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Exhibit 2.1
STOCK PURCHASE AGREEMENT
BY AND AMONG
VLASIC FOODS INTERNATIONAL INC.,
MONEY'S FOODS (U.S.) LTD.
AND
MONEY'S MUSHROOMS LTD.
DECEMBER 17, 1999
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TABLE OF CONTENTS
Section Page
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1. Definitions................................................ 1
2. The Purchase and Sale of the Shares........................ 11
2.1 The Purchase and Sale of the Shares............... 11
2.2 Closing........................................... 11
2.3 Closing Deliveries................................ 11
2.4 Post-Closing Adjustment........................... 12
2.5 Deposit........................................... 13
2.6 Escrow............................................ 13
3. Representations and Warranties of the Seller............... 15
3.1 Corporate......................................... 15
3.2 Authorization..................................... 15
3.3 Validity of Contemplated Transactions............. 16
3.4 Capitalization and Stock Ownership................ 16
3.5 Financial Statements.............................. 17
3.6 Title to Assets and Related Matters............... 17
3.7 Real Property..................................... 18
3.8 Accounts Receivable............................... 20
3.9 Inventory......................................... 20
3.10 Absence of Undisclosed Liabilities................ 20
3.11 Taxes............................................. 20
3.12 Subsidiaries...................................... 21
3.13 Legal Proceedings and Compliance with Law......... 21
3.14 Contracts......................................... 22
3.15 Insurance......................................... 23
3.16 Intellectual Property............................. 24
3.17 Year 2000 Compliance Matters...................... 25
3.18 Employee Relations................................ 25
3.19 ERISA............................................. 26
3.20 Corporate Records................................. 28
3.21 Absence of Certain Changes........................ 28
3.22 Previous Sales; Warranties........................ 29
3.23 Customers and Suppliers........................... 29
3.24 Finder's Fees..................................... 29
3.25 Additional Information............................ 29
3.26 Environmental Matters............................. 30
4. Representations and Warranties of the Buyer................ 31
4.1 Corporate......................................... 31
4.2 Authorization..................................... 31
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4.3 Validity of Contemplated Transactions............. 31
4.4 Finder's Fees..................................... 32
4.5 Litigation........................................ 32
4.6 Financing......................................... 32
4.7 Supply Agreement.................................. 32
5. Mutual Covenants........................................... 32
5.1 Fulfillment of Conditions......................... 32
5.2 Consents.......................................... 32
5.3 HSR Filing........................................ 33
5.4 Disclosure of Certain Matters..................... 33
5.5 Public Announcements.............................. 34
5.6 Expenses.......................................... 34
6. Covenants of the Parties................................... 34
6.1 Restricted Actions................................ 34
6.2 Access............................................ 35
6.3 Subsequent Financial Information.................. 35
6.4 Acquisition Proposals............................. 35
6.5 Competition and Confidentiality................... 36
6.6 Tax Matters....................................... 37
6.7 Confidentiality................................... 42
6.8 Supply Agreement.................................. 42
6.9 Operation of the Buyer............................ 42
6.10 Nonsolicitation by the Buyer...................... 42
6.11 Collective Bargaining Agreements.................. 43
6.12 Certain Actions by Seller and Company............. 43
6.13 Uncollected Accounts Receivable................... 43
6.14 Collective Bargaining Negotiations................ 44
6.15 Transition Planning............................... 44
6.16 Trademark License................................. 44
6.17 Corporate Name Change............................. 45
6.18 Completion of Environmental Due Diligence......... 45
6.19 Employee Benefit Matters.......................... 46
6.20 Litigation........................................ 47
6.21 UPC............................................... 47
6.22 Real Property Liens............................... 47
6.23 Assignments....................................... 47
6.24 Direction of the Company.......................... 48
6.25 Guaranty.......................................... 48
7. Conditions Precedent to the Buyer's Obligations............ 48
7.1 Representations True at Closing................... 48
7.2 Performance of Covenants.......................... 48
7.3 Certificates...................................... 48
7.4 Litigation Affecting Closing...................... 48
7.5 Material Adverse Change........................... 48
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7.6 Governmental Approvals............................ 48
7.7 Consents.......................................... 48
7.8 Legal Opinion..................................... 49
7.9 Ancillary Documents............................... 49
7.10 Company Documents................................. 49
7.11 Assignment of Supply Agreement.................... 49
7.12 Release of Guarantees............................. 49
7.13 Release - CSC-TIA................................. 49
7.14 Resignations of Officers and Directors............ 49
7.15 Tax Opinion....................................... 49
7.16 Seller Plans...................................... 49
7.17 Surveys and Title................................. 49
8. Conditions Precedent to Obligations of the Seller.......... 50
8.1 Representations True at Closing................... 50
8.2 Performance of Covenants.......................... 50
8.3 Certificates...................................... 50
8.4 Litigation Affecting Closing...................... 50
8.5 Governmental Approvals............................ 50
8.6 Legal Opinion..................................... 51
8.7 Ancillary Documents............................... 51
9. Indemnification............................................ 51
9.1 General Indemnification........................... 51
9.2 Tax Indemnification............................... 52
9.3 Environmental Indemnification..................... 53
9.4 Procedure for Claims.............................. 54
9.5 Third Party Claims................................ 56
9.6 Effect of Investigation or Knowledge.............. 57
9.7 Conflicts......................................... 57
10. Termination................................................ 57
10.1 Grounds for Termination........................... 57
10.2 Effect of Termination............................. 58
11. General.................................................... 58
11.1 Governing Law..................................... 58
11.2 Further Assurances................................ 58
11.3 Binding Effect.................................... 58
11.4 Waivers........................................... 59
11.5 Waiver of Jury Trial.............................. 59
11.6 Exhibits.......................................... 59
11.7 Entire Agreement.................................. 59
11.8 Notices........................................... 59
11.9 Interpretation.................................... 61
11.10 Counterparts; Facsimile Signature................. 61
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For purposes of this Current Report on Form 8-K, the following exhibits have
been omitted but will be supplied to the Securities and Exchange Commission upon
request:
A Schedule of Exceptions to Permitted Encumbrances
C Form of Transitional Services Agreement
4.6 Financing Letters
6.1(a) Employees-Seller
6.1(b) Employees-Buyer
6.16 Vlasic Farms Marks
6.20 Assumed Litigation
7.7 Consents
7.15 Tax Opinion
7.15(a) CSC Acknowledgment
7.17 Acreage
A separate Disclosure Schedule has also been omitted and will be supplied to the
Securities and Exchange Commission upon request.
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STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made as of the 17th day of December 1999, by and
among Money's Foods (U.S.) Ltd., a Washington corporation (the "Buyer"), Money's
Mushrooms Ltd., a British Columbia corporation (the "Parent"), and Vlasic Foods
International Inc., a New Jersey corporation (the "Seller"). Certain other terms
are used herein as defined below in Section 1 or elsewhere in this Agreement.
Background
The Seller desires to sell to Buyer, and the Buyer desires to purchase
from Seller, all of the outstanding capital stock of Vlasic Farms, Inc., an Ohio
corporation (the "Company").
WITNESSETH:
In consideration of the mutual promises, representations and
warranties, covenants, payments and actions herein provided, the parties hereto,
each intending to be legally bound hereby, do agree as follows:
1. Definitions.
For convenience, certain terms used in this Agreement are listed in
alphabetical order and defined or referred to below (such terms as well as any
other terms defined elsewhere in this Agreement shall be equally applicable to
both singular and plural forms of the terms defined).
"Accounts Receivable" means, as of any date, any accounts receivable
(billed or unbilled) and notes receivable.
"Acquisition Proposal" is defined in Section 6.4(b).
"Affiliated Group" means any affiliated group within the meaning of
Code Section 1504(a) or any similar group defined under a similar provision of
state, local or foreign law.
"Affiliates" means, with respect to a particular Party, any Persons
controlling, controlled by or under common control with that Party, as well as
any officers and directors of that Party and their immediate family members. For
the purposes of the foregoing, ownership, directly or indirectly, of greater
than 50% of the voting stock or other equity interest shall be deemed to
constitute control. Notwithstanding the foregoing, neither Xxxxxxxx Soup Company
nor any of its subsidiaries shall be deemed to be an affiliate of Seller or the
Company for any purpose of this Agreement.
"Agreement" means this Agreement and the Exhibits and Disclosure
Schedule attached hereto.
"Annual Financial Statements" is defined in Section 3.5.
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"Assets" means all of the assets of every kind and description, real
and personal, tangible and intangible, that are owned by the Company.
"Balance Sheet" is defined in Section 3.5.
"Balance Sheet Date" is defined in Section 3.5.
"Benefit Plan" means any (a) "employee benefit plan" as defined in
Section 3(3) of ERISA and (b) supplemental retirement, bonus, deferred
compensation, severance, incentive plan, program or arrangement or other
employee fringe benefit plan, program or arrangement.
"Business" means the entire business and operations of the Company
relating to the production and sale of fresh mushrooms and the other Products
listed on Schedule A and the production of spawn and supplement relating
thereto, but excluding the business and customer service functions which are
being performed by Seller for the Company.
"Business Day" means any day other than a Saturday or Sunday, or a day
on which the banking institutions of the State of New Jersey are authorized or
obligated by law or executive order to close.
"Business Materials" is defined in Section 6.16(b).
"Buyer" is defined above in the preamble.
"Buyer Indemnified Party" is defined in Section 9.1(a).
"CSC TIA" is defined in Section 9.2.
"Charter Documents" means a Person's certificate or articles of
incorporation, certificate defining the rights and preferences of securities,
articles of organization, general or limited partnership agreement, certificate
of limited partnership, joint venture agreement or similar document governing
the entity.
"Claim Notice" is defined in Section 9.4(a).
"Closing" is defined in Section 2.2.
"Closing Date" is the date on which the Closing is held.
"Closing Statement" means the statement as of the Closing Date (or
January 30, 2000 if the Closing Date is January 31, 2000) of Net Working
Capital, Net Fixed Assets, non-current worker's compensation liabilities and
non-current capitalized lease obligations of the Company which the Seller
intends to produce from the pro-forma balance sheet prepared by the Seller. For
the avoidance of any doubt, the pro-forma balance sheet will be composed of the
accounts on the Company's Hyperion balance sheet with the addition of accounts
for capitalized lease assets net
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of accumulated depreciation, capitalized lease obligations, capitalized interest
and worker's compensation liability; and excluding the following accounts: cash
in banks control lock box, Giorgio inventory swap, intercompany clearing
accounts, VFI headquarters management fee, WIN bonus accrual, accrued US federal
income taxes, accrued state income taxes, and re-engineering reserve. The
Hyperion and the pro-forma balance sheets do not include pension,
post-retirement benefit liabilities, medical claim liabilities and deferred
income taxes.
"Closing Value" is defined in Section 2.4(b).
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" is defined above in the preamble.
"Concurrence Notice" is defined in Section 2.4(c).
"Confidential Information" is defined in Section 6.5(b).
"Contract" means any written or oral contract, agreement, lease,
instrument, or other document or commitment that is binding on any Person or its
property under any applicable Law.
"Court Order" means any judgment, decree, injunction, order or ruling
of any Governmental Authority that is binding on any person or its property
under applicable Law.
"Damages" is defined in Section 9.1(a).
"Default" means (a) a breach, default or violation or (b) the
occurrence of an event that with or without the passage of time or the giving of
notice, or both, would constitute a breach, default or violation or give rise to
a right of termination or acceleration or a right to receive damages or a
payment of penalties.
"Deferred Tax Benefit" is defined in Section 2.4(b).
"Deposit" is defined in Section 2.5.
"Disclosure Schedule" is defined in Section 3.
"Dispute Notice" is defined in Section 2.4(c).
"Encumbrances" means any lien, mortgage, security interest, pledge,
restriction on transferability, defect of title or other claim, charge or
encumbrance of any nature whatsoever on any property or property interest, other
than Permitted Encumbrances.
"Environment" means all air, surface water, groundwater, or land,
including land surface or subsurface, including all fish, wildlife, biota and
all other natural resources.
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"Environmental Claim" means any and all administrative or judicial
actions, suits, orders, claims, liens, notices, notices of violations,
investigations, complaints, requests for information, proceedings, or other
written communication, whether criminal or civil (collectively, "Claims")
pursuant to or relating to any applicable Environmental Law by any Person
(including any Governmental Authority, private person and citizens' group) based
upon, alleging, asserting, or claiming any actual or potential (a) violation of
or Liability under any Environmental Law, (b) violation of any Environmental
Permit prior to Closing or (c) Liability for investigatory costs, cleanup costs,
removal costs, remedial costs, response costs, natural resource damages,
property damage, personal injury, fines, or penalties arising out of, based on,
resulting from, or related to the presence, Release, or threatened Release into
the Environment, of any Hazardous Materials at any location, including but not
limited to any off-Site location to which Hazardous Materials or materials
containing Hazardous Materials were sent for handling, storage, treatment, or
disposal.
"Environmental Clean-up Site" means any location which is listed or
proposed for listing on the National Priorities List, the Comprehensive
Environmental Response, Compensation and Liability Information System, or on any
similar state list of sites requiring investigation or cleanup.
"Environmental Condition" means any condition or circumstance existing
as of or prior to the Closing Date, including the presence of Hazardous
Materials, whether created by the Seller, the Company or a third party, at or
relating to any Site (a) caused by or relating to a violation of any
Environmental Law, or (b) that gives rise to any civil or criminal Liability
under any Environmental Law, and in either case of subparagraph (a) or (b) of
this definition of "Environmental Condition," which is required to be
compensated for, investigated, remediated, or corrected by any Governmental
Authority with jurisdiction over such condition or circumstance and for which
such Governmental Authority has issued a Court Order requiring such
compensation, investigation, remediation, or correction. "Environmental
Condition" shall not include any compensation, investigation, remediation, or
correction given or undertaken by any Buyer Indemnified Party or any other
Person not pursuant to a Court Order.
"Environmental Law" means any and all applicable federal, state, local,
provincial and foreign, civil and criminal laws, statutes, ordinances, orders,
codes, rules, regulations, Environmental Permits, policies, guidance documents,
judgments, decrees, injunctions, or agreements with any Governmental Authority,
relating to the protection of the Environment, or governing the handling, use,
generation, treatment, storage, transportation, disposal, manufacture,
distribution, formulation, packaging, labeling, or Release of Hazardous
Materials, in existence as of the Closing Date, including the Clean Air Act, 42
U.S.C. Section 7401 et seq.; the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Section 9601 et seq.; the
Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et seq.; the
Hazardous Material Transportation Act 49 U.S.C. Section 1801 et seq.; the
Federal Insecticide, Fungicide and Rodenticide Act 7 U.S.C. Section 136 et seq.;
the Resource Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. Section
6901 et seq.; the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.;
the Oil Pollution Act of 1990, 33 U.S.C. Section 2701 et seq.; and the state
analogies thereto, prior to the Closing Date; and any common law doctrine in
existence as of the Closing Date, including but
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not limited to, negligence, nuisance, trespass, personal injury, or property
damage related to or arising out of the presence, Release, or exposure to a
Hazardous Material.
"Environmental Notice" is defined in Section 2.6(a).
"Environmental Permit" means any federal, state, local, provincial, or
foreign permits, licenses, approvals, consents or authorizations required by any
Governmental Authority under or in connection with any Environmental Law and
includes any and all orders, consent orders or binding agreements issued or
entered into by a Governmental Authority under any applicable Environmental Law.
"Environmental Remedial Costs" means the total cost of remediating any
condition or circumstance existing as of or prior to the Closing Date, including
the presence of Hazardous Materials, whether created by the Seller, the Company
or a third party, at or relating to any Site (a) caused by or relating to a
violation of any Environmental Law or (b) that may give rise to any civil or
criminal Liability under any Environmental Law, as identified in the Phase I
Site Assessments or by the Buyer as a result of the Phase II Work. Environmental
Remedial Costs shall be quantified by a qualified environmental consultant
selected at the sole discretion of the Buyer and shall include a reasonably
detailed description of the costs and work necessary to remedy any such
condition or circumstances in accordance with the standards set forth in Section
9.3(c)(i) and (ii) of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and all regulations and rules issued thereunder, or any successor law.
"ERISA Affiliate" means any Person that, together with the Seller, is
treated as a single employer under Section 414 of the Code or Section 4001 of
ERISA.
"Escrow Agent" means the Escrow Agent, if any, named in the Escrow
Agreement.
"Escrow Agreement" means the escrow agreement by and among the Seller,
the Buyer and the Escrow Agent, to be negotiated among such Persons after the
date of this Agreement and prior to the Closing, if required pursuant to Section
2.6 or, after the Closing, if any dispute regarding the Final Environmental
Remedial Cost has not been conclusively resolved as of the Closing.
"Escrow Funds" means that amount, if any, that is determined in
accordance with Section 2.6 hereof that will be placed in escrow and
administered in accordance with the Escrow Agreement.
"Final Environmental Remedial Costs" means Environmental Remedial Costs
that are (i) not objected to by Seller, (ii) revised and agreed upon by Buyer
and Seller or (iii) as determined by Xxxxx X. Xxxxxxx, P.E. of Roux Associates
Inc., pursuant to the terms set forth in Section 2.6 of this Agreement.
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"Final Escrow Amount" is defined in Section 2.6(b).
"GAAP" means generally accepted US accounting principles consistently
applied.
"GAAS" means generally accepted US auditing standards.
"Governmental Authority" means any court, tribunal, arbitrator,
authority, agency, regulatory body, commission or other instrumentality of the
US or Canada, or any US or Canadian state, province, county, city or other
political subdivision.
"Governmental Permits" means all governmental permits, licenses,
registrations, certificates of occupancy, approvals and other governmental
authorizations.
"Hazardous Material" means petroleum, petroleum hydrocarbons or
petroleum products, petroleum by-products, radioactive materials, asbestos or
asbestos-containing materials, gasoline, diesel fuel, pesticides, radon, urea
formaldehyde, lead or lead-containing materials, polychlorinated biphenyls; and
any other chemicals, materials, substances or wastes in any amount or
concentration which are now defined as or included in the definition of
"hazardous substances," "hazardous materials," "hazardous wastes," "extremely
hazardous wastes," "restricted hazardous wastes," "toxic substances," "toxic
pollutants," "pollutants," "regulated substances," "solid wastes," or
"contaminants" or words of similar import, under any Environmental Law.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Indemnified Parties" is defined in Section 9.1(b).
"Indemnifying Parties" is defined in Section 9.4(a).
"Independent Accountant" is defined in Section 2.4(c).
"Intellectual Property" means trademarks, service marks, trade names,
Internet domain names, logos, designs, slogans, and general intangibles of like
nature, together with all goodwill, registrations and applications related to
the foregoing; patents (including any registrations, continuations,
continuations-in-part, renewals and applications for any of the foregoing);
copyrights (including any registrations and applications for any of the
foregoing); software (whether in source code or object code form and all
documentation, including user manuals and training materials); databases;
technology, trade secrets and other confidential information, know-how,
proprietary processes, formulae, algorithms, models, and methodologies; in each
case, as used in or necessary for the conduct of the Business as conducted
during the one-year period prior to the Closing Date or as used in or necessary
for the conduct of the Business as presently conducted.
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"Inventory" means any inventory of the Company, including raw
materials, supplies, packaging supplies, work in process and finished goods,
excluding those items historically expensed or booked as prepaid expense.
"IP License Agreement" is defined in Section 3.16.
"IRS" means the US Internal Revenue Service.
"Law" means any statute, law, ordinance, regulation, order or rule of
any Governmental Authority in effect as of or prior to the Closing Date,
including those covering environmental, energy, safety, health, transportation,
bribery, record keeping, zoning, antidiscrimination, antitrust, wage and hour,
and price and wage control matters.
"Liability" means any liability, indebtedness, obligation, expense,
claim, loss, damage, guaranty of or by any Person, absolute or contingent,
accrued or unaccrued, due or to become due, liquidated or unliquidated.
"Litigation" means any lawsuit, action, arbitration, administrative,
quasi-administrative or other legal proceeding, criminal prosecution or, to the
Seller's knowledge, governmental investigation.
"Material Adverse Effect" means a material adverse effect on the
Company, Business, Assets or Liabilities or the results of operations or
financial condition of the Company, taken as a whole.
"Minor Contract" is defined in Section 3.14(a).
"Napolean Property Lease" means the lease agreement dated March 30,
1998 for the premises located at the Southwest Quarter of Section 17, T-5-N,
R-7-E, Harriston Township, Xxxxx County, Ohio.
"Net Fixed Assets" means, as of January 30, 2000 (or such other date
mutually acceptable to the Parties if the Closing Date is not January 31, 2000),
the sum of the Company's cost of fixed assets, as shown in the Company's
accounting records for property, plant, equipment and machinery, capitalized
interest, capitalized lease assets, net of accumulated depreciation and
amortization, plus projects in process net of accumulated depreciation.
"Net Working Capital" means, as of January 30, 2000 (or such other date
mutually acceptable to the Parties if the Closing Date is not January 31, 2000),
the sum of the Company's cash and cash equivalents, Accounts Receivable (net of
reserves), Inventory (net of LIFO reserve), and prepaid expenses, less trade
accounts payable, accrued liabilities, the current portion of worker's
compensation liabilities, the current portion of capitalized lease obligations
and general reserves.
"Non-Competition Period" is defined in Section 6.5.
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"Ordinary course" or "ordinary course of business" means the ordinary
course of business for the Company that is consistent with its past practices.
"Parties" means the Buyer, the Parent and the Seller, collectively, and
"Party" means any of the Buyer, the Parent or the Seller individually.
"Permitted Encumbrances" means (i) those exceptions to title to the
assets of the Company listed in the title reports attached to and made part of
the Disclosure Schedule other than those Encumbrances identified by Buyer on
EXHIBIT A and those Encumbrances that the Buyer cannot reasonably assess in the
absence of a current survey, and which, once plotted, would interfere with or
impair Buyer's use of any of the properties for its current use or otherwise
materially diminish the value of any such properties; (ii) any state of facts
that a current survey of the Real Property would disclose except matters which
would interfere with or impair Buyer's use of any of the properties for its
current use or otherwise materially diminish the value of any such properties;
(iii) Encumbrances listed on the Disclosure Schedule; (iv) statutory liens for
current Taxes, assessments or other governmental charges not yet due or payable
or the validity of which is being contested in good faith by appropriate
proceedings and is listed on the Disclosure Schedule; (v) mechanics', carriers',
workers', repairers' and other similar liens arising or incurred in the ordinary
course of business relating to Liabilities which are not yet due and payable;
and (vi) zoning, entitlement, conservation restrictions and other land use and
environmental regulations by governmental authorities except any such matters
which would interfere with or impair Buyer's use of any of the properties for
its intended purpose or otherwise materially diminish the value of any such
properties.
"Person" means any natural person, business trust, corporation,
partnership, limited liability company, joint stock company, proprietorship,
association, trust, joint venture, unincorporated association or any other legal
entity of whatever nature.
"Phase I Site Assessments" means the reports prepared by Environmental
Resources Management for Seller for the purpose of identifying the presence of
Environmental Conditions at or relating to the Real Property and performed in
accordance with the American Society for Testing and Materials Standard Practice
E1527-97 for Phase I Environmental Site Assessments.
"Phase II Work" means any sampling, monitoring, analysis or other
physical inspection of any environmental media on, at, beneath or near the Real
Property.
"Prime Rate" means the prime lending rate as announced from time to
time in The Wall Street Journal.
"Products" means those products produced by the Company set forth on
Exhibit A.
"Real Estate Leases" is defined in Section 3.7(a).
"Real Property" is defined in Section 3.7(a).
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"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, or disposing of a
Hazardous Material into the Environment.
"Required Consents" is defined in Section 3.3.
"Seller" is defined above in the preamble.
"Seller Plan" means (a) any pension plan, 401(k) plan, profit-sharing
plan, health or welfare plan, and any other employee benefit plan (within the
meaning of Section 3(3) of ERISA) that covers employees of the Company and is
maintained or sponsored by the Seller or to which the Seller contributes or for
which the Seller otherwise has any liability, either directly or as a result of
an ERISA Affiliate and (b) any other benefit arrangement, obligation, or
practice to provide benefits other than salary, as compensation for services
rendered, to one or more present or former employees, directors or independent
contractors, that covers employees of the Company and is maintained or sponsored
by the Seller or to which the Seller contributes or for which the Seller
otherwise has any liability, contingent or otherwise, either directly or as a
result of an ERISA Affiliate, including, without limitation, employment
agreements, severance policies or agreements, executive compensation
arrangements, incentive arrangements, sick leave, vacation pay, salary
continuation, consulting or other compensation arrangements, workers'
compensation, bonus plans, stock option, stock grant or stock purchase plans,
medical insurance, life insurance, tuition reimbursement programs or scholarship
programs, any plans subject to section 125 of the Code, and any plans providing
benefits or payments in the event of a change of ownership or control.
"Seller's Accountant" is defined in Section 2.4(a).
"Seller's knowledge" or "knowledge of the Seller" means the knowledge
of any of the following individuals: Xxxx XxXxxxxx, Xxx Xxxxxxx, Xxxxxxx
Xxxxxxxxx, Xxxx Xxxxx, Xxxxx XxXxxxxx (solely with respect to Section 3.11
hereof), Xxxxx Xxxxxx (solely with respect to Section 3.16 hereof), Xxxx Xxxx,
Xxxxxxx Xxxxx, Xxxxx Xxxxxx, Xxxx XxXxxxxx, Xxx Xxxxxxxxxxxx or Xxxxx Xxxxxx.
"Seller's Environmental Remedial Costs" means the total cost of
remediating any condition or circumstance existing as of or prior to the Closing
Date, including the presence of Hazardous Materials, whether created by the
Seller, the Company or a third party, at or relating to any Site (a) caused by
or relating to a violation of any Environmental Law or (b) that may give rise to
any civil or criminal Liability under any Environmental Law, as identified in
the Phase I Site Assessments and/or by the Buyer as a result of the Phase II
Work. Seller's Environmental Remedial Costs shall be quantified by a qualified
environmental consultant selected at the sole discretion of the Seller and shall
include a reasonably detailed description of the costs and work necessary to
remedy any such condition or circumstances in accordance with the standards set
forth in Section 9.3(c)(i) and (ii) of this Agreement.
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"Shares" mean all of the issued and outstanding shares of capital
stock, no par value, of the Company.
"Site" means any of the real properties (a) currently or previously
owned, leased or operated by the Company, any predecessors of the Company or any
entities previously owned by the Company (b) any of the real properties at which
the Business is currently or previously has been conducted or (c) any premises
at which any Hazardous Material has been deposited by the Company or at the
behest of or on behalf of the Company, including all soil, subsoil, surface
waters and groundwater thereat.
"Supply Agreement" means the supply agreement by and between the Seller
and Xxxxxxxx Soup Company dated as of March 30, 1998.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement filed or required to be filed with respect to
Taxes, including any schedule or attachment thereto, and including any amendment
thereof.
"Taxes" means any taxes, duties, charges, fees, levies or other
assessments imposed by any taxing authority including income, gross receipts,
value-added, excise, withholding, personal property, real estate, sale, use, ad
valorem, license, lease, service, severance, stamp, transfer, payroll,
employment, customs, duties, alternative, add-on minimum, estimated and
franchise taxes (including any interest, penalties or additions attributable to
or imposed on or with respect to any such assessment).
"Termination Date" means February 27, 2000.
"Transaction Documents" means this Agreement, the Escrow Agreement, if
any, and the Transitional Services Agreement.
"Transactions" means the purchase and sale of the Shares and the other
transactions contemplated by the Transaction Documents.
"Transfer Taxes" is defined in Section 6.6(l).
"Transitional Services Agreement" means the transitional services
agreement between the Seller and the Company attached as EXHIBIT "B."
"US" means the United States of America.
"Vlasic Farms Marks" is defined in Section 6.16.
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20 The Purchase and Sale of the Shares.
2.1 The Purchase and Sale of the Shares. At the Closing and
subject to the terms and conditions of this Agreement, the Seller shall sell the
Shares to the Buyer, and the Buyer shall buy the shares from the Seller, for an
aggregate purchase price of $50 million (the "Purchase Price"), less the amount
of any Deposit, which shall be payable in immediately available funds.
2.2 Closing. A closing for the Transaction (the "Closing") will be
held at the offices of Xxxxxx, Xxxxx & Xxxxxxx LLP, 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxxxx, XX 00000, at 9:00 a.m. (Philadelphia time) on January 31, 2000 (or
at such other place and on such other date as Seller and the Buyer may agree in
writing) provided all of the conditions set forth in Sections 7 and 8 have been
satisfied or waived.
2.3 Closing Deliveries. At the Closing,
(a) the Seller shall deliver to the Buyer certificates for the
Shares, duly endorsed in blank or accompanied by appropriate stock powers, free
and clear of any Encumbrances;
(b) the Buyer shall pay the Purchase Price, net of any Escrow
Funds, to the Seller via wire transfer, pursuant to instructions delivered to
Buyer at least two Business Days prior to the Closing for such purposes;
(c) the Buyer shall deposit any Escrow Funds with the Escrow
Agent to be held by the Escrow Agent in accordance with the terms and conditions
of the Escrow Agreement; and
(d) the Parties shall each deliver to each other fully
executed counterparts of those Transaction Documents to which they are a party
and such other certificates, legal opinions and cross receipts as are reasonably
requested or required under Sections 7 and 8.
2.4 Post-Closing Adjustment.
(a) As soon as practicable after the Closing Date, but in no
event later than 75 days after the Closing Date, the Seller shall deliver to the
Parent the Closing Statement and a calculation of the post-closing purchase
price adjustment in accordance with Section 2.4(b), prepared on the same basis
as the Balance Sheet, together with the audit reports of PricewaterhouseCoopers
LLP (the "Seller's Accountants") whose audit will be conducted in accordance
with GAAS. The Seller shall also give the Parent and its representatives,
including KPMG LLP, access to all work papers and all other supporting
accounting documents of the Company related to the preparation of the Closing
Statement. In addition, the Parent and its representatives, including KPMG LLP,
shall be entitled to ask questions, receive answers and request such other data
and information from the Company, the Seller and the Seller's Accountant as
shall be reasonable under the circumstances; provided, however, that
notwithstanding the foregoing, all questions and requests to Seller's Accountant
shall be made
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solely by KPMG LLP. The Seller shall also cause the Seller's Accountants to
provide to KPMG LLP access to work papers prepared pursuant to the audit of the
Closing Statement, provided, however, that such access shall be in accordance
with GAAS and the policies of Seller's Accountants.
(b) If the sum of the pro-forma net assets shown on the
Closing Statement and the Deferred Tax Benefit of the Company, as conclusively
determined pursuant to this Section 2 .4 (collectively, the "Closing Value") is
less than 44,500,000, the Seller shall pay to the Buyer, by wire transfer of
immediately available funds, the amount by which the Closing Value is less than
$44,500,000. If the Closing Value is greater than $47,500,000, the Buyer shall
pay to the Seller, by wire transfer of immediately available funds, the amount
by which the Closing Value is greater than $47,500,000. For purposes of this
Section 2.4 (i) "Deferred Tax Benefit" shall mean 37.9% of the total worker's
compensation liabilities (current and non-current) of the Company included on
the Closing Statement, and (ii) the LIFO reserve will be designated at
$1,047,000 as of the date of the Closing Statement.
(c) The Parent may dispute any item set forth on the Closing
Statement. Alternatively, the Parent may elect not to dispute the Closing
Statement, in which case the Parent shall provide the Seller with notice (the
"Concurrence Notice") that it agrees with the Closing Statement. If the Parent
disagrees with any item set forth on the Closing Statement, it shall give the
Seller notice (the "Dispute Notice") of any disagreement that it may have with
such calculations within 45 days after the Parent is provided with the Closing
Statement. The Dispute Notice shall specify in reasonable detail the nature of
the disagreement. During the 15 days after the date on which the Dispute Notice
is given, the Seller and the Parent shall attempt, in good faith, to resolve
such dispute. If they fail to reach a written agreement regarding the dispute
within such 15-day period (or such longer period to which they may agree in
writing), the Parent and the Seller shall present the disputed items to a "big
five" accounting firm that is mutually acceptable to the Parent and Seller (the
"Independent Accountant") for resolution. If the Independent Accountant is
engaged, then (i) the Seller and the Parent shall submit to the Independent
Accountant in writing not later than 15 days after the Independent Accountant is
engaged their respective positions with respect to the Closing Statement
together with such supporting documentation as they deem necessary or as the
Independent Accountant requests and (ii) the Seller and the Parent shall request
the Independent Accountant to render its decision regarding the Closing
Statement as promptly as practical, which decision shall be final and binding
on, and nonappealable by, the Seller and the Parent, absent manifest error that
can only be corrected by the Independent Accounting Firm. The costs and expenses
of the Independent Accountant shall be shared equally by the Seller and the
Parent.
2.5 Deposit. The Buyer shall pay, via a wire transfer of
immediately available funds, to the Seller a deposit against the Purchase Price
in the amount of $500,000 (the "Deposit") within five Business Days after the
latest to occur of the following events (i) the delivery to counsel to the
Parent of all of the complete Phase I Site Assessments and (ii) the delivery to
counsel to the Parent of complete and current ALTA/ACSM land title surveys for
each of the Real Properties in accordance with Section 7.17.
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2.6 Escrow.
(a) Based on the results of the Phase II Work, Buyer shall
notify Seller and Seller's counsel of any Environmental Remedial Costs (the
"Environmental Notice"). Upon receipt of the Environmental Notice, Seller shall
have up to seven calendar days (the "Seller Review Period") to provide Buyer
with the Seller's Environmental Remedial Costs or to notify Buyer that it does
not have any objections to the Environmental Remedial Costs. The failure of the
Seller to provide the Seller's Environmental Remedial Costs or notification by
Seller to Buyer of no objection to the Environmental Remedial Costs by the end
of the Seller Review Period shall be deemed an agreement by the Seller to the
Environmental Remedial Costs and an election by the Seller to have funds
deposited under the Escrow Agreement in accordance with the terms set forth in
Section 2.6(b) of this Agreement. If Seller provides the Buyer with the Seller
Environmental Remedial Costs in a timely manner, Buyer and Seller shall
diligently work to agree upon Final Environmental Remedial Costs. If Buyer and
Seller are unable to agree upon Final Environmental Remedial Costs within two
calendar days of the date Seller delivers a statement of the Seller's
Environmental Remedial Costs, the matter shall be submitted to Xxxxx X. Xxxxxxx,
P.E. of Roux Associates Inc. for review and a final determination of the Final
Environmental Remedial Costs. Such determination shall be final and binding upon
the Parties. Upon the final determination of the Final Environmental Remedial
Costs, funds shall either be deposited or released from escrow in accordance
with Section 2.6(b). The costs and expenses of such consultant shall be shared
equally by the Seller and Parent.
(b) If the Final Environmental Remedial Costs have been
determined prior to the Closing, the Buyer shall deposit at the Closing under
the Escrow Agreement, on Seller's behalf, (i) 50% of the first $2,000,000 of the
Final Environmental Remedial Costs and (ii) 100% of the Final Environmental
Remedial Costs in excess of $2,000,000. The funds deposited under the Escrow
Agreement pursuant to the formula in the preceding sentence are referred to as
the Final Escrow Amount. If prior to the Closing, the Environmental Notice has
been provided, the Seller Review Period has expired and the Final Environmental
Remedial Costs have not been conclusively determined pursuant to Section 2.6(a)
of this Agreement, the Buyer shall deposit at the Closing under the Escrow
Agreement an amount equal to the sum of (i) 50% of the first $2,000,000 of the
Seller's Environmental Remedial Costs, (ii) 100% of the Seller's Environmental
Remedial Costs in excess of $2,000,000 and (iii) 50% of the difference between
the Environmental Remedial Costs and the Seller's Environmental Remedial Costs.
If the Phase II Work has not been completed, the Environmental Notice has not
been provided or the Seller Review Period has not elapsed prior to the Closing
Date, then the amount of any Final Environmental Remedial Costs shall be
determined after the Closing in accordance with Section 2.6(a), and the Seller
shall deposit under the Escrow Agreement within three business days after such
conclusive determination an amount equal to the Final Escrow Amount. If an
amount was previously deposited under the Escrow Agreement prior to the
conclusive determination of the Final Environmental Remedial Costs pursuant to
Section 2.6(a), then within three business days after the Final Environmental
Remedial Costs are determined (i) the Seller shall deposit the amount by which
the Final Escrow Amount exceeds the amount previously deposited under the Escrow
Agreement, or (ii) the Seller shall be entitled to a refund to the extent that
the Final Escrow Amount is less than the amount previously deposited under the
Escrow Agreement.
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The Escrow Funds shall be withdrawn by the Buyer in accordance with the terms of
the Escrow Agreement solely for the purpose of addressing the Environmental
Conditions for which Seller has agreed herein to indemnify the Buyer Indemnified
Parties. Any interest earned on the amounts deposited under the Escrow Agreement
shall be paid to Seller as earned.
(c) The Escrow Agreement shall be terminated upon the earlier
of the following events: (i) the payment to Buyer of all Escrow Funds, or (ii)
the completion of all investigation, remediation, or corrective action for all
Environmental Conditions for which Seller has agreed to indemnify Buyer
Indemnified Parties under this Agreement and for which Escrow Funds are
deposited pursuant to this Section 2.6, in which latter case, all remaining
Escrow Funds shall be returned to Seller. Notwithstanding the preceding
sentence, with respect to any portion of the Final Escrow Amount relating to
Final Environmental Remedial Costs deposited under the Escrow Agreement which
have not met the requirements of the definition of Environmental Condition on or
before the fifth anniversary of the Closing Date, such amount shall be refunded
to Seller and the Escrow Agreement shall terminate if such refund reduces the
balance of the funds deposited under the Escrow Agreement (including interest on
such amount) to zero. The Parties acknowledge that the Escrow Funds, if any, are
meant to serve as a mechanism to fund the remediation of any Environmental
Conditions, but do not limit the rights of the Buyer Indemnified Parties under
Section 9.
30 Representations and Warranties of the Seller.
The Seller hereby represents and warrants to the Buyer as follows, as
of the date hereof and also at and as of the Closing Date as though then made
(except to the extent such representations and warranties speak as of an earlier
date or as expressly set forth on the disclosure schedule of Seller attached
hereto (the "Disclosure Schedule")):
3.1 Corporate.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Ohio and is
qualified to do business as a foreign corporation in the states of California,
Pennsylvania, Ohio, Illinois, Indiana, Georgia, Connecticut, Maine, Michigan,
Nevada and Texas, and in such other jurisdictions where it is required to be so
qualified, except where the failure to be qualified would not have a Material
Adverse Effect. The Company has delivered to the Buyer current and correct
copies of the Company's Charter Documents and bylaws, both of which are in full
force and effect. The Disclosure Schedule lists with respect to the Company its
jurisdiction of incorporation, officers and directors and states in which it is
qualified to do business as a foreign corporation.
(b) The Seller is a corporation duly organized, validly
existing and in good standing under the Laws of the State of New Jersey and is
qualified to do business as a foreign corporation in any jurisdiction where such
corporation is required to be so qualified, except for such failures that would
not have any Material Adverse Effect on the Company.
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3.2 Authorization.
(a) The Company has the requisite power and authority to lease
and operate its Assets and to carry on the Business. The Company has the
requisite power and authority to execute and deliver any of the respective
Transaction Documents to which it is or will at the Closing become a party and
to perform the Transactions to be performed by it. Such execution, delivery and
performance have respectively been duly authorized by all necessary corporate
action, including, when necessary, approval by the stockholders of the Company
under Ohio law. Each Transaction Document executed and delivered by the Company
has been duly executed and delivered by the Company and constitutes a valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, subject to bankruptcy, reorganization, fraudulent conveyance,
moratorium, insolvency and other Laws now or hereafter in effect relating to or
affecting creditors' rights and general equitable principles.
(b) The Seller has the requisite power and authority to
execute and deliver any of the respective Transaction Documents to which it is
or will at the Closing become a party and to perform the Transactions to be
performed by it. Such execution, delivery and performance have respectively been
duly authorized by all necessary action of the Seller under New Jersey law. Each
Transaction Document executed and delivered by the Seller has been duly executed
and delivered by the Seller and constitutes a valid and binding obligation of
the Seller, enforceable against the Seller in accordance with its terms, subject
to bankruptcy, reorganization, fraudulent conveyance, moratorium, insolvency and
other Laws now or hereafter in effect relating to or affecting creditors' rights
and general equitable principles.
3.3 Validity of Contemplated Transactions. Except for any filings,
consents or approvals specified on the Disclosure Schedule (the "Required
Consents") or except for any consents which solely relate to Seller's provision
of services under the Transition Services Agreement, and for compliance with the
HSR Act, neither the execution and delivery by the Company or the Seller of the
Transaction Documents to which it is or will be a party, nor the performance of
the Transactions performed or to be performed by the Company or the Seller will
require any filing, consent, or approval or constitute a Default under (a) any
Law or Court Order to which the Company is subject, (b) the Charter Documents or
by-laws of the Company or (c) any Contract, Governmental Permit or other
document to which the Company is a party or by which the Assets of the Company
may be subject.
3.4 Capitalization and Stock Ownership. The total authorized
capital stock of the Company is 100 shares of common stock, no par value. The
Shares are the only issued and outstanding Shares of capital stock of the
Company, all of which are owned beneficially and of record by the Seller, free
and clear of all Encumbrances except as set forth on the Disclosure Schedule.
There are no existing options, warrants, calls, commitments or other rights of
any character (including conversion or preemptive rights) relating to the
acquisition of any issued or unissued capital stock or other securities of the
Company. The Company complied with all applicable Laws in connection with the
issuance of the Shares, and none of the Shares were issued in violation of any
Contract binding upon the Company. The outstanding Shares are all duly and
validly authorized and issued, fully paid and non-assessable. Upon consummation
of
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the Transactions, the Buyer will have received valid title to the Shares,
free and clear of all Encumbrances.
3.5 Financial Statements: The Disclosure Schedule contains correct and
complete copies of unaudited financial statements for the Company consisting of
an actual and pro-forma balance sheet of the Company as of August 1, 1999 and
the related management statements of earnings before interest and income taxes
for the period then ended (the "Annual Financial Statements"). The Disclosure
Schedule contains correct and complete copies of the Company's unaudited balance
sheet as of October 31, 1999 on an actual and pro-forma basis and the related
management statements of earnings before interest and income taxes for the
three-month period then ended (the "Interim Financial Statements," and together
with the Annual Statements, the "Financial Statements"). The Financial
Statements are consistent in all material respects with the books and records of
the Company, and there have not been any material transactions, as defined by
GAAP, that have not been recorded in the accounting records underlying such
Financial Statements. The Financial Statements have been compiled from the
consolidating financial statements of Seller, which were prepared in accordance
with GAAP, and present fairly the financial position and the Assets and
Liabilities of the Company as of the dates thereof, and the results of its
operations for the periods then ended. The pro-forma balance sheet of the
Company as of October 31, 1999 that is included in the Financial Statements is
referred to herein as the "Balance Sheet," and the date thereof is referred to
as the "Balance Sheet Date." The Balance Sheet is consistent in all material
respects with the books and records of the Company, and there have not been any
material transactions, as defined by GAAP, that have not been recorded in the
accounting records underlying the Balance Sheet.
3.6 Title to Assets and Related Matters.
(a) The Company has good and marketable title to, valid
leasehold interests in or valid licenses to use, all of the Assets (other than
Real Property), free from any Encumbrances except for (a) those specified in the
Disclosure Schedule (b) Encumbrances to secure indebtedness reflected on the
Financial Statements or (c) Permitted Encumbrances. The use of the Assets does
not encroach on the property or rights of anyone else. Except as set forth on
the Disclosure Schedule, all tangible personal property (other than Inventory)
included in the Assets and currently used in the Business are suitable for the
purposes for which they are used, in good working condition, reasonable wear and
tear excepted.
(b) The liens set forth on the Disclosure Schedule which
indicate SMF, Inc. as the debtor are not obligations of the Company and do not
encumber any of the Assets.
3.7 Real Property.
(a) To Seller's knowledge, except as set forth in the
Disclosure Schedule, no portion of the Real Property lies within a flood hazard
area, flood plain or wetland.
(b) The Disclosure Schedule accurately describes all real
estate (whether owned or leased) used by the Company and the improvements
(including buildings and other
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structures) located thereon (collectively, the "Real Property"), and lists any
leases under which any such Real Property is possessed (the "Real Estate
Leases"). There are no Contracts permitting the use by any third parties of any
Real Property that are not terminable within 30 days and other than as set forth
on the Disclosure Schedule, there are no parties in possession of, or making any
use of any portion of the Real Property, other than Seller or the Company. All
of the Real Property currently being used in the operation of the Business is
usable in the ordinary course of business and is in good operating condition and
repair reasonable wear and tear excepted. Except as set forth on the Disclosure
Schedule, each Real Estate Lease is in full force and effect and has not been
assigned, modified, supplemented or amended and neither the tenant nor, to the
Seller's knowledge, the landlord under any such lease is in Default under any
such lease, and no circumstances or state of facts presently exists that, with
the giving of notice or passage of time, or both, would permit the tenant or, to
Seller's knowledge, the landlord to terminate any such lease, except that the
Napoleon Property Lease cannot be assigned to Buyer without the consent of the
landlord thereunder.
(c) Except as set forth on the Disclosure Schedule, there is
no condemnation or eminent domain proceeding pending with regard to any part of
the Real Property, and to the best of the Seller's knowledge, no such
proceedings are proposed.
(d) To the Seller's knowledge, there are no public
improvements, in the nature of off-site improvements, or otherwise, which have
been ordered to be made by Governmental Authorities or which have not heretofore
been assessed.
(e) The current use of the Real Property is free from any
restrictions which restrict or prevent the continued use of the Real Property in
such manner.
(f) Except as set forth on the Disclosure Schedule, adequate
utilities, including, useable public sanitary and storm sewers, public water
facilities, electric facilities and, if any, gas facilities (collectively, the
"Utilities"), are installed in, and are duly connected to, each parcel
comprising the Real Property, and can be used without charge except the normal
and usual metered utility charges and water and sewer charges. To the Seller's
knowledge, all Utilities required for the operation of the Real Property either
enter each parcel comprising the Real Property through adjoining public streets
or, if they pass through adjoining public land, do so in accordance with valid
public easements or private easements which will inure to the benefit of Buyer
at no cost to the owner of the Real Property. All of said Utilities are
installed and operating. All installation, connection and "tap-in" charges
heretofore due and payable have been paid for in full.
(g) The Company holds good and marketable, fee simple title to
the Real Property set forth on the Disclosure Schedule which is owned by it,
free and clear of all Encumbrances, other than the Permitted Encumbrances, which
title shall be insurable as such at customary rates by any reputable title
insurance company selected by Buyer. The Company holds good and marketable,
leasehold title to that portion of the Real Property which it leases, free and
clear of all Encumbrances, other than the Permitted Encumbrances, which
leasehold title shall be insurable as such at customary rates by any reputable
title insurance company selected by
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Buyer, provided Buyer shall accept an exception to coverage due to the absence
of memorandum, short form or notice of lease having been recorded.
(h) Except as set forth on the Disclosure Schedule, no work
has been performed by or for the account of the Company or the Seller or is in
progress at, and no materials have been furnished to the Real Property which
would, or may with the passage of time, give rise to construction, mechanic's,
materialmen's, or other liens against the Real Property or any portion thereof,
except that for which full and complete releases have been obtained.
(i) Any and all applicable charges, fees and assessments and
any and all other sums due under declarations, cross-easements and like
agreements to which the Real Property or any portion thereof may be subject,
have been paid, and no special assessments thereunder are pending, and all
consents and approvals required to be obtained under any such declarations,
cross-easements and like agreements have been obtained pursuant to the
requirements of such documentation.
(j) There are no outstanding agreements, options, rights of
first refusal, conditional sales agreements or other agreements or arrangements,
whether oral or written, regarding the purchase and sale of the Real Property or
any portion thereof.
(k) To Seller's knowledge, all curb cut and street opening
permits or licenses required for vehicular access to and from the Real Property
to any adjoining public street have been obtained and paid for by the Company
and shall be in full force and effect at the Closing.
(l) The Company is not a party to any development, tri-party
or any other agreements with county, municipal or other Governmental Authorities
respecting the ownership, development and operation of the Real Property and all
portions thereof.
(m) The Company holds good and marketable, fee simple title to
Evansville Farm A and B, Maiden Creek Road, Blandon, Berks County, Pennsylvania.
3.8 Accounts Receivable. Except as set forth on the Disclosure
Schedule, the Accounts Receivable are bona fide Accounts Receivable created in
the ordinary course of business and are good and collectible at the aggregate
recorded amounts thereof, net of the reserves for such items included on the
Balance Sheet.
3.9 Inventory. All Inventory of the Company is valued on the Company's
books and records at the lower of cost (with cost being computed by the LIFO
method) or market. Subject to reserves reflected on the Balance Sheet, all such
inventory consisting of raw materials or packaging is usable in the ordinary
course of business, and all such inventory consisting of finished goods is, of
merchantable quality, meeting all contractual, United States Department of
Agriculture, Food and Drug Administration and Nutrition Labeling and Education
Act of 1990 requirements.
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3.10 Absence of Undisclosed Liabilities. The Company does not have
any Liabilities other than (a) Liabilities described on the Disclosure Schedule,
(b) Liabilities reflected or reserved for on the Balance Sheet, except as
heretofore paid or discharged, (c) Liabilities incurred in the ordinary course
since the Balance Sheet Date and (d) Liabilities under any Contracts that are
specifically disclosed in the Disclosure Schedule (or not required to be
disclosed because of the term or amount involved).
3.11 Taxes. Except as set forth on the Disclosure Schedule:
(a) The Company has filed (or had filed on its behalf) all
income and franchise Tax Returns and all other material Tax Returns that it was
ever required to file. All such Tax Returns were correct and complete in all
material respects. All Taxes shown to be due on such Tax Returns have been paid.
The Company currently is not the beneficiary of any extension of time within
which to file any Tax Return. To the Seller's knowledge, no written claim has
ever been made by a taxing authority in a jurisdiction where the Company does
not file Tax Returns that the Company is or may be subject to taxation by that
jurisdiction. There are no liens for Taxes on any of the assets of the Company
(except for liens for Taxes not yet due and payable).
(b) The Company has properly withheld and timely paid over to
the proper taxing authority all material Taxes required to have been withheld
and paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party and has complied with
all material information reporting and backup withholding requirements,
including maintenance of required records with respect thereto in connection
with any amounts paid to any employee, independent contractor, creditor, or
third party.
(c) The Company has not received any written notice from or
been informed by any representative of any taxing authority of any pending,
proposed or threatened action, suit, investigation, audit, claim, assessment, or
other administrative proceedings or court proceedings with respect to Taxes or
Tax Returns of the Company relating to taxable periods for which the applicable
statute of limitations has not expired. Schedule 3.11(c) lists all federal,
state, local, and foreign income Tax Returns filed with respect to the Company
for taxable periods ended on or after July 31, 1992, indicates those Tax Returns
that have been audited, and indicates those Tax Returns that currently are the
subject of audit. The Seller has delivered to the Buyer complete copies of all
U.S. federal income Tax Returns (on a separate return basis), examination
reports, and statements of deficiencies assessed against or agreed to by the
Company since July 31, 1996.
(d) The Company has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to any Tax
assessment or deficiency.
(e) The Company has not filed a consent under Code Section
341(f) concerning collapsible corporations. The Company is not obligated to make
any payments, and is not a party to any agreement that under certain
circumstances could obligate it to make any payments that will not be deductible
under Code Section 280G. Other than the CSC-TIA, the
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Company is not a party to any Tax allocation, Tax sharing, Tax indemnification
or similar agreement. The Company has not been notified in writing by any taxing
authority that it is required to make any adjustments to income under Section
481 of the Code for any period ending after the Closing Date. The Company has
not been a member of an Affiliated Group filing a consolidated federal income
Tax Return (other than any group of which Xxxxxxxx Soup Company or the Seller is
the common parent).
(f) The Company is not a party to any joint venture,
partnership, or other arrangement treated as a partnership for US federal income
tax purposes.
3.12 Subsidiaries. The Company does not own, directly or
indirectly, any equity interest in any corporation, partnership, limited
liability company, trust, joint venture or other legal entity.
3.13 Legal Proceedings and Compliance with Law.
(a) Except as set forth on the Disclosure Schedule or as
expressly set forth in this Agreement, (i) there is no Litigation that is
pending or, to the Seller's knowledge, threatened against or related to the
Company, (ii) there has been no Default under any Laws applicable to the
Company, including Environmental Laws, and the Company has not received any
written notices from any Governmental Authority alleging any Defaults under any
Laws and (iii) there is no Default with respect to any Court Order material to
the operation of the Business. The Disclosure Schedule sets forth all Court
Orders applicable to the Business.
(b) Except as set forth on the Disclosure Schedule or as
expressly set forth in this Agreement, the Company has obtained, or has filed
timely and sufficient applications to obtain, and is in compliance with, all
Governmental Permits, including Environmental Permits, all of which are listed
in the Disclosure Schedule that are required for the operation of the Business
as currently operated. Except as set forth on the Disclosure Schedule, all of
the Governmental Permits are currently valid and in full force and, to the
Seller's knowledge, no revocation, cancellation or withdrawal thereof has been
threatened.
3.14 Contracts.
(a) Except as otherwise expressly set forth elsewhere in this
Agreement, including, Section 3.15 (insurance contracts) and Section 3.16
(Intellectual Property contracts), the Disclosure Schedule lists all Contracts
of the following types to which the Company is a party or by which it is bound,
except for any Contract that may be terminated by the Company on not more than
30 days' notice without any Liability or any Contract under which the executory
obligation of the Company involves an amount of less than $50,000 (such excepted
Contracts are referred to collectively as "Minor Contracts"):
(i) Contracts with any present or former shareholder,
director, officer, employee, partner or consultant of the Company or Affiliate
thereof;
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(ii) Contracts for the future purchase of, or payment
for, supplies or products, or for the lease of any Asset from or the performance
of services by a third party, that involve an amount in excess of $50,000 in any
individual case, or any Contracts for the sale of products that involve an
amount in excess of $150,000 with respect to any one supplier or other party;
(iii) Contracts to sell or supply products or to
perform services that involve an amount in excess of $50,000 in any individual
case;
(iv) Contracts to lease to or to operate for any
other party any Asset that involve an amount in excess of $50,000 in any
individual case;
(v) Any distributorship or sales agency agreement or
other similar agreements;
(vi) Any notes, debentures, bonds, conditional sale
agreements, equipment trust agreements, letter of credit agreements,
reimbursement agreements, loan agreements or other Contracts for the borrowing
or lending of money, agreements or arrangements for a line of credit or for a
guarantee of, or other undertaking in connection with, the indebtedness of any
Person or other legal entity;
(vii) Contracts for any capital expenditure or
leasehold improvement in excess of $50,000;
(viii) Any Contracts under which any Encumbrances
(except for Permitted Encumbrances) exists with respect to any Assets;
(ix) Any Contracts relating to the use of any portion
of the Real Property by any third party; or
(x) Any other Contracts (other than Minor Contracts
and those described in any of (i) through (ix) above) not made in the ordinary
course of business.
(b) The Company has delivered to the Buyer correct copies of
all written Contracts (other than those that are Minor Contracts), together with
all amendments thereto, and accurate descriptions of all material terms of all
oral Contracts (other than those that are Minor Contracts), set forth or
required to be set forth on the Disclosure Schedule, each of which Contracts is
in full force and effect.
(c) The Company is not in Default under any Contract, which
Default could result in a Liability on the part of the Company in excess of
$50,000 in any individual case, and the aggregate Liabilities that could result
from all such Defaults do not exceed $100,000. Neither the Seller nor the
Company has received any communication from, or given any communication to, any
other party indicating that the Company or such other party, as the case may be,
is in Default under any Contract.
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(d) As of the Closing, the Company will have no continuing
obligations under, or any Liabilities relating to, the Benefits Sharing
Agreement dated March 30, 1998, the Separation and Distribution Agreement dated
March 26, 1998, or the Technology Sharing Agreement dated March 26, 1998, each
among Seller, certain Affiliates of Seller and Xxxxxxxx Soup Company.
3.15 Insurance.
The Disclosure Schedule lists all policies or binders of
insurance where the insured value of any such policy is greater than $25,000
held by or on behalf of the Company, specifying with respect to each policy the
insurer, the amount of the coverage, the type of insurance, the risks insured,
the expiration date, the policy number and any pending claims thereunder. All
such policies are in full force and effect, there has been no failure to give
any notice or present any material claim under any such policy or binder in a
timely fashion or in the manner or detail required by the policy or binder and
no coverage has been questioned, denied or disputed by the underwriters of such
policies or binders. The Company has not received any written notice of
nonrenewal or cancellation with respect to, or disallowance of any material
claim under, any such policy or binder.
3.16 Intellectual Property.
(a) The Disclosure Schedule sets forth, for the Intellectual
Property owned or used by Company, a complete and accurate list of all U.S. and
foreign (i) patents and patent applications; (ii) trademark registrations
(including Internet domain registrations), trademark applications, and
unregistered trademarks; (iii) copyright registrations, copyright applications,
and unregistered copyrights. The Company is the owner of each application and
registration listed on the Disclosure Schedule. All applications and
registrations listed on the Disclosure Schedule are: (i) currently recorded in
the appropriate intellectual property registry in the name of Vlasic Farms,
Inc.; (ii) have been assigned to Vlasic Farms, Inc. and filed for recordation in
the appropriate intellectual property registry; or (iii) will be assigned to
Vlasic Farms, Inc. and filed for recordation in the appropriate intellectual
property registry prior to Closing. All pending applications will remain valid
and will be maintained in full force until assigned to the Company. Prior to the
Closing, the Company shall provide full and complete records of all
registrations and applications and written evidence of the assignments to the
Company.
(b) The Disclosure Schedule sets forth all agreements material
to the operations of the Business which grant or by which the Company has
obtained any right to use or practice any rights under any Intellectual Property
(excluding "click-wrap," or "shrink-wrap" agreements or agreements contained in
"off-the-shelf" software or the terms of use or service for any website) to
which the Company is a party as licensee or licensor thereunder (collectively,
the "IP License Agreements").
(c) Except as set forth on the Disclosure Schedule, the
Company does not use any patents, spawn technology or trademarks of Xxxxxxxx
Soup Company, nor does the
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Company share with Xxxxxxxx Soup Company in the use of any patents, spawn
technology or trademarks.
(d) The mother-culture for the Company's spawn production is
owned by the Company and is located on the Napoleon Property in Ohio. The
Company owns three allowed United States patents concerning the biotechnical
process for speed spawn used in connection with the Business, and has three
pending Patent Cooperation Treaty applications covering the same subject matter.
(e) Except as set forth on the Disclosure Schedule:
(i) All patents, trademarks and copyrights used in or
necessary to the conduct of the Business owned by the Company, and to the
Seller's knowledge, any patents, trademarks and copyrights used but not owned by
the Company, have been duly maintained (including payment of filing, examination
and maintenance fees), are valid and subsisting, in full force and effect and
have not been canceled, expired or abandoned;
(ii) To the Seller's knowledge, the conduct of the
Business during the 12 months preceding the Closing Date does not infringe upon
any intellectual property rights owned or controlled by any third party;
(iii) Except as set forth on the Disclosure Schedule,
there are no claims or suits pending or threatened: (a) alleging that the
Company's activities or the conduct of the Business infringes upon, violates or
constitutes the unauthorized use of the intellectual property rights of any
third party or (b) challenging the ownership, use, validity or enforceability of
any Intellectual Property or (c) challenging or questioning the validity or
effectiveness of any IP License Agreement;
(iv) To the best of Seller's knowledge, no third
party is misappropriating, infringing, diluting or violating any Intellectual
Property owned by Company and, except as set forth on the Disclosure Schedule,
no such claims have been brought against any third party by Company since March
30, 1998.
3.17 Year 2000 Compliance Matters.
As of the Closing Date, all material Date Data and
Date-Sensitive Systems used by the Company in connection with its business as
currently conducted, are Year 2000 Compliant, or are reasonably expected to be
Year 2000 Compliant by December 31, 1999. "DATE DATA" means any data of any type
that includes date information or which is otherwise derived from, dependent on
or related to date information. "DATE-SENSITIVE SYSTEM" means any software,
microcode or hardware system or component, including any electronic or
electronically controlled system or component, that processes any Date Data.
"YEAR 2000 COMPLIANT" means (i) with respect to Date Data, that such data is in
proper format and accurate for all dates, including those before, on and after
December 31, 1999, and (ii) with respect to Date-Sensitive Systems, that each
such system accurately processes all Date Data, including for dates before, on
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and after December 31, 1999, without loss of any functionality or performance,
including but not limited to calculating, comparing, sequencing, storing and
displaying such Date Data (including all leap year considerations), when used as
a stand-alone system or in combination with other software or hardware that is
Year 2000 Compliant and properly interfaces with that Date-Sensitive System.
3.18 Employee Relations. Except as set forth on the Disclosure
Schedule, the Company (a) is not a party to, involved in or, to the Seller's
knowledge, threatened by any labor dispute or unfair labor practice charge, (b)
is not currently negotiating or made any binding commitments to negotiate any
collective bargaining agreement or (c) is not a party to or bound by any
collective bargaining agreement with any labor union or employee association.
Except as set forth on the Disclosure Schedule, the Company has not experienced
during the last three years any strike, lockout or other material work stoppage.
Except as set forth on the Disclosure Schedule, no trade union, council of trade
unions, employee bargaining agency or affiliated bargaining agent (a) holds
bargaining rights with respect to the Company's employees by way of
certification, interim certification, voluntary recognition, designation or
successor rights or (b) has applied to be certified as the bargaining agent of
the Company's employees.
3.19 ERISA. For purposes of the following provisions of this Section
3.19, the term "Seller" includes any ERISA Affiliate.
(a) The Disclosure Schedule contains a complete and accurate
list of all material Seller Plans. True, correct, and complete copies of all the
following documents with respect to each material Seller Plan, to the extent
applicable, have been delivered to the Buyer: (i) all documents constituting the
Seller Plans, including amendments thereto; (ii) the most recently filed Forms
5500 or 5500C/R and any financial statements attached thereto; (iii) the IRS
favorable determination letters for any Seller Plan from which any Company
qualified plan may accept rollover contributions pursuant to Section 6.19; (iv)
the most recent summary plan description and any amendments or modifications
thereof, if available; and (v) all notices that were issued within the preceding
three years by the IRS, Department of Labor, or any other governmental entity
with respect to the Seller Plan.
(b) The plans marked on the Disclosure Schedule as "Qualified
Plans" are the only Seller Plans that are intended to meet the requirements of
section 401(a) of the Code (a "Qualified Plan"). Each of the Qualified Plans has
been determined by the Internal Revenue Service to be qualified under section
401(a) of the Code and exempt from tax under section 501(a) of the Code, and
none of such determinations has been revoked. To the knowledge of the Seller,
nothing has occurred with respect to the design or operation of any Qualified
Plan that would cause the loss of such qualification or exemption or the
imposition of any material liability, lien, penalty, or tax under ERISA or the
Code, and the Qualified Plans have been timely amended to comply with current
law.
(c) None of the Seller Plans is a multiemployer plan (as
defined in Section 3(37) of ERISA). Seller (i) does not contribute to, and has
not, within the six years preceding the
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date hereof, contributed to a multiemployer plan and (ii) does not have any
current other liability with respect to, a multiemployer plan.
(d) The Seller has no material liability with respect to any
benefit plan or arrangement other than the Seller Plans. All Seller Plans are in
material compliance with their terms and to the requirements of ERISA, the Code
and all applicable Laws.
(e) With respect to each Seller Plan, there has occurred no
non-exempt "prohibited transaction" (within the meaning of Section 4975 of the
Code or Section 406 of ERISA) or breach of any fiduciary duty described in
Section 404 of ERISA that would, if successful, result in any material liability
for the Seller.
(f) The Seller has paid all amounts that the Seller is
required to pay as contributions to the Seller Plans as of the last day of the
most recent fiscal year of each of the Seller Plans.
(g) The Seller has not incurred any material liability for any
excise, income or other taxes or penalties with respect to any Seller Plan.
Except as set forth on the Disclosure Schedule, there are no pending or to the
knowledge of the Seller, any threatened claims by or on behalf of any
participant, beneficiary or other Person, alleging any breach of fiduciary duty
on the part of the Seller or any of its officers, directors or employees under
ERISA or any applicable Law, or claiming benefit payments other than those made
in the ordinary operation of such plans. No Seller Plan is presently under audit
or examination (nor has notice been received of a potential audit or
examination) by the IRS, the Department of Labor, or any other governmental
entity, and no matters are pending with respect to any Seller Plan under any IRS
program.
(h) Except as set forth on the Disclosure Schedule, no Seller
Plan contains any provision or is subject to any Law that would prohibit the
transactions contemplated by this Agreement. The transactions contemplated by
this Agreement will not (i) give rise to any vesting of benefits (other than
under Seller's Qualified Plans), severance, termination or other payments or
liabilities, or (ii) constitute a "change of control" as that term is defined in
any Seller Plan. No payments or benefits under any Seller Plan or other
agreement of the Seller will be considered "excess parachute payments" under
Section 280G of the Code. Except as set forth on the Disclosure Schedule, the
Seller has not declared or paid any bonus compensation in contemplation of the
transactions contemplated by this Agreement.
(i) All Seller Plans may be amended or terminated without
penalty to Buyer or the Company at any time on or after the Closing.
(j With respect to any Seller Plan that is an employee welfare
benefit plan (within the meaning of Section 3(1) of ERISA): (i) any Seller Plan
that is a group health plan (within the meaning of Section 4980B(g)(2) of the
Code) complies with all applicable requirements of Section 4980B of the Code,
ERISA, Title XXII of the Public Health Service Act, the applicable provisions of
the Social Security Act, the Health Insurance Portability and Accountability Act
of 1996, and other applicable Laws and (ii) except as set forth on the
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Disclosure Schedule, no welfare plan provides health benefits after an
employee's or former employee's retirement or other termination of employment
except as required by Section 4980B of the Code.
(k) There have been no accumulated funding deficiencies (as
defined in Section 412 of the Code or Section 302 of ERISA) with respect to any
Seller Plan and no request for a waiver from the Internal Revenue Service has
been made with respect to any minimum funding requirement under Section 412 of
the Code.
(l) The Seller has not incurred any liability to the Pension
Benefit Guaranty Corporation ("PBGC") under Section 4001 et seq. of ERISA, other
than any liability for premium payments, that would reasonably be expected to
result in the Seller incurring liability under Title IV of ERISA, either
directly or with respect to any ERISA Affiliate. All premiums payable to the
PBGC have been paid when due.
(m) The term "Pension Plan" means all Seller Plans that are
defined benefit pension plans or that are otherwise subject to Section 412 of
the Code or Title IV of ERISA. There has not been in the twelve months preceding
the date hereof, with regard to any Pension Plan, any reportable event, as
defined in Section 4043 of ERISA, that is required to be reported to the PBGC by
law or regulation.
3.20 Corporate Records. Except as set forth on the Disclosure Schedule,
the minute books of the Company contain complete, correct and current copies of
its Charter Documents and by-laws and of all minutes of meetings, resolutions
and other proceedings of its Board of Directors and shareholders. The stock
record books of the Company are complete, correct and current.
3.21 Absence of Certain Changes. Except as contemplated by this
Agreement or as set forth on the Disclosure Schedule, since the Balance Sheet
Date, the Business has been conducted in the ordinary course and there has not
been:
(a) any event, development or change that has had a Material
Adverse Effect;
(b) any distribution or payment declared or made in respect of
capital stock by way of dividends, purchase or redemption of shares or
otherwise;
(c) any increase in the compensation payable or to become payable
to any director, officer, employee or agent of the Company, except for increases
made in the ordinary course of business, nor any other change in any employment
or consulting arrangement with any Company employee, consultant or contractor;
(d) any sale, assignment or transfer of Assets, or any additions
to or transactions involving any Assets, other than those made in the ordinary
course of business;
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(e) other than in the ordinary course of business, any waiver or
release of any claim or right or cancellation of any debt held;
(f) any payments to any stockholder of the Company or to any
Affiliate of any such stockholder or of the Company, other than in the ordinary
course of business, including intercompany payments or transfers and wages and
reimbursements in accordance with past practices as specified in the Disclosure
Schedule;
(g) any change or amendment to its Charter Documents;
(h) any sale, issuance or acquisition of equity securities or
other securities or any grant of options, warrants, calls or commitments of any
kind with respect thereto; or
(i) any borrowings or incurrence of debt, or assumption of any
additional Liabilities or Encumbrances (other than Permitted Encumbrances)
except in the ordinary course of business.
3.22 Previous Sales; Warranties. Except as set forth on the Disclosure
Schedule, the Company has not granted any warranties, either express or implied,
with respect to any Product or services rendered, and to the extent the Company
has, the Company has not breached any express or implied warranties in
connection with the sale or distribution of goods or the performance of
services, except for breaches that, individually and in the aggregate, are not
material and are consistent with past practice of the Business.
3.23 Customers and Suppliers. The Company has used reasonable business
efforts to maintain, and currently maintains, good working relationships with
all of its material customers and suppliers. The Disclosure Schedule contains a
list of the names of each of the twelve customers that, in the aggregate, for
the year ending August 1, 1999 and the three months ended October 31, 1999, were
the largest dollar volume customers of products or services, or both, sold by
the Company. Except as specified on the Disclosure Schedule, since August 1,
1998 none of such customers has given the Company written notice terminating or
canceling any Contract or relationship with the Company, and to the knowledge of
the Company, none of such customers intends or has threatened to terminate or
cancel any such Contract or relationship. The Disclosure Schedule also contains
a list of the ten suppliers of the Company that, in the aggregate, for the year
ending August 1, 1999 and the three months ended October 31, 1999, were the
largest dollar volume suppliers of supplies used by the Company. Except as
specified on the Disclosure Schedule, since August 1, 1998 none of such
suppliers has given the Company written notice terminating or canceling any
Contract or relationship with the Company, and to the knowledge of the Company,
none of such suppliers intends or has threatened to terminate or cancel any such
Contract or relationship.
3.24 Finder's Fees. Excluding any fees payable by the Seller to Xxxxxx
Brothers, Inc., no Person retained by the Seller or the Company is or will be
entitled to any commission or finder's or similar fee in connection with the
Transactions.
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3.25 Additional Information. The Disclosure Schedule accurately
lists the following:
(a) the names of all officers and directors of the Company;
(b) the names and addresses of every bank or other financial
institution in which the Company maintains an account (whether checking, saving
or otherwise), lock box or safe deposit box, and the account numbers and names
of Persons having signing authority or other Company authorized access thereto;
(c) the names of all Persons authorized to borrow money or
incur or guarantee indebtedness on behalf of, or otherwise obligate, the Company
in excess of $50,000; and
(d) all names under which the Company has conducted any part
of the Business or that it has otherwise used at any time since March 1998.
3.26 Environmental Matters.
Except as listed in the Disclosure Schedule:
(a) The Company has obtained and holds all necessary
Environmental Permits.
(b) The Company is in compliance with all terms, conditions
and provisions of all applicable Environmental Permits.
(c) There are no pending or, to the Seller's knowledge,
threatened Environmental Claims against the Company, and the Company is not
aware of any facts or circumstances which could reasonably be expected to form
the basis for any Environmental Claim against the Company.
(d) No Releases of Hazardous Materials have occurred at, from,
in, to, on, or under any Site and no Hazardous Materials are present in, on,
about or migrating to or from any Site that could give rise to an Environmental
Claim against the Company.
(e) Neither the Company, any predecessor of the Company, nor
any entity previously owned by the Company, has transported or arranged for the
treatment, storage, handling, disposal, or transportation of any Hazardous
Material to any off-Site location which could result in an Environmental Claim
against the Company.
(f) To the Seller's knowledge, no Site is a current or
proposed Environmental Clean-up Site.
(g) There are no Liens arising under or pursuant to any
Environmental Law on any Site.
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(h) There are no (i) underground storage tanks, active or
abandoned, (ii) polychlorinated biphenyl containing equipment or (iii) asbestos
containing material at any Site.
(i) To the Seller's knowledge, since September 30, 1997 there
have been no material environmental investigations, studies, audits, tests,
reviews or other analyses conducted by, on behalf of, or which are in the
possession of the Seller or the Company with respect to any Site which have not
been delivered or made available to Purchaser prior to execution of this
Agreement.
4. Representations and Warranties of the Buyer.
The Buyer and the Parent jointly and severally represent and warrant to
the Seller as follows, as of the date hereof and also at and as of the Closing
Date as though then made (except to the extent such representations and
warranties speak as of an earlier date):
4.1 Corporate. Each of the Buyer and the Parent is a corporation
duly organized, validly existing and in good standing under the laws under which
it was incorporated. Each of the Buyer and the Parent has all requisite
corporate power and authority to conduct its business as it is now being
conducted and to own, lease and operate its property and assets except where the
failure to be so organized, existing and in good standing or to have such power
or authority would not have a material adverse effect on the business, assets,
liabilities, results of operations or financial condition of Parent or Buyer, as
applicable.
4.2 Authorization. Each of the Buyer and the Parent has the
requisite power and authority to execute and deliver the Transaction Documents
to which it is or will at the Closing become a party and to perform the
Transactions to be performed by it. Such execution, delivery and performance by
Buyer and the Parent have been duly authorized by all necessary corporate
action. The respective Transaction Documents to which the Buyer is a party
constitute valid and binding obligations of Buyer, enforceable against the Buyer
in accordance with their terms, subject to bankruptcy, reorganization,
fraudulent conveyance, moratorium, insolvency and other Laws now or hereafter in
effect relating to or affecting creditors' rights and general equitable
principles. The respective Transaction Documents to which the Parent is a party
constitute valid and binding obligations of Parent, enforceable against the
Parent in accordance with their terms, subject to bankruptcy, reorganization,
fraudulent conveyance, moratorium, insolvency and other Laws now or hereafter in
effect relating to or affecting creditors' rights and general equitable
principles.
4.3 Validity of Contemplated Transactions. Except for compliance
with the HSR Act, and any consents specified on Schedule 4.3, neither the
execution and delivery by either the Buyer or the Parent of the Transaction
Documents to which it is or will be a party, nor the performance of the
Transactions to be performed by it, will require any filing, consent,
renegotiation or approval under or constitute a Default under (a) any Law or
Court Order to which the Buyer or the Parent is subject, (b) the Charter
Documents or by-laws of the Buyer or
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the Parent or (c) any material Contract, Governmental Permit or other document
to which the Buyer or the Parent is a party or by which its assets may be
subject.
4.4 Finder's Fees. No Person retained by the Buyer or the Parent
is or will be entitled to any commission or finder's or similar fee in
connection with the Transactions.
4.5 Litigation. There is no Litigation before any Governmental
Authority which is pending, or to the knowledge of the Buyer or the Parent,
threatened against the Buyer or the Parent which challenges the validity of this
Agreement or any action taken by the Buyer or the Parent in connection with the
Transactions.
4.6 Financing. The Buyer either has or will have sufficient funds
available to pay the Purchase Price at the Closing, as evidenced by the letters
outlining the terms and conditions of financing attached as Exhibit 4.6 hereto.
4.7 Supply Agreement. The Buyer acknowledges that it has received
and reviewed a copy of the Supply Agreement, and that it understands that the
Supply Agreement expires on July 31, 2000 and that, pursuant to the terms of the
Supply Agreement, there is no obligation of either party to the Supply Agreement
to extend the term of the Supply Agreement, to renew the Supply Agreement beyond
such date, or to renegotiate the Supply Agreement.
5. Mutual Covenants.
5.1 Fulfillment of Conditions. At and prior to the Closing, the
Seller and the Buyer shall use commercially reasonable efforts to fulfill the
conditions specified in Section 7 and Section 8, respectively. The foregoing
obligation includes refraining from any actions that would cause a Party's
respective representations and warranties to be inaccurate in any material
respect as of the Closing, executing and delivering of the agreements and other
documents referred to in Section 7 and Section 8, respectively, using
commercially reasonable efforts to prepare all necessary documentation and, in
the case of the Seller, causing the Company to comply with the terms of the
Transaction Documents, and in the case of the Parent, causing the Buyer to
comply with the terms of the Transaction Documents.
5.2 Consents. Except with respect to the HSR Act, which is covered
by Section 5.3, each of the Seller and the Buyer shall cooperate, and use
commercially reasonable efforts, in as timely a manner as is reasonably
practicable, to make all filings and obtain all licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental authorities
and other third parties necessary to consummate the Transactions. Each of the
Parties shall furnish to the other Parties such necessary information and
reasonable assistance as such other Parties may reasonably request in connection
with the foregoing and shall provide the other Parties with copies of all
filings made by such Party with any governmental entity or any other information
supplied by such Party to a governmental entity in connection with this
Agreement.
5.3 HSR Filing.
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(a) The Seller and the Buyer shall each (i) take promptly all
actions necessary to make the filings required of such Party or any of its
Affiliates under the HSR Act, (ii) comply at the earliest practicable date with
any request for additional information or documentary material received by such
Party or any of its Affiliates from the Federal Trade Commission or the
Antitrust Division of the Department of Justice pursuant to the HSR Act and
(iii) cooperate with the other Parties in connection with any filing of the
Seller under the HSR Act and in connection with resolving any investigation or
other inquiry concerning the Transactions commenced by either the Federal Trade
Commission or the Antitrust Division of the Department of Justice or state
attorneys general. Each Party shall bear its respective filing fees associated
with the filings under the HSR Act and any other similar filings required in any
other jurisdictions.
(b) In furtherance and not in limitation of the other
covenants of the Parties contained herein, each Party shall use commercially
reasonable efforts to resolve such objections, if any, as may be asserted with
respect to the Transactions under any Law relating to anti-trust. If any
administrative, judicial or legislative action or proceeding is instituted (or
threatened to be instituted) challenging the Transaction as violative of any Law
relating to anti-trust, each Party shall cooperate and use commercially
reasonable efforts to vigorously contest and resist any such action or
proceeding, and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order (whether temporary, preliminary or
permanent) (any such decree, judgment, injunction or other order hereinafter
referred to as an "Order") that is in effect and that restricts, prevents or
prohibits consummation of the Transactions.
(c) Each Party shall promptly inform the other Parties of any
material communication received by such Party from the Federal Trade Commission,
the Antitrust Division of the Department of Justice or any other governmental or
regulatory authority regarding any of the Transactions. Each Party shall advise
the other Parties promptly of any understandings, undertakings or agreements
that such Party proposes to make or enter into with the Federal Trade
Commission, the Antitrust Division of the Department of Justice or any other
governmental or regulatory authority in connection with the Transactions.
5.4 Disclosure of Certain Matters. The Seller on the one hand, and
the Buyer on the other hand, shall give the Buyer and the Seller, respectively,
prompt notice of any event or development that occurs that (a) would cause, in
such Party's reasonable judgment, any of the representations and warranties of
such Party contained herein to be inaccurate or otherwise misleading or (b)
gives any such Party a reasonable belief that any of the conditions set forth in
Sections 7 or 8 will not be satisfied prior to the Termination Date.
5.5 Public Announcements. No Party shall issue any press release
or make any public statement with respect to this Agreement and the
Transactions, except as the Parties shall mutually agree or as may be required
by applicable law or stock exchange regulations.
5.6 Expenses. Each Party shall pay all of its own expenses
incurred in connection with the Transactions.
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6. Covenants of the Parties.
6.1 Restricted Actions. Between the date hereof and the Closing, the
Company shall operate the Business in the ordinary course and shall not:
(a) amend its Certificate of Incorporation or Bylaws;
(b) merge or consolidate with, or purchase substantially all
of the assets of, or otherwise acquire any business of, any corporation,
partnership or other business organization or business division thereof;
(c) split, combine or reclassify its outstanding capital
stock; declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock or redeem or otherwise acquire any of its securities;
(d) transfer, sell, lease or dispose of any Assets outside the
ordinary course of business;
(e) enter into any Contract or otherwise incur any Liability
under which the Company's obligation in any such individual case is more than
$10,000, unless such action is in the ordinary course of business;
(f) discharge, except as contemplated hereby, or satisfy any
material Encumbrance or pay or satisfy any material Liability except pursuant to
the terms thereof or compromise, settle or otherwise adjust any material claim
or litigation;
(g) make any capital expenditure involving in any individual
case more than $25,000;
(h) without the written consent of Buyer, create any
additional Seller Plan nor modify or change any existing Seller Plan that would
materially affect the benefits of the Company employees; or
(i) take or agree in writing or otherwise to take, any of the
foregoing actions.
In addition, the Company shall not transfer or terminate, nor shall the Seller
cause or allow the Company to transfer or terminate, any Company employee except
that (i) any Company employee may be terminated for cause, and (ii) (x) the
Seller, on or prior to the Closing Date, may transfer or terminate, in its sole
discretion, those Company employees listed on Exhibit 6.1(a), and (y) the
Seller, on or prior to the Closing Date, shall transfer or terminate those
employees of the Company that the Buyer identifies, within 30 days after the
date of this Agreement, from the employees set forth on Exhibit 6.1(b). Any
employee transferred or terminated in accordance with the foregoing sentence,
shall be the sole responsibility of Seller, including any Liabilities related to
periods of past service with the Company.
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6.2 Access. The Seller shall give the Buyer the opportunity at all
reasonable times to make such examination and investigation of the Company, the
Real Property, and the Business as they may deem necessary or desirable for all
reasonable purposes relating to this Agreement. To that end, the Seller shall
cause the Company to open its books of accounts and records for examination by
accountants, counsel and other representatives of the Buyer and the Parent and
the Seller shall furnish to the Buyer and such representatives all other
information with respect to the Company's affairs as the Buyer or the Parent may
reasonably request and make the officers and senior management of the Company
available at reasonable times for discussions regarding the Business and the
Company. After the Closing Date, Buyer shall, at all reasonable times after
reasonable request therefor, make available to Seller for inspection and copying
at Seller's expense any records and documents relating to the Company and the
Business that existed as of the Closing Date or pertain to matters prior to the
Closing Date.
6.3 Subsequent Financial Information. As soon as practicable and
for the months prior to Closing, but except for the month in which the Closing
takes place, the Seller shall prepare or cause to be prepared in accordance with
GAAP, consistent with past practices, and deliver to the Buyer monthly financial
information of the Company consisting of its regularly prepared "Hyperion"
management reports and cost information in substantially the same form as
Exhibit 6.3.
6.4 Acquisition Proposals.
(a) Without the prior written consent of the Buyer, neither
the Seller nor the Company shall, and neither Person shall authorize or permit
any of its officers, directors or employees or any investment banker, financial
advisor, attorney, accountant or other representative retained by it to (i)
solicit, initiate or encourage (including by way of furnishing non-public
information), or take any other action to facilitate, any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, an Acquisition Proposal or (ii) participate in any substantive discussions
or negotiations regarding an Acquisition Proposal.
(b) As used in this Agreement, "Acquisition Proposal" means
any bona fide proposal made by a third party to acquire (i) "beneficial
ownership" (as such term is defined under Rule 13d of the Exchange Act) of a
majority equity interest in the Company pursuant to a merger, consolidation or
other business combination, sale of shares of capital stock, tender offer or
exchange offer or similar transaction involving the Company, including any
single or multi-step transaction or series of related transactions that is
structured in good faith to permit such third party to acquire beneficial
ownership of a majority or greater equity interest in the Company or (ii) all or
substantially all of the Business or Assets.
6.5 Competition and Confidentiality.
(a) During the period beginning on the Closing Date and ending
on the fifth anniversary thereof (the "Non-Competition Period"), the Seller
shall not, within North America or Mexico, directly or indirectly, in any
capacity, engage in or have a financial interest in, any business that shall be
competitive with the Business, nor shall Seller assist any Person that is
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engaged in, any such business activities (other than as contemplated by the
Transitional Services Agreement), including by making available to any such
Person any information related to the Company. Notwithstanding the foregoing,
the ownership of an interest in any Person that does not derive more than 10% of
its revenue from, or hold more than 10% of its assets in, a business engaged in
the sale of fresh mushroom products, shall not be a violation of this Section
6.5(a). A Person that derives more than 10% of its revenue from, or holds more
than 10% of its assets in, a business engaged in the Business shall be
considered a "Competitor." If Seller or any of its Affiliates acquires an
ownership interest in a Competitor, the Seller shall be deemed not to have
violated this Section 6.5(a) if within one year, (i) the Seller or its Affiliate
divests its ownership interests in the Competitor or (ii) if the Person that is
a Competitor divests assets as are necessary so that it would no longer meet the
definition of Competitor. In addition, during the Non-Competition Period, the
Seller shall not solicit any employee of the Company for the purposes of having
any such employee terminate his or her employment with the Company. If a court
determines that the foregoing restrictions are too broad or otherwise
unreasonable under applicable law, including with respect to time or space, the
court is hereby requested and authorized by the Parties to revise the foregoing
restriction to include the maximum restrictions allowable under applicable law.
The Seller acknowledges, however, that this Section 6.5 has been negotiated by
the Parties and that the geographical and time limitations, as well as the
limitation on activities, are reasonable in light of the circumstances
pertaining to the Company and the Seller hereunder.
(b) The Seller acknowledges that, by reason of its ownership
of and involvement with the Company, it has had access to certain confidential
information, as defined in the Confidentiality Agreement dated September 24,
1999 between the Seller and the Parent ("Confidential Information") relating to
the Business. The Seller acknowledges that such Confidential Information is a
valuable asset and covenants that it will not disclose any such Confidential
Information to any Person for any reason whatsoever, unless such information (a)
is or becomes in the public domain through no wrongful act of Seller, (b) has
been rightfully received from a third party without restriction and without
breach of this Agreement or (c) is required by any Law to be disclosed.
(c) The terms of this Section 6.5 shall apply to each
Affiliate of the Seller and any of their respective Affiliates to the same
extent as if they were parties hereto, and the Seller shall take whatever
actions are within its control to cause any such other Persons to adhere to the
terms of this Section 6.5.
(d) In the event of any breach or threatened breach by any
Person of any provision of Section 6.5, the Buyer shall be entitled to
injunctive or other equitable relief, to restrain such party from using or
disclosing any Confidential Information in whole or in part, or from engaging in
conduct that would constitute a breach of the obligations under this Section
6.5. Such relief shall be in addition to and not in lieu of any other remedies
that may be available, including an action for the recovery of Damages.
6.6 Tax Matters.
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The following provisions shall govern the allocation of
responsibility as between Buyer and Seller for certain Tax matters following the
Closing Date:
(a) Tax Returns for Periods Ending on or Before the Closing
Date. Seller shall prepare or cause to be prepared and file or cause to be filed
all Tax Returns for the Company for all periods ending on or prior to the
Closing Date. Subject to Section 9.2(a), the Seller shall remit (or cause to be
remitted) any Taxes due in respect of any such Tax Returns, provided however,
that the Buyer shall pay to the Seller the Excluded Taxes (as hereinafter
defined) which are payable with any Tax Return to be filed by Seller upon the
written request of the Seller, setting forth in detail the computation of the
amount owed no later than ten days prior to the due date of the Tax Returns
relating to such Taxes.
(b) Post-Closing Tax Returns. The Buyer shall file or cause to
be filed when due all Tax Returns that are required to be filed by or with
respect to the Company for taxable years or periods beginning after the Closing
Date and the Buyer shall remit (or cause to be remitted) any Taxes due in
respect of such Tax Returns.
(c) Tax Returns for Periods Beginning Before and Ending After
the Closing Date. Buyer shall prepare or cause to be prepared and file or cause
to be filed any Tax Returns of the Company for Tax periods which begin on or
before the Closing Date and end after the Closing Date (the "Straddle Period").
Any Straddle Period Tax Return required to be filed by Buyer shall be submitted
(with copies of any relevant schedules, work papers and other documentation then
available) to the Seller for the Seller's approval not less than 30 days prior
to the due date for the filing of such Tax Return, which approval shall not be
unreasonably withheld. The Seller shall have the option of preparing jointly
with the Buyer any Tax Return with respect to any, or all, of the items (or a
portion thereof) for which it may be liable reflected on such Tax Return and if
the Seller does not participate, any such items shall be reported in a manner
consistent with the past practice of the Company (unless, in the opinion of
nationally recognized tax counsel to the Buyer, complying with such past
practice is not permitted under applicable Law). Upon the written request of the
Buyer, setting forth in detail the computation of the amount owed, Seller shall
pay to Buyer within 15 days after the date on which Taxes are paid for the
Company with respect to such Straddle Periods an amount equal to the portion of
such Taxes which relates to the portion of such Straddle Period ending on the
Closing Date. For purposes of this Section, in the case of any Taxes that are
imposed on a periodic basis and are payable for a Straddle Period that includes
(but does not end on) the Closing Date, the portion of such Tax which relates to
the portion of such Taxable period ending on the Closing Date shall (i) in the
case of any Taxes other than Taxes based upon or related to income or receipts,
be deemed to be the amount of such Tax for the entire Taxable period multiplied
by a fraction the numerator of which is the number of days in the Taxable period
ending on the Closing Date and the denominator of which is the number of days in
the entire Taxable period and (ii) in the case of any Tax based upon or related
to income or receipts be deemed equal to the amount which would be payable if
the relevant Taxable period ended on the Closing Date. Any credits relating to a
Taxable period that begins before and ends after the Closing Date shall be taken
into account as though the relevant Taxable period ended on the Closing Date.
All determinations necessary to give effect to the foregoing allocations shall
be made in a manner consistent with prior practice
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of the Company. In determining the Seller's liability for Taxes pursuant to this
Agreement, the Seller shall be credited with the amount of estimated Taxes paid
by or on behalf of the Company prior to the Closing. To the extent that the
Seller's liability for Taxes for a taxable year or period is less than the
amount of estimated income Taxes previously paid by or on behalf of the Company
with respect to all or a portion of such taxable year or period, the Buyer shall
pay the Seller the difference no later than two days prior to the due date of
the Tax Return relating to such Taxes.
(d) Amendments. The Seller may, in its sole and absolute
discretion, amend any Tax Return of the Company filed or required to be filed
for any taxable years or periods ending on or before the Closing Date, provided
such amendment is in accordance with applicable Law and provided further, that
if such amendment could reasonably be expected to materially increase the amount
of Taxes imposed on the Company or its affiliates in a taxable period ending
after the Closing Date, such amended Tax Return shall not be filed without the
prior approval of the Buyer, which approval shall not be unreasonably withheld
or delayed.
(e) Contests.
(i) Each of the Buyer, on the one hand, and the
Seller, on the other hand (the "Recipient"), shall notify the other party in
writing within 60 days of receipt by the Recipient of written notice of any
pending or threatened audits, notice of deficiency, proposed adjustment,
assessment, examination or other administrative or court proceeding, suit,
dispute or other claim (a "Tax Claim") which could affect the liability for
Taxes of such other party. If the Recipient fails to give such prompt notice to
the other party it shall not be entitled to indemnification for any Taxes
arising in connection with such Tax Claim if and to the extent that such failure
to give notice materially and adversely affects the other party's right to
participate in the Tax Claim.
(ii) The Seller shall have the sole right to
represent the Company's interests in any Tax Claim relating to taxable periods
ending on or before the Closing Date and to employ counsel of it choice at its
expense. In the case of a Straddle Period, the Seller shall be entitled to
participate at its expense in any Tax Claim relating in any part to Taxes
attributable to the portion of such Straddle Period deemed to end on or before
the Closing Date and, with the written consent of the Buyer, at the Seller's
sole expense, may assume the control of such entire Tax Claim. None of the
Buyer, any of its affiliates, or the Company or any subsidiary may settle or
otherwise dispose of any Tax Claim for which the Seller may have a liability
under this Agreement, or which may result in an increase in Seller's liability
under this Agreement, without the prior written consent of the Seller, which
consent may be withheld in the sole discretion of the Seller, and none of Seller
or any of its affiliates may settle or dispose of any Tax Claim for which Buyer
or the Company may have a liability under this Agreement, or which may result in
an increase in Buyer's or the Company's tax liability for taxable periods ending
after the Closing without the prior written consent of Buyer, which consent may
be withheld in the sole discretion of Buyer.
(f) Refunds.
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(i) Any Tax refund (including any interest in respect
thereof) received by the Buyer, Parent, Company or any Company subsidiary, and
any amounts credited against Tax to which the Buyer, Company or any Company
subsidiary become entitled (including by way of any amended Tax Returns), that
relate to any taxable period, or portion thereof, ending on or before the
Closing Date shall be for the account of the Seller, and the Buyer shall pay
over to the Seller any such refund or the amount of any such credit within 60
days after receipt or entitlement thereto. For purposes of this Section 6.6(f),
where it is necessary to apportion a refund or credit between the Buyer and the
Seller for a Straddle Period, such refund or credit shall be apportioned between
the period deemed to end at the close of the Closing Date, and the period deemed
to begin at the beginning of the day following the Closing Date on the basis of
an interim closing of the books, except that refunds or credits of Taxes imposed
on a periodic basis (e.g., real property Taxes) shall be allocated on a daily
basis.
(ii) The Buyer shall cooperate, and shall cause the
Company and any Company subsidiary to cooperate, in obtaining any refund that
the Seller reasonably believes should be available, including without
limitation, through filing appropriate forms with the applicable taxing
authorities.
(g) Resolution of All Tax-Related Disputes. In the event that
the Seller and the Buyer cannot agree on the calculation of any amount relating
to Taxes such dispute shall be resolved by a nationally recognized accounting
firm mutually acceptable to each of the Seller and the Buyer, whose decision
shall be final and binding upon all persons involved and whose expenses shall be
shared equally by the Seller and Buyer.
(h) Post-Closing Actions Which Affect Seller's Liability for
Taxes.
(i) None of the Buyer, the Parent or any affiliate of
the Buyer or Parent shall (or shall cause or permit the Company or any Company
subsidiary to) amend, refile or otherwise modify any Tax Return relating in
whole or in part to the Company with respect to (A) any taxable year or period
ending on or before the Closing Date or (B) with respect to any Straddle Period
if the amendment or modification of such Straddle Period Tax Return would have
the effect of increasing Seller's liability for Taxes pursuant to the Agreement
without the prior written consent of the Seller, which consent may be withheld
in the sole discretion of the Seller; provided, however, that the written
consent of the Seller may not be withheld if Buyer provides to Seller an opinion
of nationally recognized tax counsel, to the effect that such amendment,
refiling, or other modification is required by applicable Law.
(i) Adjustment to Purchase Price. For all Tax purposes, any
payment by the Buyer or the Seller under this Agreement shall be treated as an
adjustment to the Purchase Price.
(j) Cooperation on Tax Matters.
(i) Buyer, the Company, and Seller shall cooperate
fully, as and to the extent reasonably requested by the other Party, in
connection with the filing of Tax Returns
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pursuant to this Section and any audit, litigation or other proceeding with
respect to Taxes. Such cooperation shall include the retention and (upon another
Party's request) the provision of records and information which are reasonably
relevant to any such audit, litigation or other proceeding and making employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. Each Party shall (A) retain all
books and records with respect to Tax matters pertinent to the Company relating
to any taxable period beginning before the Closing Date until the expiration of
the statute of limitations (and, to the extent notified by Buyer or Seller, any
extensions thereof) of the respective taxable periods, and to abide by all
record retention agreements entered into with any taxing authority and (B) give
the other Party reasonable written notice prior to transferring, destroying or
discarding any such books and records and, upon such notice if the other party
so requests, the Company or Seller, as the case may be, shall allow the other
party to take possession of such books and records.
(ii) Buyer and Seller shall, upon request, use their
best efforts to obtain any certificate or other document from any Governmental
Authority or any other Person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed (including, with respect to the
transactions contemplated hereby).
(iii) Buyer and Seller shall, upon request, provide
the other party with all information that either party may be required to report
pursuant to Section 6043 of the Code and all Treasury Department Regulations
promulgated thereunder.
Notwithstanding the foregoing or any other provision in this Agreement, none of
the Buyer, Parent or the Company (or any affiliates of any of the foregoing)
shall have the right to receive or obtain any information relating to Taxes of
the Seller, any of its affiliates, or any of its predecessors, other than
information relating solely to the Company.
(k) Tax Sharing Agreements. All Tax sharing, Tax
indemnification, Tax allocation agreements or similar agreements to which the
Company is a party shall be terminated with respect to the Company as of the
Closing Date and, after the Closing Date, the Company shall not be bound thereby
or have any Liability whatsoever thereunder.
(l) Certain Taxes. All transfer, documentary, sales, use,
stamp, registration and other such taxes and fees (including any penalties and
interest with respect thereto) incurred in connection with this Agreement (the
"Transfer Taxes") shall be paid by Buyer. Notwithstanding Section 6.6(a), (b) or
(c), the party primarily or customarily responsible under applicable local law
shall prepare and file when due any Tax Returns required to be filed with
respect to Transfer Taxes, and such party shall use reasonable efforts to
provide such Tax Returns to the other party at least 10 days prior to the due
date for such Tax Returns, and, if required by applicable law, such other party
will, and will cause its Affiliates to, join in the execution of any such Tax
Returns and other documentation. Buyer shall pay to Seller any Transfer Taxes
that are payable with any Tax Return filed by Seller pursuant to this Section
6.6(l) no later than 5 days prior to the due date of such Tax Return.
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(m) Seller and Buyer will join in making an election under
Section 338(h)(10) of the Code (and, if permissible, any corresponding elections
available under state, local, or foreign law) (collectively the "Section
338(h)(10) Elections") with respect to the purchase and sale of stock of the
Company hereunder. The Seller and Buyer shall report the transactions
contemplated by this Agreement consistent with such Section 338(h)(10) Election
and shall take no position contrary thereto.
(i) The Buyer hereby agrees that it shall not make
any election under Section 338, except for any such election deemed to be made
in any jurisdiction by reason of the making of the Section 338(h)(10) Election.
(ii) The Seller and the Buyer agree to use
commercially reasonable efforts to agree to an allocation of the Modified
Aggregate Deemed Sale Price (as defined under applicable Treasury Regulations)
among the assets of the Company within 60 days after the Closing Date, and such
allocation shall be reported by each party on IRS Form 8023 (and any comparable
state, local or foreign filing); provided, however, that if the Seller and the
Buyer shall not have agreed on such allocation by the sixtieth day following the
Closing Date, such allocation shall be made in accordance with the appraisal of
a recognized appraisal firm chosen and retained by mutual agreement of the Buyer
and the Seller, the fees and expenses of which shall be paid one-half by the
Seller and one-half by the Buyer. The Seller, the Buyer and the Company shall
reflect such allocation in all applicable Tax Returns filed by any of them.
Neither the Seller nor the Buyer shall take a position before any taxing
authority or otherwise (including in any Tax Return) inconsistent with such
allocation.
6.7 Confidentiality. The Parties shall, and shall cause their
Affiliates to, continue to abide by the terms of the Confidentiality Agreement
after the date hereof, and shall, and shall cause their Affiliates to, abide by
the terms of such agreement after the consummation or termination of this
Agreement.
6.8 Supply Agreement. On or after the Closing, the Seller shall use its
reasonable commercial efforts to assist the Buyer and the Company to obtain an
extension or renewal of the Supply Agreement. Notwithstanding the foregoing, the
Seller shall not have any liability, including under Section 9 of this
Agreement, to the Buyer, the Parent or the Company if Xxxxxxxx Soup Company does
not (i) agree to any amendment or modification of any terms of the Supply
Agreement, (ii) renew or extend the term of the Supply Agreement beyond July 31,
2000 or (iii) enter into a new contract providing for the supply of mushrooms to
Xxxxxxxx Soup Company. In addition, the Parent and the Buyer shall not be
entitled to assert that the prospective occurrence of any of the foregoing has
resulted in or caused any breach of any representation or warranty of Seller or
a Material Adverse Effect.
6.9 Operation of the Buyer. The Parent shall take all necessary actions
such that the Buyer has not taken any action, or engaged in any business
activity, that would impair its ability to consummate the Transactions.
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6.10 Nonsolicitation by the Buyer. During the Non-Competition Period,
the Buyer shall not solicit any employee of the Seller for the purposes of
having any such employee terminate his or her employment with the Seller and
shall not hire any employee of the Seller except those employees that are
currently employed in connection with the Business.
6.11 Collective Bargaining Agreements. Buyer shall cause the Company to
honor all collective bargaining agreements that are set forth on the Disclosure
Schedule.
6.12 Certain Actions by Seller and Company. Notwithstanding anything to
the contrary contained in this Agreement, the Seller and the Company may revoke
all powers of attorney held by any Person with respect to the Company as of the
Closing Date and may close any bank accounts and terminate any lock box or safe
deposit box arrangements as of the Closing Date.
6.13 Uncollected Accounts Receivable. In the event that as of the date
six months from the Closing Date (the "Adjustment Date") Buyer shall not have
been paid in full in respect of all Accounts Receivable of the Company
outstanding as of the Closing Date (net of reserves for doubtful accounts and
allowances for valid promotional discounts), Buyer shall so advise Seller in
writing, and Seller shall promptly, but in any event within 10 Business Days
following such notice from Buyer, acquire from Buyer all such unpaid Accounts
Receivable for a sum, in immediately available funds, equal to the excess of (i)
the amount of the Accounts Receivable outstanding as of the Closing Date (net of
reserves for doubtful accounts and allowance for valid promotional discounts)
over (ii) the amount of payments actually received by Buyer or its Affiliates in
respect of such Accounts Receivable (the "Reimbursed Accounts Receivable"). In
calculating the amount, if any, which Seller must pay to Buyer pursuant to this
Section 6.13, payments received by Buyer or its Affiliates in respect of
Accounts Receivable of the Company shall be credited, unless otherwise
designated, specified or noted by the customer, first to the oldest account
receivable of a customer outstanding as of the Closing until all Accounts
Receivable with respect to that customer outstanding as of the Closing are paid
in full. At and after such time as Buyer assumes responsibility for the
collection of Accounts Receivable of the Company outstanding as of the Closing
Date, Buyer shall use its reasonable commercial efforts to collect such Accounts
Receivable, including any Reimbursed Accounts Receivable. In addition, so long
as Buyer has responsibility for the collection of accounts receivable of the
Company outstanding as of the Closing Date pursuant to the Transition Services
Agreement, Buyer shall use its reasonable commercial efforts to assist Seller in
collecting any Reimbursed Accounts Receivable. If any Reimbursed Accounts
Receivable are, after such reimbursement by Seller to Buyer, ultimately
collected by Buyer or its Affiliates, Buyer shall promptly notify Seller in
writing of such collection and will promptly, but in any event within 10
Business Days following such collection, transfer to Seller, in immediately
available funds, such collected Reimbursed Accounts Receivable. In connection
with such acquisition of Accounts Receivable by Seller, Buyer agrees to execute
and cause its Affiliates to execute such assignments as are reasonably requested
by Seller in order to effectively transfer to Seller or its designee(s) such
Accounts Receivable. Buyer shall not disclose the provisions of this Section
6.13 to any person other than its employees, advisors and agents who need to
know such information in order for Buyer to fulfill its obligations hereunder.
The Buyer and the Seller shall each provide access to
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all information relating to accounts receivable collection and customer
remittances applicable to all Accounts Receivable of the Company outstanding as
of the Closing Date, and with respect to the Buyer, Accounts Receivable
outstanding after the Closing Date.
6.14 Collective Bargaining Negotiations. Neither the Parent nor the
Company shall conduct any negotiations regarding a collective bargaining
agreement with the Comite De Trabajadores xx Xxxxxxxx Fresh (Workers Committee
of Campbell's Fresh).
6.15 Transition Planning. To facilitate an orderly transition of
the ownership of the Company, the Parent and the Seller shall work together to
coordinate the transition of the operation the Business and shall select a joint
transition planning team for this purpose, including any discussions regarding
employment.
6.16 Trademark License.
(a) Effective as of the Closing Date, any license agreement
(including, but not limited to the Trademark License Agreement, effective as of
March 30, 1998, between VF Brands, Inc. and Vlasic Farms, Inc.) pursuant to
which Seller or any Affiliate of Seller has granted to the Company the right to
use trademarks, trade names, service marks, domain names or logos that include
the word "Vlasic" shall immediately terminate.
(b) Seller or its wholly owned subsidiary, VF Brands, Inc.
hereby grants to Buyer, effective upon the Closing Date, a non-transferable,
exclusive, royalty free worldwide right and license to use the trademarks,
service marks, and trade names listed on Exhibit 6.16, together with all
slogans, logotypes, designs and trade dress associated therewith (collectively,
the "Vlasic Farms Marks") solely in connection with the Business and on and in
connection with the goods and services of the Business, and which are embodied
in any stationery, business cards, advertising and promotional materials, and
inventory which is, in each case, in existence at Closing and is currently being
used in the conduct of the Business ("Business Materials"), for transition
purposes. Such license shall run for one year, unless earlier terminated in
accordance with this Section 6.16. The Business Materials shall be used solely
in the form and consistent with the manner in which such Business Materials have
heretofore been used in the Business. No other use of Business Materials shall
be made which incorporate, or utilize, the Vlasic Farms Marks without Seller's
express written consent, which consent shall not be unreasonably withheld.
(c) All rights and goodwill arising from the use of the Vlasic
Farms Marks and/or any similar names or marks (including logos) shall inure
solely to Seller's benefit. Buyer agrees that neither Buyer, nor any of its
Affiliates, shall use, directly or indirectly, the word "Vlasic," the Vlasic
Farms Marks or any marks similar thereto, as part of Buyer's or any of its
Affiliates' own trade names, or in any other way that suggests that there is any
relation or affiliation between Seller and Buyer or any of its Affiliates other
than that created by this Agreement, or as a trademark, service xxxx or trade
name for any other business, product or service. Buyer shall have no interest in
the Vlasic Farms Marks except as expressly provided in this Agreement and shall
not claim any other rights therein. Nothing in this Agreement or in the
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performance thereof, or that might otherwise be implied by law, shall operate to
grant Buyer any right, title, or interest in and to the Vlasic Farms Marks other
than as specified in the limited license granted in this Agreement. All rights
not expressly granted in this Agreement or herein are reserved to the Seller.
(d) Buyer's right to use the Vlasic Farms Marks shall cease
upon the earlier of (i) the end of the one year period immediately after the
Closing Date; or (ii) Buyer's failure to cure any material breach with respect
to its use of the Vlasic Farms Marks within 30 days of receipt of written notice
from Seller. Upon the termination of Buyer's right to use the Vlasic Farms
Marks, Buyer shall immediately cease all use of the Vlasic Farms Marks and all
materials bearing the Vlasic Farms Marks (such materials to be returned to
Seller or destroyed).
(e) Buyer agrees to assign to Seller and does hereby assign to
Seller all rights it may acquire, if any, by the operation of law or otherwise
in the Vlasic Farms Marks, including all applications or registrations
therefore, along with the goodwill associated therewith. Buyer shall, at
Seller's expense, assist Seller in protecting and maintaining Seller's rights in
the Vlasic Farms Marks in connection with Buyer's licensed use hereunder,
including preparation and execution of documents necessary or appropriate to
register the Vlasic Farms Marks or record this Agreement. As between the
parties, the Seller shall have the sole right to, and in its sole discretion
may, commence, prosecute, defend, and control any action, concerning the Vlasic
Farms Marks.
(f) In relation to its use of the Vlasic Farms Marks, Buyer
agrees to maintain the quality of all aspects of the Business (e.g., products
and services, advertising) at a level that meets or exceeds those standards
maintained by Seller immediately prior to the execution of this Agreement.
(g) Neither Buyer nor any of its Affiliates shall directly or
indirectly, contest the validity of, or take any action, or fail to take any
action inconsistent with, Seller's rights in the Vlasic Farms Marks (including
attempting to register the Vlasic Farms Marks or a xxxx incorporating either the
Vlasic Farms Marks or the word "Vlasic" or any xxxx similar thereto). Buyer's
rights under the license granted herein are personal and may not be sublicensed,
assigned or otherwise transferred, other than to its Affiliates.
6.17 Corporate Name Change. As soon as reasonably practicable after
the Closing, the Buyer shall change the corporate name of the Company to such
other name that does not employ either the name Vlasic or Xxxxxxxx.
6.18 Completion of Environmental Due Diligence. Seller shall permit
Buyer, Parent, and any Person acting on their behalf, to have reasonable access
to Real Property during normal business hours, upon 24 hours advance notice (and
continuing thereafter until such time that any Phase II Work is completed) and
in such a manner as will not unreasonably interfere with operations at such
facilities, to conduct, at Buyer's sole cost, Phase II Work subject to the
conditions that (i) the Seller shall have the right to conduct, at Seller's sole
discretion, split sampling in conjunction with any sampling the Buyer may
perform, (ii) the Buyer shall promptly
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provide the Seller with the results of all such Phase II Work, including copies
of reports and sampling results, and (iii) all Phase II Work shall be subject to
the confidentiality provisions of Section 6.5 hereof, provided that,
notwithstanding the foregoing, the Buyer is entitled to disclose the results of
the Phase II Work after the Closing Date.
6.19 Employee Benefit Matters. On and after Closing:
(a) Seller agrees that Company shall not be obligated to
maintain any Seller Plan except for any benefit plan the Company may be required
to maintain pursuant to a collective bargaining agreement. Effective as of the
Closing Date, Buyer shall cause Company to establish any and all employee
benefit plans that Company may be required to maintain pursuant to a collective
bargaining agreement.
(b) Seller shall be responsible for complying with the
applicable requirements of Section 4980B of the Code and Sections 601-608 of
ERISA with respect to employees who terminated employment with the Company
before, or in connection with, the Closing and shall indemnify and hold harmless
Buyer from and against any Liability incurred by Buyer with respect to such
employees' termination of employment with the Company.
(c) Seller, Parent and Buyer agree that Seller shall be solely
responsible for any and all obligations and liabilities arising under or with
respect to Seller Plans, whether arising before, on or after the Closing Date,
that relate to periods of service or events occurring prior to the Closing Date.
Seller, Parent and Buyer agree that Seller shall not be responsible for any and
all obligations or liabilities arising after the Closing Date under or with
respect to any employee benefit plans maintained, established or contributed to
by the Company or any affiliate thereof after the Closing Date.
(d) Subject to the terms of Section 6.19(a), Seller, Parent
and Buyer agree that, with respect to any Seller Plan that offers medical or
life insurance benefits to retirees, Seller shall be solely responsible for any
and all obligations and liabilities as of the Closing Date for those employees
or former employees of the Company who have met the eligibility requirements
sufficient to be entitled to commence receiving benefits under such plans as of
the Closing Date, whether or not such eligible individuals have terminated
employment with the Company as of the Closing Date.
(e) Seller shall permit each Company employee who participated
in a Qualified Plan that is a defined contribution plan maintained by the Seller
to receive a distribution of his or her accrued benefits as soon as
administratively feasible after the Closing, to the extent permitted by
applicable Law. Company shall cause any defined contribution Qualified Plan
maintained by Company to accept as a rollover contribution any such distribution
provided that such employee would be eligible to participate in the Company's
applicable Qualified Plan.
6.20 Litigation. All Litigation listed on Schedule 6.20 and all
Litigation arising after the date hereof but prior to the Closing Date (other
than workers' compensation claims,
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grievances under a collective bargaining agreement or with respect to a labor
dispute, unemployment claims, and other than any Litigation arising out of,
challenging the validity of, or seeking to enjoin the consummation of the
transactions contemplated by this Agreement) shall be litigated, settled,
compromised or otherwise handled by the Seller after the Closing, subject to the
applicable provisions of Section 9.5(c), and the Seller shall be obligated for
all Damages relating to such litigation, compromise or settlement of such
Litigation. Buyer shall cause the Company to open its books of accounts and
records for examination by accountants, counsel and other representatives of
Seller in connection with any such Litigation, and shall furnish to Seller and
such representatives all other information with respect to such Litigation as
Seller or its representatives may reasonably request and make the officers and
employees of the Company available at reasonable times for purposes related to
any such Litigation. Notwithstanding the foregoing, the Seller shall not be
entitled to any correspondence between the Buyer or the Parent or its respective
counsel reflecting legal analysis protected by attorney-client privilege.
6.21 UPC. On or before six months after the Closing Date, Buyer
shall (a) apply to Uniform Commercial Code Council, Inc. and obtain a Uniform
Product Code ("UPC") company code number assigned to Buyer and (b) not introduce
into commerce in the ordinary course of business, or destroy, all remaining
packaging or other materials on which either UPC company code 051000 or UPC
company code 658276 is displayed.
6.22 Real Property Liens. The Seller shall promptly discharge any
Encumbrance that is filed before or after the Closing relating to work performed
prior to Closing, by or for the account of Seller or the Real Property, whether
or not such work has been disclosed on the Disclosure Schedule.
6.23 Assignments. On or prior to the Closing Date, the Seller shall
assign to the Company its rights under those Contracts with Company employees
relating to or regarding confidentiality, assignment of invention,
non-competition or other similar matters, which assignment may be in the form of
a master assignment. Notwithstanding the foregoing, Seller shall not be liable
to the Buyer Indemnified Parties for any Damages arising out of the
nonenforceability of such assignment. Prior to or after the Closing Date, the
Seller shall use its reasonable efforts to assign to the Company all of its
rights under those Contracts (other than those addressed above in this Section
6.23) and Governmental Permits exclusively relating to the operation of the
Business.
6.24 Direction of the Company. The Parties acknowledge that the
Company is not a party to this Agreement. Therefore, the Seller shall cause the
Company to fully observe and perform each covenant and agreement that is
applicable to the Company in this Agreement and expressly guaranties and shall
be liable for such obligations and agreements if the Company fails to perform
any of its obligations or agreements under this Agreement.
6.25 Guaranty. Parent shall cause Buyer to perform its obligations
and agreements under this Agreement and expressly guaranties and shall be liable
for such obligations and agreements if the Buyer fails to perform any of its
obligations or agreements under this Agreement.
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7. Conditions Precedent to the Buyer's Obligations.
All obligations of the Buyer to be performed on the Closing Date shall
be subject to the satisfaction (or waiver by the Buyer), prior thereto, of the
following conditions:
7.1 Representations True at Closing. The representations and
warranties of the Seller contained in this Agreement, shall be true and correct
in all material respects on the date hereof and (except to the extent such
representations and warranties speak as of a different date) as of the Closing
Date with the same force and effect as if made on the Closing Date.
7.2 Performance of Covenants. The Seller shall have performed or
complied in all material respects with all agreements, conditions and covenants
required by this Agreement to be performed or complied with by the Seller on or
before the Closing Date.
7.3 Certificates. The Buyer shall have received a certificate of
an executive officer of the Seller to the effect set forth in Sections 7.1 and
7.2 with respect to the Seller.
7.4 Litigation Affecting Closing. No court of competent
jurisdiction shall have issued any Court Order, and there shall not be any Law,
enjoining or prohibiting the consummation of the Transactions.
7.5 Material Adverse Change. There has not been any event,
development or change that has had, or could reasonably be expected to have, a
Material Adverse Effect.
7.6 Governmental Approvals. The waiting period applicable to the
Transactions under the HSR Act shall have expired or been terminated.
7.7 Consents. The Company shall have delivered to the Buyer the
consents set forth on Exhibit 7.7.
7.8 Legal Opinion. The Buyer shall have received a legal opinion
of the general counsel of the Seller, in form and substance reasonable
satisfactory to the Parent.
7.9 Ancillary Documents. The Seller shall have tendered delivery
of executed copies of the Transaction Documents.
7.10 Company Documents. The Company shall have delivered to the
Buyer certified copies of the Company's Charter Documents, and a certificate of
status, compliance, good standing or like certificate with respect to the
Company issued by the appropriate government official of the Company's
jurisdiction of incorporation.
7.11 Assignment of Supply Agreement. Xxxxxxxx Soup Company has
consented in writing to the assignment to the Buyer of the rights of Seller
under the Supply Agreement or
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otherwise consented to the Buyer's performance of its obligations under the
Supply Agreement, which consent shall be in form and substance reasonably
acceptable to the Buyer.
7.12 Release of Guarantees. The Company shall have been released
from any and all Liabilities under all Contracts with Xxxxxx Guaranty Trust
Company, including those Contracts with Xxxxxx Guaranty Trust Company listed in
Section 3.3 of the Disclosure Schedule.
7.13 Release - CSC-TIA. The Company shall have been released from
all obligations under the CSC-TIA.
7.14 Resignations of Officers and Directors. All of the officers
and directors of the Company shall have tendered their written resignations.
7.15 Tax Opinion. The Parent shall have received a copy of a tax
opinion from Dechert, Price & Xxxxxx LLP, tax counsel to the Seller, and Ernst
and Young, LLP, substantially in the form of the opinion attached hereto as
Exhibit 7.15, and shall have received a copy of an acknowledgment from Xxxxxxxx
Soup Company substantially in the form of the acknowledgment attached hereto as
Exhibit 7.15(a).
7.16 Seller Plans. As of the Closing Date, the Company shall have
been removed as sponsor of, participating employer under and administrator of
Seller Plans, and removed from any other fiduciary capacities with respect to
Seller Plans.
7.17 Surveys and Title. The Buyer, prior to January 19, 2000, shall
have received from the Seller current ALTA/ACSM land title surveys for each of
the Real Properties (exclusive of the leased Real Property), and each disclosing
no easements, restrictions, boundary overlaps or encroachments, violations on
the land, or any other matters, in each case, which may interfere with or impair
the use of any such property for its current use, or otherwise materially
diminish the value thereof. In addition, the surveys shall confirm total
aggregate site acreage of not less than 80% of the total aggregate acreage set
forth in Section 7.17 of the Disclosure Schedule, and each survey shall confirm
total acreage for each site of not less than 75% of the total acreage for each
such site set forth on Section 7.17 of the Disclosure Schedule. Buyer shall have
received at Closing from any reputable title insurance company selected by
Buyer, at such insurer's customary rates, with respect to each Real Property
(other than the leased Real Property), an ALTA owner's title insurance policy in
form reasonably satisfactory to Buyer and consistent with the terms of this
Agreement, in allocable amounts reasonably designated by the Buyer, wherein such
title company shall insure Company's fee simple title to that portion of the
Real Property which is owned by the Company, in each case free and clear of all
Encumbrances other than the Permitted Encumbrances, containing such endorsements
or forms of affirmative coverage as Buyer shall reasonably require, including,
affirmative insurance against strips, gaps and gores, boundary overlaps and
encroachments, and against shortages in acreage (to the extent permitted by the
applicable jurisdiction), and affirmatively insuring that in each instance the
insured legal description for each Real Property (other than the leased Real
Property) accurately describes in metes and bounds the same Real Property as is
depicted on the new survey obtained for each such Real Property.
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8. Conditions Precedent to Obligations of the Seller.
All obligations of the Seller to be performed on the Closing Date shall
be subject to the satisfaction (or waiver by the Seller), prior thereto, of each
of the following conditions:
8.1 Representations True at Closing. The representations and
warranties of the Buyer contained in this Agreement shall be true and correct in
all material respects on the date hereof and (except to the extent such
representations and warranties speak as of a different date) as of the Closing
Date with the same force and effect as if made on the Closing Date.
8.2 Performance of Covenants. The Buyer shall have performed or
complied in all material respects with all agreements, conditions and covenants
required by this Agreement to be performed or complied with by the Buyer on or
before the Closing Date.
8.3 Certificates. The Seller shall have received a certificate of
an executive officer of the Buyer to the effect set forth in Sections 8.1 and
8.2 with respect to the Buyer, and each such certificate shall be deemed a
representation of the related parties.
8.4 Litigation Affecting Closing. No court of competent
jurisdiction shall have issued any Court Order, and there shall not be any Law,
enjoining or prohibiting the consummation of the Transactions.
8.5 Governmental Approvals. The waiting period applicable to the
Transactions under the HSR Act shall have expired or been terminated.
8.6 Legal Opinion. The Seller shall have received an opinion of
Xxxxxx, Xxxxx & Xxxxxxx LLP, counsel to the Buyer and the Parent, in form and
substance reasonable satisfactory to the Seller.
8.7 Ancillary Documents. The Buyer and the Parent shall have
tendered delivery of executed copies of the Transaction Documents.
9. Indemnification.
9.1 General Indemnification.
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(a) From and after the Closing Date, the Seller shall
indemnify and hold harmless the Buyer and the Parent and their respective
successors, assigns, officers, directors, employees, stockholders, agents,
Affiliates and any Person who controls any of such Persons (each, a "Buyer
Indemnified Party") from and against any Liabilities, demands, judgments or
expenses whatsoever (including reasonable attorneys', consultants' and other
professional fees and disbursements of every kind, nature and description
incurred by such Buyer Indemnified Party in connection therewith and any
consequential or punitive damages, or both, solely to the extent that they are
payable to a third party) (collectively, "Damages") that such Buyer Indemnified
Party may sustain, suffer or incur and that result from, arise out of or relate
to any breach of any representation, warranty, covenant or agreement of the
Seller or the Company contained in this Agreement. For the avoidance of doubt,
it is agreed that any payments paid to a Buyer Indemnified Party pursuant to
Section 2.4 shall not be further reimbursed pursuant to this Section 9. The
indemnification provided in this Section 9.1 for breaches of representation and
warranties contained in Section 3.26 hereof (Environmental Matters) shall be
subject to and limited by the conditions and terms in the definition of
"Environmental Conditions" and Sections 2.6 and 9.3 hereof, regardless of
whether a claim for Damages for such breach could also be made under any other
indemnification provision of this Agreement.
(b) From and after the Closing Date, the Parent and the Buyer
shall indemnify and hold harmless the Seller, its successors, assigns, officers,
directors, employees, stockholders, agents, Affiliates and any Person who
controls any of such Persons (each, a "Seller Indemnified Party", and together
with the Buyer Indemnified Parties, the "Indemnified Parties") from and against
any Damages that such Seller Indemnified Party may sustain, suffer or incur and
that result from, arise out of, or relate to, any breach of any representation,
warranty, covenant or agreement of the Buyer contained in this Agreement.
(c) The amount of any Damages shall be reduced by (A) any
amount received by an Indemnified Party under any insurance coverage or from any
other party alleged to be responsible therefor (net of any cost of recovery) and
(B) the amount of any tax benefit available to such Indemnified Party relating
thereto; the Indemnified Party shall use reasonable efforts to collect any
amounts available under such insurance coverage or from such other party alleged
to have responsibility. If an Indemnified Party receives an amount under
insurance coverage or from such other party with respect to Damages at any time
subsequent to any indemnification provided by this Section 9, then such
Indemnified Party shall promptly reimburse the Indemnifying Party for any
payment made or expense incurred by such party in connection with providing such
indemnification up to such amount received by the Indemnified Party. In
addition, no Indemnified Party shall be entitled to any duplication of
reimbursement or indemnification with respect to any Damages which constitute a
breach of more than one representation, warranty, covenant or agreement
contained herein.
9.2 Tax Indemnification
(a) From and after the Closing Date, the Seller shall
indemnify and hold harmless the Buyer Indemnified Parties from and against all
Damages that such Buyer Indemnified Party may sustain, suffer or incur that
result from, arise out of or relate to:
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(i) any Liability for Taxes imposed on the Company
for any taxable year or period that ends on or before the Closing Date and, with
respect to any Straddle Period, the portion of such Straddle Period deemed to
end on and include the Closing Date (together, the "Pre-Closing Period");
(ii) any Liability for any Damages arising under or
related to the Tax Sharing and Indemnification Agreement among Xxxxxxxx Soup
Company, the Seller and the Company dated March 30, 1998 (the "CSC TIA"); and
(iii) any Liability for Taxes of any person
attributable to the Pre-Closing Period imposed on the Company (A) as a member of
an "affiliated group" (within the meaning of Section 1504(a) of the Code) that
arises under Treas. Reg. 1.1502-6 (or any similar provision of state, local, or
foreign law, (B) as a transferee or successor, or (C) by contract or otherwise;
provided, however, that the Seller shall not be liable for and shall not
indemnify the Buyer for (i) any Taxes resulting from transaction or actions
taken by the Buyer or the Company on the Closing Date that are properly
allocable to the portion for the Closing Date after the Closing, except for
transactions or actions contemplated by this Agreement or undertaken in the
ordinary course of business; (ii) any Taxes that result from an actual election
under Section 338 of the Code (other than the Section 338(h)(10) Election or any
Section 338(g) election deemed to be made in any jurisdiction by reason of the
making of the Section 338(h)(10) Election), or any similar provisions of state
law or the law of any other taxing jurisdiction with respect to the Company in
connection with any of the transactions contemplated by this Agreement; or (iii)
any Transfer Taxes for which the Buyer is liable pursuant to Section 6.6(l)
(Taxes described in this proviso referred to hereinafter as "Excluded Taxes").
(b) The Buyer shall indemnify and hold harmless the Seller
Indemnified Parties from and against all Damages that such Seller Indemnified
Party may sustain, suffer or incur that results from, arises out of or relate
to:
(i) Taxes imposed on the Company or any Company
subsidiary for any taxable year or period that begins after the Closing Date
and, with respect to any Straddle Period, the portion of such Straddle Period
beginning after the Closing Date; and
(ii) Excluded Taxes.
9.3 Environmental Indemnification.
(a) From and after the Closing Date, the Seller shall
indemnify and hold harmless the Buyer Indemnified Parties from and against all
Damages that such Buyer Indemnified Party may sustain, suffer or incur and that
result from, arise out of or relate to any Environmental Condition, subject to
the conditions provided hereafter in this Section 9.3.
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(b) Buyer is entitled at Buyer's sole discretion to conduct
any investigation, remediation, or correction of Environmental Conditions for
which Seller has agreed herein to indemnify Buyer Indemnified Parties. In the
event that Buyer elects to conduct such investigation, remediation, or
corrective action, Seller shall have the right (but not the duty) to attend all
material proceedings and meetings (including, without limitation, telephonic
conferences) among Buyer, any Governmental Authority, or third party claimant,
relating to discussions or negotiations of remediation, investigation, or
corrective action plans. Upon request, Buyer shall provide Seller with (i) any
material correspondence, report, technical data or other material information
generated by Buyer or its contractors relating to such Environmental Conditions
or remediation, investigation, or corrective action relating thereto (except
that Buyer is not required to provide attorney-client privileged information),
(ii) reasonable access to the Real Property which is the subject of such
Environmental Conditions, and (iii) the right to take split samples relating to
such remediation, investigation, or corrective action conducted or proposed by
Buyer. Buyer shall promptly provide Seller with copies of all material documents
received from any Governmental Authority or third party claimant and shall
timely provide Seller with drafts of any material documents or letters which
Buyer may send or submit to any Governmental Authority or third party claimant
with respect to such discussions or negotiations of remediation, investigation,
or corrective action plans. Seller shall have the right (but not the duty) to
consent to any such documents or letters, which consent shall not be
unreasonably withheld, and Seller shall use reasonably commercial efforts to
respond on a timely basis.
(c) Any investigation, remediation or correction of
Environmental Conditions for which Seller has agreed herein to indemnify Buyer
Indemnified Parties and undertaken or proposed by Buyer (i) shall not exceed the
least stringent requirements (reflective of the commercial use of the Real
Property as of the Closing Date) of any applicable Environmental Law or any
clean-up standards set forth, established, published, proposed or promulgated
under, pursuant to or by an Environmental Law or Governmental Authority having
jurisdiction over such investigation, remediation, or corrective action, or (ii)
if the standard of subsection (i) cannot be achieved, then the most commercially
reasonable method under the circumstances and based upon the understanding that
the Real Property is and will continue to be used for industrial or commercial
purposes. To the extent necessary to achieve the purposes set forth in the
preceding sentence hereof, Buyer shall agree to a deed restriction or other
institutional controls on the Real Property that is subject to such action
consistent with the commercial activities being performed at such Real Property
as of the Closing Date. Buyer agrees that it shall use reasonable commercial
efforts to obtain agreement with the Governmental Authority requiring such
investigation, remediation, or corrective action, or with the third party
claimant who has obtained a Court Order with respect to Environmental Conditions
for which Seller has agreed herein to indemnify Buyer Indemnified Parties, to
allow Buyer to use the most commercially reasonable method or least stringent
standard in connection with such investigation, remediation, or corrective
action, whichever is applicable.
(d) Buyer shall not compromise or settle any Environmental
Claim for which Seller has agreed herein to indemnify Buyer Indemnified Parties
without Seller's consent which consent, shall not be unreasonably withheld.
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(e) Buyer and Seller agree that the identification of any
matter, condition, circumstance, or claim in any schedule to this Agreement, any
Phase I Site Assessments, Phase II Work, or any information provided by Seller
to Buyer pursuant to this Agreement shall not constitute an admission by Seller
that such matter, condition, circumstance or claim constitutes an Environmental
Condition for which Seller has agreed to indemnify Buyer Indemnified Parties in
Section 9.3(a) hereof, nor shall any cost estimate contained in any such
information, be admissible in the resolution of any objection raised by Seller
to any Environmental Notice pursuant to Section 2.6 hereof.
(f) The provisions of Section 9.1(c) of this Agreement shall
apply to Damages for which Seller has agreed to indemnify Buyer Indemnified
Parties in Section 9.3(a) hereof.
(g) With respect to any Environmental Claim, Buyer's right to
indemnification set forth in this Agreement shall constitute a Buyer Indemnified
Party's exclusive remedy for such claim, and the Buyer expressly waives and
relinquishes, on behalf of itself, its successors and any assigns, any and all
rights, claims, or remedies such person may have against any and all of the
Seller Indemnified Parties under any Environmental Laws, as presently in force
or hereafter enacted, promulgated, or amended (including, without limitation,
under the Comprehensive Environmental Response Compensation and Liability Act,
or any similar state or local law) or at common law.
9.4 Procedure for Claims.
(a) Any Indemnified Party that seeks indemnification under any
part of this Section 9 shall give notice (a "Claim Notice") to each Party
responsible or alleged to be responsible for indemnification hereunder (an
"Indemnifying Party") prior to any applicable Expiration Date specified below.
Such notice shall explain in reasonable detail the nature of the claim and the
parties known to be involved, and shall specify the amount thereof. If the Claim
Notice is being sent under Section 9.3, the Indemnified Party shall also send a
copy of the Claim Notice to the Escrow Agent. The Seller and the Parent shall
seek to resolve any dispute identified in any Claim Notice by negotiating
promptly with each other. These negotiations shall be conducted by the
respective designated senior management representative of each such Person.
(b) If there shall be a dispute as to the amount or manner of
indemnification under this Section 9, the Indemnified Party may pursue whatever
legal remedies may be available for recovery of the Damages claimed from any
applicable Indemnitor. If any Indemnitor fails to pay all or part of any
indemnification obligation when due, then such Indemnitor shall also be
obligated to pay to the applicable Indemnified Party interest on the unpaid
amount for each day during which the obligation remains unpaid at an annual rate
equal to the Prime Rate plus 5%, and the Prime Rate in effect on the first
business day of each calendar quarter shall apply to the amount of the unpaid
obligation during such calendar quarter.
(c) Notwithstanding any other provision of this Section 9,
except as provided below in this paragraph (c), (i) none of the Indemnified
Parties shall be entitled to
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indemnification hereunder with respect to the breach of a representation or
warranty by any Party until the aggregate of all Damages to such Indemnified
Parties from all such breaches of representations or warranties exceeds $500,000
(the "Deductible Amount"), and then only to the extent of such excess amount and
(ii) neither the Seller, on the one hand, nor collectively the Buyer and the
Parent, on the other hand, shall be liable under this Agreement for an aggregate
amount in excess of $10,000,000 (the "Maximum Indemnification"). The foregoing
limitations with respect to the Deductible Amount or Maximum Indemnification
shall not apply, however, to (a) the indemnification obligations set forth in
Sections 9.2 or 9.3 or (b) any breach of the Company's representations or
warranties under Sections 3.4, 3.6(b), 3.11 or 3.26.
(d) Claims Period. Any claim for indemnification under this
Section 9 shall be made by giving a Claim Notice under Section 9.4 on or before
the applicable "Expiration Date" specified below in this Section 9.4, or the
claim shall be invalid. The following claims shall have the following respective
"Expiration Dates": (a) the date that is the 18 month anniversary of the Closing
Date for any claims for Damages under Section 9.1; (b) the fifth anniversary of
the Closing Date for any claim for Damages under Section 9.3 and (c) the statute
of limitations for any claim for Damages under Section 9.2. So long as an
Indemnified Party gives a Claim Notice on or before the applicable Expiration
Date, such Indemnified Party shall be entitled to pursue its rights to
indemnification regardless of when the claim has been liquidated. An Indemnified
Party shall not be entitled to make a claim for Damages if it had not given its
initial Claim Notice on or before the applicable Expiration Date.
Notwithstanding anything to the contrary in this Agreement and for purposes of
clarity, any claim for indemnification under Section 9.3 as result of any
Environmental Claim shall be declared to have been timely given if notice of the
Environmental Claim has been delivered to the Seller within five years of the
Closing Date.
9.5 Third Party Claims.
(a) An Indemnified Party that desires to seek indemnification
under any part of this Section 9 with respect to any actions, suits or other
administrative or judicial proceedings (each, an "Action") that may be
instituted by a third party shall give each applicable Indemnitor prompt notice
of a third party's institution of such Action. The failure on the part of an
Indemnified Party to give any such notice of an Action in a reasonably prompt
manner shall not relieve the Indemnifying Party of any indemnification
obligation hereunder unless, and only to the extent that, the Indemnifying Party
is materially prejudiced thereby. The Indemnifying Party shall have 30 days from
the receipt of the notice (the "Notice Period") to notify the Indemnified Party
(a) whether or not the Indemnifying Party disputes the liability of the
Indemnifying Party hereunder with respect to such Action and (b) whether or not
it desires to defend the Indemnified Party against such Action.
(b) Except as hereinafter provided and except as provided in
Section 9.3, if the Indemnifying Party notifies the Indemnified Party within the
Notice Period that it desires to defend the Indemnified Party against such
Action, the Indemnifying Party shall, at its sole cost and expense (subject to
Section 9.1(c) hereof), have the right to defend the Indemnified Party by
appropriate proceedings with counsel reasonably satisfactory to the Indemnified
Party, and have
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the sole power to direct and control such defense. If any Indemnified Party
desires to participate in any such defense, it may do so at its sole cost and
expense.
(c) The Indemnified Party shall not settle an Action for which
it is indemnified by the Indemnifying Party without the written consent of the
Indemnifying Party unless the Indemnifying Party elects in writing not to defend
the Indemnified Party against such Action. The Indemnifying Party may, with the
consent of the Indemnified Party, which consent shall not be unreasonably
withheld, settle or compromise any action or consent to the entry of any
judgment which includes as a term thereof the delivery by the claimant or
plaintiff to the Indemnified Party of a duly executed written unconditional
release of the Indemnified Party from all liability in respect of such action.
Notwithstanding the foregoing, (i) if an Indemnified Party determines in good
faith that there is a reasonable probability that an Action will materially
adversely affect it other than as a result of monetary damages for which it
would be entitled to indemnification under this Agreement, the Indemnified Party
may, by notice to the Indemnifying Party, assume the exclusive right to defend
such Action and may, with the consent of the Indemnifying Party, which consent
shall not be unreasonably withheld, settle or compromise such Action and (ii)
the Indemnified Party shall have the sole right to defend, settle or compromise
any Action with respect to which it has agreed in writing to waive its right to
indemnification pursuant to this Agreement. In addition, during the period the
Indemnifying Party is determining whether to elect to assume the defense of a
matter covered by this Section 9.5, the Indemnified Party may take such
reasonable actions as it deems necessary to preserve any and all rights with
respect to the matter, without such actions being construed as a waiver of the
Indemnified Party's rights to defend and indemnification pursuant to this
Agreement. If the Indemnifying Party elects not to defend the Indemnified Party
against the Action, whether by not giving the Indemnified Party timely notice as
provided above or otherwise, then the amount of any such Action, or, if the same
be contested by the Indemnified Party, then that portion thereof as to which
such defense is unsuccessful (and the reasonable costs and expenses pertaining
to such defense) shall be the liability of the Indemnifying Party hereunder,
subject to Section 9.1(c) hereof.
9.6 Effect of Investigation or Knowledge. Any claim by an Indemnified
Party for indemnification shall not be adversely affected by any investigation
by or opportunity to investigate afforded to the Buyer. Each Party shall be
deemed to be relying on the representations and warranties of any other Party
set forth herein regardless of any investigation or audit conducted before or
after the Closing Date or the decision of any Party to consummate the
Transactions contemplated hereby and complete the Closing.
9.7 Conflicts. In the event of a conflict between any of the provisions
of Sections 6.6(e) or 6.6(g) or Section 9.3 on the one hand, and Sections 9.4(a)
or (b) or Section 9.5 on the other hand, Section 6.6(e), Section 6.6(g) or
Section 9.3, as the case may be, shall control.
10. Termination.
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10.1 Grounds for Termination. This Agreement may be terminated at any
time prior to the Closing Date:
(a) by mutual written consent of the Seller and the Buyer;
(b) by either the Seller or the Buyer, if the Closing has not
occurred by the Termination Date; provided, however, that the right to terminate
this Agreement under this paragraph (b) of Section 10.1 shall not be available
to any Party that has breached any of its covenants, representations or
warranties in this Agreement;
(c) by either the Seller or the Buyer, if there shall be any
Law that makes consummation of the Transactions illegal or otherwise prohibited
or if any Court Order enjoining the Buyer or the Company from consummating the
Transactions is entered and such Court Order shall become final and
nonappealable;
(d) by the Buyer if the Seller shall have breached in any
material respect any of its covenants hereunder or if the representations and
warranties of the Seller contained in this Agreement shall not be true and
correct in any material respect, except for such changes as are contemplated by
this Agreement, and, in either event, if such breach is subject to cure, the
Seller shall not have cured such breach within 15 business days of the Buyer's
notice of an intent to terminate;
(e) by the Seller, if the Buyer shall have breached in any
material respect any of its covenants hereunder or if the representations and
warranties of the Buyer contained in this Agreement shall not be true and
correct in any material respect, except for such changes as are contemplated by
this Agreement, and, in either event, if such breach is subject to cure, the
Buyer shall not have cured such breach within 15 business days of the Seller's
notice of an intent to terminate; or
(f) by either the Parent or the Seller if the Environmental
Remedial Costs exceed $10,000,000.
10.2 Effect of Termination. If this Agreement is terminated
pursuant to Section 10.1, the covenants in Sections 5.5, 5.6 and 6.7 shall
survive the termination hereof. If this Agreement is terminated pursuant to
Sections 10.1(a), (b), (c), (d) or (f), then the Seller shall return the full
amount of the Deposit to the Parent via a wire transfer of immediately available
funds within three Business Days of any such termination. In addition, any Party
may pursue any legal or equitable remedies that may be available if such
termination is based on a breach of another Party.
11. General.
11.1 Governing Law. This Agreement shall be governed by, construed
and enforced in accordance with the laws of the State of New Jersey, without
giving effect to any of the conflict of laws rules thereof. Each of the Parties
hereto (a) consents to submit itself to the personal
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jurisdiction of any New Jersey state court or any Federal court located in the
State of New Jersey if any dispute arises out of this Agreement, (b) agrees that
it will not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court, and (c) agrees that it will not
bring any action relating to this Agreement in any court other than any New
Jersey state court or any Federal court sitting in the State of New Jersey.
11.2 Further Assurances. The parties hereto agree to execute and
deliver any and all papers and documents reasonably necessary to complete the
transactions contemplated hereby.
11.3 Binding Effect. This Agreement shall be binding upon the
Parties hereto and their respective successors and assigns; provided, however,
that this Agreement and all rights hereunder may not be assigned by any Party
hereto without the written consent of the other Parties. Nothing contained in
this Agreement, express or implied, is intended to confer upon any Person other
than the Parties and their respective successors and permitted assigns, any
rights or remedies under or by reason of this Agreement. If after the Closing
Date any Party or any of its successors or assigns (a) consolidates with or
merges into any other Person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or (b) transfers all or
substantially all of its properties, assets or stock to any Person, then and in
each such case, proper provision shall be made so that the successors and
assigns of any such Party (or their successors and assigns) shall assume the
surviving obligations of such Party in this Agreement.
11.4 Waivers. At any time prior to the Closing, the Parties may (i)
extend the time for the performance of any of the obligations or other acts of
the Parties, (ii) waive any inaccuracies in the representations or warranties or
the other Parties contained herein, or (iii) waive compliance with any of the
agreements or conditions contained herein.
11.5 Waiver of Jury Trial. Each Party waives, to the fullest extend
permitted by applicable Law (a) any right it may have to a trial by jury in
respect of any action, suit, proceeding arising out of or relating to this
Agreement and (b) except as expressly contemplated by Section 9.1(a), any right
it may have to receive damages from any other party based on any theory of
liability for any special, indirect, consequential (including lost profits) or
punitive damages.
11.6 Exhibits. All of the Exhibits attached to this Agreement are
hereby incorporated herein and made a part hereof.
11.7 Entire Agreement. This Agreement and the Confidentiality
Agreement constitute the entire agreement among the parties with respect to the
subject matter hereof. All prior negotiations, agreements and understandings are
superseded hereby. This Agreement may not be amended or revised except by a
writing signed by all parties hereto that makes express reference that such
writing is an such an amendment as required by this Section 11.7.
11.8 Notices. Any notice, authorization, request or demand required
or permitted to be given hereunder shall be in writing and shall be deemed to
have been duly given when delivered by hand, facsimile (provided that a
conforming copy is sent by a nationally-recognized overnight
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delivery service or by reputable courier service) to, the respective addresses
specified for the parties below.
TO THE BUYER:
Money's Mushrooms Ltd.
0000-000X Xxxxxx
Xxxxxxx, Xxxxxxx Xxxxxxxx
Xxxxxx X0X0X0
Attention: Xx. Xxx Xxxxxxxx
FAX: 000-000-0000
With a copy to:
Xxxxxxxxx Xxxxxxx Xxxxxxx & Xxxx
0000-000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX X0X 0X0
Attention: F. Xxxxxx Xxxx, Esq.
FAX: 000-000-0000
and
Xxxxxx, Xxxxx & Xxxxxxx LLP
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
FAX: 000-000-0000
TO THE SELLER:
Vlasic Foods International Inc.
Vlasic Plaza
Six Executive Campus
Cherry Hill, NJ 08002-4112
Attention: General Counsel
FAX: 000-000-0000
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With a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
(until January 6, 2000)
000 0xx Xxxxxx Xxx Xxxx, XX 00000
(after January 6, 0000) Xxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxxxx, Esq.
FAX: 000-000-0000
11.9 Interpretation. Unless the context of this Agreement clearly
requires otherwise, (a) references to the plural include the singular, the
singular the plural, the part the whole, (b) references to any gender include
all genders, (c) "including" has the inclusive meaning frequently identified
with the phrase "but not limited to" or "without limitation", (d) references to
"hereunder" or "herein" relate to this Agreement and (e) accounting terms used
herein have the meanings set forth in GAAP. All dollar amounts expressed herein
are in US dollars.
11.10 Counterparts; Facsimile Signature. This Agreement may be
executed in two or more counterparts and may be exchanged by facsimile, each of
which shall be binding as of the date first written above. Each such copy shall
be deemed an original, and it shall not be necessary in making proof of this
Agreement to produce or account for more than one such counterpart or the
original signature page represented by facsimile.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
VLASIC FOODS INTERNATIONAL INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxxxx
President and Chief Executive Officer
MONEY'S FOODS (U.S.) LTD.
By: /s/ Xxx Xxxxxxxx
----------------------------------------
Xxx Xxxxxxxx
President and Chief Executive Officer
By: /s/ Xxx Xxx
----------------------------------------
Xxx Xxx
Senior Vice President
MONEY'S MUSHROOMS LTD.
By: /s/ Xxx Xxxxxxxx
----------------------------------------
Xxx Xxxxxxxx
President and Chief Executive Officer
By: /s/ Xxx Xxx
----------------------------------------
Xxx Xxx
Senior Vice President
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EXHIBIT B
Mushroom Products (Vlasic Farms(TM) brand)
Button Whites
Medium Whites
Large Whites
Jumbo Whites
White Gourmet Caps
Sliced Whites
Portabella
Baby bellas
Sliced Portabella
Portabella Caps
Shiitake
Oyster
Classic Xxxxx "Crimini"
Marinated Mushrooms
Restaurant Style Grillers
Portabella Sampler
Sautee Medley
Mushroom Mania
Spawn and Supplemental (Full House(R) and Speed Spawn(TM) brands)
