of the growth of the Corporation's business);
(i) Altering in any way the manner in which it has regularly and
customarily maintained its books of account and records;
(j) Splitting, combining or otherwise changing its capital stock,
or redeem any of its capital stock;
(k) Declaring, setting aside or paying any dividend (whether in
cash or property) with respect to its capital stock;
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(l) Issuing or selling any shares of its capital stock or any
securities or obligations convertible into or exchangeable for, or giving any
person or entity any right to acquire any shares of its capital stock (except
pursuant to the exercise of existing Stock Options, shares which may become
issuable pursuant to the dispute under the Xxxxxxxx Agreement, and the shares to
be purchased pursuant to the terms of this Agreement and the Warrant);
(m) Settle any dispute under the Xxxxxxxx Agreement other than by
issuance of stock and the repayment of $300,000 plus accrued interest, if any,
lent by Xx. Xxxxxxxx to the Corporation as referenced in the Xxxxxxxx Agreement;
(n) Amending its Certificate of Incorporation or Bylaws;
(o) Canceling or allowing any of its existing insurance policies
to lapse without replacing them on similar terms as existing policies; or
(p) Entering into an agreement to do any of the things described
in clauses (a) through (n) above.
6.3 Investigation of Business and Properties. From the date hereof
until the Closing the Corporation will, and the Shareholders will use reasonable
commercial efforts to cause the Corporation to, afford Buyer and its
representatives, including, without limitation, its attorneys, accountants and
financial advisors full access, at all reasonable times, to the Corporation's
officers, and to the officers, employees, properties, contracts, and books and
records of the Corporation, in order to enable Buyer to make a full
investigation of the condition of the Corporation. In addition, the Corporation
will, and the Shareholders will cause the Corporation to, furnish Buyer with
such financial, operating and additional data as Buyer may reasonably request in
making such investigation.
6.4 Special Shareholders' Meeting. Upon execution of this Agreement,
the Corporation will, and the Shareholders will cause the Corporation to, call a
special meeting of the shareholders of the Corporation to consider the approval
and authorization of the execution and performance of this Agreement by the
Corporation.
6.5 Shareholders' Approval. The Corporation will, and the Shareholders
will cause the Corporation to, use reasonable commercial efforts to obtain
shareholder approval and authorization of the execution and performance of this
Agreement by the Corporation, including the Shareholders voting their shares in
favor of such approval and authorization.
6.6 Subsequent Events. If any event shall occur prior to the Closing
which, had it occurred prior to the execution of this Agreement, should have
been disclosed by a party to this Agreement in a representation and warranty or
otherwise, then upon the happening of such event, the party shall promptly make
such disclosure to the other party hereto.
6.7 Negotiations with Others. From the date hereof until latest of (a)
May 31, 2001, (b) the termination of this Agreement according to its terms or
(c) the Closing, if the Agreement has not been sooner terminated, the
Corporation will not, directly or indirectly, without the written consent of
Buyer, initiate discussions or engage in negotiations with any person, other
than Buyer, concerning any sale of the Stock or of any merger, sale of assets or
13
similar transaction involving the Corporation; provided that the Corporation may
communicate with its shareholders concerning this Agreement and the Related
Agreements.
6.8 Expenses. Except as otherwise provided in this Agreement, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby will be paid by the party incurring such costs
and expenses.
6.9 Further Assurances. Buyer and the Corporation will (and the
Shareholders will use reasonable commercial efforts to cause the Corporation to)
use reasonable efforts to implement the provisions of this Agreement, and for
such purpose, at the reasonable request and expense of the other party, at or
after the Effective Date, without further consideration, promptly execute and
deliver, or cause to be executed and delivered, such additional documents as may
be necessary to implement any provision of this Agreement.
ARTICLE VII
CONDITIONS TO OBLIGATIONS
7.1 Conditions to Obligations of Buyer. The obligations of Buyer to
consummate the transactions contemplated by this Agreement shall be subject, to
the extent not waived, to the following conditions:
(a) Representations and Warranties. Each of the representations
and warranties of the Corporation and Shareholders contained in this Agreement
(which representations and warranties include the information in the schedules
corresponding thereto) shall be true and correct in all material respects as of
the date of this Agreement and as of the Closing (unless such representations
and warranties related to another date in which case they shall be true and
correct in all material respects as of such date) and the Corporation shall have
delivered to Buyer a certificate to that effect signed by its President.
(b) Performance of this Agreement. The Corporation shall have
performed in all material respects all of its obligations under this Agreement
and the Corporation shall have delivered to Buyer a certificate to that effect
signed by its President.
(c) Corporate Authorization. All corporate action required to be
taken by the Corporation or the Shareholders in connection with the transactions
contemplated hereby and in the Related Agreements shall have been taken, all
documents incident thereto shall be reasonably satisfactory in substance and
form to Buyer and Buyer shall have received copies of such documents as it may
reasonably request.
(d) Consents and Approvals. The consents and approvals of all
persons which the Corporation or the Shareholders are required to obtain to be
able to issue the Stock to Buyer, shall have been obtained and all waiting
periods specified by law with respect thereto shall have passed.
(e) Injunction, Litigation, etc. No order of any court or
governmental agency shall be in effect which restrains or prohibits the
consummation of the transactions contemplated by this Agreement or the Related
Agreements or which would limit or affect the ability of Buyer to own and
control the Stock, and there shall not have been threatened, nor shall
14
there be pending, any action or proceeding by or before any such court or
governmental agency seeking to prohibit or delay or challenging the validity of
the transactions contemplated by this Agreement or the Related Agreements.
(f) Resignations. All of the directors of the Corporation except
for three directors shall have resigned as of the Closing, and two directors
nominated by Buyer shall have been elected.
(g) Percentage Ownership. The Stock will constitute 50% of the
issued and outstanding shares of the capital stock of the Corporation.
(h) Related Agreements. All Related Agreements shall have been
executed and delivered by the appropriate parties.
(i) Opinion of Counsel for Seller. Buyer shall have received an
opinion from Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP for the Corporation, in a
form reasonably satisfactory to Buyer.
(j) Shareholder Approval. The shareholders of the Corporation
shall have approved and authorized the execution and performance of this
Agreement by the Corporation.
7.2 Conditions to Obligations of the Corporation. The obligations of
the Corporation to consummate the transactions contemplated by this Agreement
shall be subject, to the extent not waived, to the satisfaction of each of the
following conditions.
(a) Representations and Warranties. Each of the representations
and warranties of Buyer contained in this Agreement shall be true and correct in
all respects as of the date of this Agreement and as of the Closing and Buyer
shall have delivered to the Corporation a certificate to that effect signed by
its President.
(b) Performance of this Agreement. Buyer shall have performed in
all material respects all of its obligations under this Agreement and shall have
delivered to the Corporation a certificate to that effect signed by its
President.
(c) Corporate Authorization. All corporate action required to be
taken by Buyer in connection with the transactions contemplated hereby and in
the Related Agreements shall have been taken, all documents incident thereto
shall be reasonably satisfactory in substance and form to the Corporation, and
the Corporation shall have received such originals or copies of such documents
as it may reasonably request.
(d) Related Agreements. All Related Agreements shall have been
executed and delivered by the appropriate parties.
(e) Opinion of Counsel for Buyer. The Corporation shall have
received an opinion from McGuireWoods LLP, counsel for Buyer, in a form
reasonably satisfactory to t e Corporation.
15
(f) Consents and Approvals. The consents and approvals of all
persons which Buyer is required to obtain to be able to purchase the Stock shall
have been obtained and all waiting periods specified by law with respect thereto
shall have passed.
(g) Injunction, Litigation, etc. No order of any court or
governmental agency shall be in effect which restrains or prohibits the
consummation of the transactions contemplated by this Agreement or the Related
Agreements or which would limit or affect the ability of Buyer to own and
control the Stock, and there shall not have been, to the Knowledge of Buyer,
threatened, nor shall there be pending, any action or proceeding by or before
any such court or governmental agency seeking to prohibit or delay or
challenging the validity of the transactions contemplated by this Agreement or
the Related Agreements.
(h) Shareholder Approval. The shareholders of the Corporation
shall have approved and authorized the execution and performance of this
Agreement by the Corporation.
ARTICLE VIII
CLOSING
8.1 Time and Place of Closing. The closing (the "Closing") shall take
place at 2:00 p.m. local time on June 21, 2001 (or as soon thereafter as all
conditions set forth in Article VII shall have been satisfied or waived), at
such place as the parties may mutually agree.
8.2 Deliveries by the Corporation. At the Closing, the Corporation
shall deliver to Buyer the following:
(a) The certificates representing the Stock duly issued;
(b) The certificates required by Sections 7. 1 (a) and (b) in a
form reasonably satisfactory to Buyer;
(c) Evidence that the corporate action described in Section 7. 1
(c) has been taken;
(d) Evidence that the shareholder approval described in Section
7.2(h) has been acquired;
(e) The resignations and elections required by Section 7. 1 (f);
(f) A certificate from the Secretary of State of Pennsylvania of
the Corporation's corporate subsistence in Pennsylvania, and a certificate from
the appropriate authority in each other jurisdiction in which the Corporation is
qualified to do business, of the Corporation's good standing in that
jurisdiction, all as of the most recent date obtainable;
(g) The Opinion of Counsel required by Section 7. 1 (k); and
(h) Such additional documents as Buyer may reasonably request.
16
8.3 Deliveries by Buyer. At the Closing, Buyer shall deliver to the
Corporation:
(a) The Purchase Price;
(b) The certificates required by Sections 7.2(a) and (b) in a
form reasonably satisfactory to the Corporation and Shareholders;
(c) Evidence that the corporate action described in Section
7.2(c) has been taken;
(d) The Opinion of Counsel required by Section 7.2(e); and
(e) Such additional documents as the Corporation may reasonably
request.
8.4 Other Deliveries. At the Closing, the Corporation, Shareholders
and Buyer, as appropriate, will each execute and deliver to the appropriate
parties copies of the following agreements (collectively, the "Related
Agreements") to which they are parties:
(a) A Registration Rights Agreement in the form attached hereto
as Exhibit C;
(b) A Warrant Agreement (the "Warrant") substantially in the form
attached hereto as Exhibit D;
(c) A Credit Agreement and Security Agreement substantially in
the form attached hereto as Exhibit E; and
(d) A Standstill Agreement substantially in the form attached
hereto as Exhibit F.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification by the Corporation. The Corporation will indemnify
and hold Buyer harmless from any damage, loss, liability or expense (including,
without limitation, reasonable expenses of investigation and reasonable
attorneys' fees) ("Losses") arising out of-
(a) Any breach of a representation or warranty made by the
Corporation or any Shareholder in this Agreement; or
(b) The breach of any agreement of the Corporation or any
Shareholder contained in this Agreement; or
Notwithstanding anything contained herein to the contrary, in the event the
Corporation must indemnify Buyer, all Losses to be indemnified shall be grossed
up to account for Buyer's
17
50% interest in the Corporation, such that Buyer shall, after the Corporation's
payment of such indemnified Loss, be made whole, considering the diminution in
value to Buyer's interest in the Corporation as a result of such payment. Buyer
acknowledges that it is purchasing the Stock and entering into the Related
Agreements as a strategic investment and has not relied solely on the assets or
liabilities of Corporation in arriving at the Purchase Price it has agreed to
pay hereunder. Accordingly, in calculating any Loss that may be asserted
hereunder, Buyer acknowledges that the mere breach of a representation, warranty
or covenant of Corporation or a Shareholder hereunder would not necessarily give
rise to a Loss, which rather, shall be determined based on all the relevant
facts and circumstances.
9.2 Limitation of Indemnification by the Corporation. Notwithstanding
Section 9.1above, in the case of Losses incurred as a result of the events
described in Section 9. 1, the Corporation shall not be liable for
indemnification with respect to such Losses unless and until the aggregate
amount of such Losses exceeds $50,000 and thereafter its liability for such
Losses shall be limited to the amount thereof in excess of $50,000. In no event
shall the Corporation be required to indemnify Buyer for any Losses exceeding
the amount of the Purchase Price.
9.3 Indemnification by the Shareholders. Each of the Shareholders
shall severally and not jointly indemnify and hold Buyer harmless from any
Losses arising out of any breach of a representation or warranty made by such
Shareholder in this Agreement.
9.4 Limitation of Indemnification by Shareholders. Notwithstanding
Section 9.3 above, in the case of Losses incurred as a result of the events
described in Section 9.3 above, no Shareholder shall be liable for
indemnification with respect to such Losses unless and until the aggregate
amount of such Losses exceeds $50,000, and thereafter such Shareholder's
liability for such Losses shall be limited to the amount thereof in excess of
$50,000. In no event shall either Shareholder be required to indemnify Buyer for
any Losses exceeding $1,000,000.
9.5 Indemnification by Buyer. Buyer will indemnify and hold the
Corporation and each of the Shareholders harmless from any damage, loss,
liability or expense (including, without limitation, reasonable expenses of
investigation and reasonable attorneys' fees) ("Losses") arising out of-
(a) Any breach of a representation or warranty made by Buyer in
this Agreement; or
(b) The breach of any agreement of Buyer contained in this
Agreement.
9.6 Limitation of Indemnification by Buyer. Notwithstanding Section
9.5 above, in the case of Losses incurred as a result of the events described in
Section 9.5, the Buyer shall not be liable for indemnification with respect to
such Losses unless and until the aggregate amount of such Losses exceeds $50,000
and thereafter its liability for such Losses shall be limited to the amount
thereof in excess of $50,000. In no event shall Buyer be required to indemnify
the Corporation or any Shareholder for any Losses exceeding the amount of
$1,000,000.
18
9.7 Survival. The representations made in this Agreement will survive
until the first anniversary date of the Closing.
9.8 Procedure for Indemnification. Each claim for indemnification,
including for those claims resulting from the assertion of liability by persons
or entities not parties to this Agreement, including claims by any authority for
penalties, fines and assessments, must be made by the indemnified party's
delivery to the party asserted to owe a duty of indemnification hereunder, of
written notice promptly upon learning of the basis for such claim, containing
details reasonably sufficient to disclose to such indemnifying party the nature
and scope of the claim. In the event that any legal action, claim or proceeding
is brought against a party entitled to indemnification pursuant to this
Agreement, the action will, upon the giving of notice as aforesaid, be defended
by the indemnifying party and such defense shall include all appropriate appeals
or reviews. The indemnified parties will cooperate in any such defense. The
indemnifying party shall not make any settlement of any claim without the
written consent of the indemnified parties, which consent shall not be
unreasonably withheld. Notwithstanding the foregoing, a party who is claimed to
owe an indemnity obligation hereunder may defend a claim against a third party
while reserving the right to contest the asserted indemnity obligation, and to
the extent the party who is claimed to owe an indemnity obligation prevails in
such contest, the party asserting the right to indemnification shall reimburse
the other party for all amounts incurred by such party in the defense thereof
and all asserted Losses, if any, for which payment had been made by such party.
9.9 Exclusive Remedy. Except (a) as provided in Article X or otherwise
under this Agreement and the Related Agreements, (b) in the case of fraud or
intentional misrepresentation, the provisions of this Article IX shall be the
exclusive rights and remedies of the parties hereto with respect solely to this
Agreement, but not the Related Agreements, or any cause, position, claim, or
circumstance by virtue of Buyer being a Shareholder of the Corporation.
ARTICLE X
TERMINATION
10.1 Termination. This Agreement may be terminated at any time prior
to the date of Closing:
(a) By the mutual written consent of the parties hereto;
(b) By Buyer if there has been a material breach by the
Corporation or Shareholders of a representation, warranty or agreement contained
herein which cannot be remedied before the Closing or if any condition which
must be met by the Corporation or Shareholders becomes impossible to fulfill; or
(c) By any party hereto if the Closing has not occurred on or
before July 3 1, 2001.
10.2 Effect of Termination. If this Agreement is terminated as
provided above, it shall be of no further force or effect and there shall be no
further liability or obligation
19
on the part of any party except to pay such expenses as are required of it, but
such termination shall not constitute a waiver by any party of any claims it may
have for damages caused by reason of a material breach of a representation or
warranty made by the other parties. Notwithstanding the foregoing, the
provisions of Article IX shall survive any termination of this Agreement.
ARTICLE XI
GENERAL PROVISIONS
11.1 Notices. All notices and other communications required or
permitted hereunder will be in writing (including telex, telefax or similar
writing) and will be given:
(a) If to Buyer, to:
Smithfield Foods, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. X. Xxxxxxx, Esq.
Tel. No.: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
McGuireWoods LLP
One Xxxxx Center
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: T. Xxxxx Xxxxxx, Esq.
Tel. No.: (000) 000-0000
Fax:(000) 000-0000
(b) If to the Corporation, to:
Pinnacle Foods, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Tel. No.: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxx Xxxxxxx & Ingersoll, LLP
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Tel. No.: (000) 000-0000
Fax:(000) 000-0000
20
(c) If to Shareholders, to the addresses listed on Exhibit A with
a copy to Xxxxxxx Xxxxx Xxxxxxx & Ingersoll, LLP at the address above or to such
other person or to such other address or telefax number as the party to whom
such notice is to be given may have furnished the other parties in writing by
like notice. If mailed, any such communication will be deemed to have been given
on the third business day following the day on which the communication is posted
by registered or certified mail (return receipt requested). If given by any
other means, the notice will be deemed to have been given when received.
11.2 Public Announcements. Except for any solicitation of shareholder
consents, proxies and related materials delivered by the Corporation to its
shareholders, the Corporation, Shareholders and Buyer will not issue any press
release or otherwise make any public statements with respect to this Agreement
or the Related Agreements and the transactions contemplated hereby and thereby
without the consent of the other party, unless required to do so in order to
comply with securities laws.
11.3 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
11.4 Expenses. The costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby, including legal fees, will
be paid by the party incurring such costs and expenses.
11.5 Miscellaneous. This Agreement: (a) and the Confidentiality
Agreement entered into by the Corporation and Buyer prior to the date hereof
constitute the entire agreement among the parties and supersedes all other prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof-, (b) is an independent agreement, the
rights and obligations of the parties to which shall not be affected by any
provision of, or remedy arising under or with respect to any other agreement
between the parties, except to the extent expressly provided in any such
agreement; (c) is not intended to and shall not confer upon any other person or
business entity, other than the parties hereto or any permitted assignees, any
rights or remedies with respect to the subject matter hereof, (d) shall not be
assigned by operation of law or otherwise by any party without the express
written prior approval of the other parties, which approval shall not be
unreasonably withheld; and (e) shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania without regard to its
conflicts of law or choice of law rules.
11.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same installment. This Agreement shall
become binding when one or more counterparts have been executed by all of the
parties hereto.
[The next page is the signature page.]
21
IN WITNESS WHEREOF the parties have caused this Agreement to be executed.
SMITHFIELD FOODS, INC.
By:________________________________
Name:______________________________
Title:_____________________________
[The signature page continues on the following page.]
22
PINNACLE FOODS, INC.
By:________________________________
Name:______________________________
Title:_____________________________
[The signature page continues on the following page.]
23
SHAREHOLDERS:
____________________________________
Xxxxx X. Xxxxx
[The signature page continues on the following page.]
24
____________________________________
Xxxxxxx X. Xxxxx
25
SCHEDULES TO STOCK PURCHASE AGREEMENT
Intentionally Omitted.
EXHIBIT A
Shareholders
------------
Xxxxxxx X. Xxxxx
Xxxxx X. Xxxxx
EXHIBIT B
Xxxxxxx Xxxxx
Xxxxxx XxXxxxx
