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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
VLASIC FOODS INTERNATIONAL INC.,
VF BRANDS, INC.
ALIGAR, INC.,
XXXXXX, INC.,
VLASIC FOODS DISTRIBUTION COMPANY,
VLASIC STANDARDS, INC.,
VLASIC FOODS CANADA, INC.,
VLASIC INTERNATIONAL BRANDS, INC.,
VLASIC INTERNATIONAL SALES INC.,
AND
HMTF FOODS ACQUISITION CORP.
DATED AS OF APRIL 3, 2001
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ASSET PURCHASE AGREEMENT, dated as of April 3, 2001 (this
"Agreement"), by and among Vlasic Foods International Inc., a New Jersey
corporation ("Seller"), VF Brands, Inc., a Delaware corporation and a wholly
owned Subsidiary of Seller ("VFB"), Aligar, Inc., a Delaware corporation
("Aligar"), Xxxxxx, Inc., a Delaware corporation ("Xxxxxx"), Vlasic Foods
Distribution Company, an Arkansas corporation ("VFDC"), Vlasic Standards, Inc.,
a New Jersey corporation ("VSI"), Vlasic Foods Canada, Inc., a Delaware
corporation ("VFCI"), Vlasic International Brands, Inc., a Delaware corporation
("VIBI"), Vlasic International Sales Inc., a New Jersey corporation ("VISI")
and, together with Seller, VFB, Aligar, Xxxxxx, VFDC, VSI, VFCI, VIBI and any
other Subsidiary (as defined in Section 8.11) of Seller selling or assigning any
Acquired Assets (as defined in Section 1.1), "Sellers"), and HMTF Foods
Acquisition Corp., a Delaware corporation ("Purchaser").
RECITALS:
WHEREAS, Sellers are engaged in the business of (i)
developing, producing, selling and marketing a variety of pickled food products,
including pickles, peppers, sauerkraut and relish (the "Pickles Business"), (ii)
developing, manufacturing, selling, licensing, marketing and distributing
barbecue sauce and grilling sauce products in the Retail Industry (as defined in
Section 8.11) under the trademark "Open Pit," and exclusively licensing the
"Open Pit" trademark for use in the Institutional and Food Service Industry (as
defined in Section 8.11) (the "Sauce Business") and (iii) developing, producing,
selling and marketing a variety of frozen dinners, pot pies, breakfasts and
other frozen food products primarily in the United States and Canada (the
"Xxxxxxx Business") and, together with the Pickles Business and the Sauce
Business, the "Business"); and
WHEREAS, Sellers (other than VFCI) have filed voluntary
petitions (collectively, the "Petitions") for reorganization relief pursuant to
Chapter 11 of title 11 of the United States Code, 11 U.S.C. Sections
101-1330 (as amended, the "Bankruptcy Code"), in the United States Bankruptcy
Court for the District of Delaware (the "Bankruptcy Court") (the "Bankruptcy
Case");
WHEREAS, prior to the date hereof, Seller and VFB have entered
into an Asset Purchase Agreement (the "Heinz Agreement"), dated January 25,
2001, with X.X. Xxxxx Company ("Heinz");
WHEREAS, on March 5, 2001, the Bankruptcy Court entered an
order approving, as provided in such order, the bidding procedures described in
Section 4.16 of the Heinz Agreement (the "Prior Bidding Procedures Order");
WHEREAS, certain Sellers have asked the Bankruptcy Court to
enter an order superseding the Prior Bidding Procedures Order (the "Existing
Bidding Procedures Order");
WHEREAS, upon the terms and subject to the conditions set
forth herein and as authorized under Sections 105, 363 and 365 of the Bankruptcy
Code, Purchaser
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desires to purchase and assume from Sellers, and Sellers desire to sell,
transfer, assign, convey and deliver to Purchaser, substantially all of the
assets relating to the Business, together with certain obligations and
liabilities relating thereto;
WHEREAS, Sellers have determined, in accordance with the Prior
Bidding Procedures Order, that Purchaser is a Qualified Bidder, that this
Agreement constitutes a Qualified Bid and an Auction Transaction and the
consummation of the transactions contemplated by this Agreement constitutes an
Alternative Transaction (as each such term is defined in the Prior Bidding
Procedures Order and the Existing Bidding Procedures Order); and
WHEREAS, Seller and VFB have terminated the Heinz Agreement in
accordance with its terms (other than in respect of the obligations thereunder
as provided for in the Prior Bidding Procedures Order to pay the Expense
Reimbursement and the Break-Up Fee thereunder);
NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements contained herein,
and intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
SALE OF ASSETS
Section 1.1. Acquired Assets. On the terms and subject to the
conditions set forth herein, on the Closing Date (as defined in Section 1.8),
Sellers shall sell, transfer, assign, convey and deliver, or cause to be sold,
transferred, assigned, conveyed and delivered, to Purchaser, and Purchaser shall
purchase and accept, all of each Seller's, (including VFB's) and any other
Subsidiaries' right, title and interest in and to (i) the assets, properties,
rights, claims, contracts and businesses of every kind, character and
description, whether tangible or intangible, whether real, personal or mixed,
whether accrued, contingent or otherwise, and wherever located, which are shown
on the Closing Balance Sheet (as defined in Section 1.7(a)) and (ii) the assets,
properties, rights, claims, contracts and businesses of every kind, character
and description, whether tangible or intangible, whether real, personal or
mixed, whether accrued, contingent or otherwise, and wherever located, that are
used or held for use in, or are otherwise required for the normal operation of,
the Business, including all those items in the following categories, whether or
not shown on the Closing Balance Sheet, other than assets described in clause
(i) or clause (ii) above that are Retained Assets (as defined in Section 1.2
below) (collectively, the "Acquired Assets"):
(a) Equipment. All machinery, fixtures, furniture, equipment,
automobiles, trucks, vehicles, tooling, tools, dies, molds, office equipment,
furnishings and other items of personal property;
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(b) Inventory. All inventory, finished goods, works in
process, raw materials, ingredients and packaging materials (collectively, the
"Inventory") owned by Seller or its Subsidiaries at the time of the Closing (as
defined in Section 1.8);
(c) Materials and Supplies. All materials, supplies, parts,
point of purchase materials, accessories, goods and other like products or
items;
(d) Intellectual Property. All registered and common law
trademarks and trade names, service marks and service names, and registrations
and applications for registration thereof, and foreign counterparts thereof (if
any), Internet domain names and associated content, logos, designs, slogans,
trade dress and general intangibles of like nature, together with the goodwill
associated therewith, including, without limitation, the "hot pockets" trademark
rights of any Seller and its Subsidiaries (whether or not related to the
Business) and those identified in Section 2.13(a)(i) of the Seller Disclosure
Schedule (as defined in the introduction to Article II) ("Trademarks"); all
patents, patent applications and foreign counterparts thereof (if any)
("Patents"); all copyrights, copyright applications and copyright registrations
and foreign counterparts thereof (if any); and all inventions, customer lists,
discoveries, trade secrets, improvements, formulae, practices, processes,
methods, technology, process sheets, mixing instructions, recipes and know-how
and similar proprietary rights and related licenses and other agreements (all of
the foregoing are collectively referred to as the "Intellectual Property");
provided, however, that computer software, programs and source disks, and
related program documentation, tapes, manuals, forms, guides and other materials
that are owned by or are licensed to Seller or any Affiliate (as defined in
Section 8.11) of Seller shall not constitute or be deemed to constitute
Intellectual Property for any purposes of this Agreement).
(e) Contracts. All rights in and to all written and oral
distribution agreements, consignment agreements, agency agreements, co-packing
agreements, license agreements, leases, broker agreements, confidentiality
agreements (under which any Seller has provided information to or received
information from a third party in respect of the Business), all purchase orders
for the sale or purchase of goods and services, or both, and all other contracts
and other agreements of whatever nature (whether written or oral) to which any
transferring party is a party or otherwise has rights under (collectively, the
"Contracts"), to the extent that, and only to the extent that, such are a part
of the Assumed Liabilities;
(f) Accounts Receivable. All accounts and notes receivable,
letters of credit and other rights to receive payments (collectively, "Accounts
Receivable");
(g) Prepaid Pickle Media Advertising. All prepaid expenses or
advance payments in existence as of the Closing Date in respect of Pickles
Business advertising (the "Prepaid Pickles Advertising") scheduled to air in the
May and June 2001 time period as contemplated by the "Consumers Events Calendar"
(as defined in Section 2.22) (the "Prepaid Ad Expense");
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(h) Claims. All rights, privileges, claims, demands, refunds,
indemnification agreements in favor of any transferring party with, and
indemnification and similar rights against, third parties, warranty claims (to
the extent transferable), offsets and other claims (other than any claims by
Sellers under this Agreement and under Sections 544, 545, 547 and 548 of the
Bankruptcy Code);
(i) Books and Records. Except as provided in Section 1.2(c),
all sales and business records, files, books of account, customer and supplier
lists, books and records relating to Taxes (as defined in Section 2.16) relating
to the Business and the Acquired Assets, product specifications, product
formulations, drawings, correspondence, engineering, maintenance, operating and
production records, advertising materials, customer lists, cost and pricing
information, business plans, quality control records and manuals, blueprints,
research and development files, litigation files, personnel records, credit
records of customers and other books and records, manuals and other materials
(in any form or medium);
(j) Goodwill. All goodwill;
(k) Permits. All Permits (as defined in Section 2.3);
(l) Real Property. All owned real property, including the real
property located at Xxxxx City, Michigan, Millsboro, Delaware, Fayetteville,
Arkansas and Omaha, Nebraska;
(m) UPC Codes. All UPC codes used on products sold in the
Business; and
(n) Information Technology. All application systems and
software, including all computer software, programs and source disks, and
related program documentation, tapes, manuals, forms, guides and other
materials, systems hardware and networking and communications assets as
generally and specifically described on Exhibit 1.1(n) (the "Information
Technology").
Subject to the terms and conditions hereof, at the Closing, the Acquired Assets
shall be transferred or otherwise conveyed to Purchaser free and clear of all
liabilities, obligations and Liens (as defined in Section 8.11) excepting only
Assumed Liabilities (as defined in Section 1.3) and Permitted Liens (as defined
in Section 2.12(a)) other than Permitted Liens required hereby to be released on
or prior to the Closing Date.
Section 1.2. Retained Assets. Notwithstanding anything to the
contrary set forth herein, the Acquired Assets shall not include the Retained
Assets. "Retained Assets" shall mean the following assets which are to be
retained by any Seller and not sold or assigned to Purchaser:
(a) Subject to Section 4.11, Contracts (i) which, by their
terms and pursuant to Applicable Law (as defined in Section 8.11), are
non-transferable or non-assignable, or (ii) are set forth in the Seller
Disclosure Schedule to the extent not assumed by Purchaser pursuant to Section
1.3 of this Agreement;
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(b) [Intentionally Omitted];
(c) All books and records solely relating to Taxes (excluding
those books and records relating to Taxes relating to the Business and the
Acquired Assets), provided that Seller shall make such information available to
Purchaser pursuant to Section 4.9 of this Agreement;
(d) Subject to Section 4.11, all non-assignable or
non-transferable Permits;
(e) All real property owned by any Seller and located at
Bridgeport, Michigan;
(f) All machinery, equipment, tooling, tools, office equipment
and similar items of personal property formerly used in the manufacture of
pickled food products at Sellers' formerly owned manufacturing facility in
Bridgeport, Michigan, none of which is currently used in the Business;
(g) All deferred tax assets relating to the Business;
(h) All rights, demands, claims, damages, suits, controversies
and causes of action of any kind or character whatsoever, whether known or
unknown, asserted or unasserted, and including but not limited to any state,
federal, contractual, tort, equitable, statutory or common law claims for
damages, injunctive relief or other recovery of any kind whatsoever, that Seller
or any of its Subsidiaries or Affiliates have or may have that are set forth on
Exhibit 1.2(h);
(i) All rights, title and interest in the assets set forth on
Exhibit 1.2(i);
(j) All claims by Sellers under this Agreement and under
Sections 544, 545, 547 and 548 of the Bankruptcy Code;
(k) All prepaid expenses, credits or similar advance payments,
except for the Prepaid Ad Expense as set forth in Section 1.1(g); and
(l) All rights, titles and interests in (i) the outstanding
equity securities of Freshbake Foods, Limited ("Freshbake") and
Stratford-upon-Avon Foods Limited ("Stratford") and their respective assets and
(ii) any other equity interests owned by any Seller.
Section 1.3. Assumed Liabilities. Subject to the terms and
conditions set forth in this Agreement and excluding the Retained Liabilities
(as defined in Section 1.4), on the Closing Date, Purchaser shall assume and
thereafter pay, perform and discharge when due the following obligations,
liabilities, debts, charges, fees, commitments, expenses and disbursements of
any Seller that have not been paid, performed or discharged as of the Closing
(the "Assumed Liabilities"):
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(a) To the extent that such remain outstanding as of the
Closing, any and all trade accounts payable and accrued expenses that (i) are
current liabilities incurred after January 29, 2001 and prior to the Closing in
the ordinary course of business consistent with prior practices that are
liabilities that would be reflected as domestic or Canadian accounts payable or
accrued expenses under (x) the 320, 340 or 360 series of ledger account numbers
(other than such ledger accounts as are set forth as "accounts to be excluded"
on Exhibit 1.3(a) attached hereto), or (y) the 450 series of ledger account
numbers set forth as "accounts to be included" on Exhibit 1.3(a) attached hereto
and (ii) have not been incurred in breach of this Agreement, except, in each
case, for (A) liabilities for Taxes (other than in respect of ledger account
450-055 in respect of Transferred Employees), (B) liabilities in respect of
employees of any Seller except to the extent that such are expressly assumed by
Purchaser pursuant to Section 1.3(c)), (C) liabilities for claims and
litigation, including worker's compensation claims and (D) liabilities that are
expressly retained by Sellers in Section 4.3;
(b) any and all liabilities, obligations and commitments
arising out of Contracts (i) that are (x) set forth on Section 2.8 of the Seller
Disclosure Schedule and that are identified in a notice from Purchaser to Seller
as Contracts being assumed by Purchaser (the "Assumption Notice"), or (y) not
described on Section 2.8 of the Seller Disclosure Schedule because such are not
required to be set forth therein under the terms of Section 2.8, (ii) Contracts
not described in Section 2.8 of the Seller Disclosure Schedule, but that are
identified in the Assumption Notice, or (iii) that are entered in the ordinary
course of business consistent with past practice after the date hereof and on or
prior to Closing in accordance with this Agreement, in each case to the extent
that such Contracts are validly assigned to Purchaser, and in each case
excluding (x) any obligation or liability for any breach thereof occurring prior
to the Closing and (y) any obligation or liability accruing with respect to any
time period prior to the Closing (except to the extent expressly assumed in
Section 1.3(a) above or Section 1.3(f) below);
(c) any and all liabilities and obligations of Sellers to the
extent specifically assumed by Purchaser pursuant to Section 4.3;
(d) any and all liabilities of Sellers to consumers in respect
of any and all products sold by the Business, including liabilities in respect
of product liability claims and liabilities for refunds, adjustments,
allowances, exchanges, returns and warranty, merchantability and other claims,
to the extent each such claim does not exceed $25 and the aggregate amount of
all such claims does not exceed $50,000;
(e) any and all liabilities of Sellers in respect of those
lawsuits, actions, proceedings and claims set forth in Exhibit 1.3(e) to the
extent that such liabilities in the aggregate do not exceed $25,000 as to each
such claim;
(f) any and all liabilities for all cure, compensation and
reinstatement costs or expenses of or relating to the assumption and assignment
of the Contracts assumed by Purchaser under Section 1.3(b) pursuant to Section
365 of the Bankruptcy Code ("Cure Costs") to the extent that such are considered
in the calculation of the Closing Net Working Capital Amount under Section 1.7;
provided, however, that
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such Cure Costs will be paid by Purchaser only if consented to by Sellers or
pursuant to an order of the Bankruptcy Court; and
(g) any and all liability of Sellers and their Subsidiaries in
respect of those environmental matters expressly disclosed on Exhibit 1.3(g) and
relating to the real property located in Fayetteville, Arkansas and Omaha,
Nebraska.
Section 1.4. Retained Liabilities. Notwithstanding any
provision of this Agreement or any Collateral Agreement (as defined in Section
8.11) and regardless of any disclosure to Purchaser, Purchaser shall not assume
and Sellers shall retain all liabilities and obligations of Sellers and their
Affiliates (a) under the Amended and Restated Credit Agreement, dated as of
September 30, 1998, by and among Seller, Xxxxxx Guaranty Trust Company of New
York and The Chase Manhattan Bank, as agents, and the other banks party thereto,
as amended, (b) under the Indenture, dated as of June 29, 1999, by and between
Seller and The Bank of New York, as trustee, (c) for Taxes arising out of the
operation of the Business or the ownership of the Acquired Assets prior to the
Closing other than the Assumed Liabilities, (d) relating to the Retained Assets,
(e) except to the extent specifically assumed by Purchaser pursuant to Section
1.3 of this Agreement, that are not items included in current liabilities or are
items which are current liabilities that are not consistent with past practices,
(f) which relate to claims and litigation, including worker's compensation
claims, or are current liabilities of types or categories not reflected on the
Reference Balance Sheet, except to the extent specifically assumed by Purchaser
pursuant to Section 1.3 of this Agreement, (g) except to the extent specifically
assumed by Purchaser pursuant to Section 1.3 of this Agreement, in respect of
the lawsuits, actions, proceedings and claims pending or threatened, including,
without limitation, those set forth on Exhibit 1.4(g), (h) relating to any fees
and expenses owed to Lazard Freres & Co., LLC, (i) in respect of employees of
any Seller or its Affiliates or Plans, except to the extent specifically assumed
by Purchaser pursuant to Section 4.3, (j) that are not expressly Assumed
Liabilities, (k) that are Contingent Obligations of each Seller, (1) that are
fees and expenses incurred by each Seller in connection with the Bankruptcy
Case, the Heinz Agreement, the transactions contemplated by this Agreement or
any Alternative Transaction including, but not limited to, fees and expenses of
attorneys, accountants, financial and other advisors, consultants, agents and
other representatives or the Expense Reimbursement and Break-Up Fee under the
Heinz Agreement, (m) that are liabilities, obligations and commitments of each
Seller for Indebtedness, including any related principal, accrued interest,
prepayment penalties, late charges, and collection fees, (n) that are
liabilities, obligations and commitments of each Seller for any damage claims
arising from the rejection under Section 365 of the Bankruptcy Code of any
executory or unexpired Contracts, (o) that are liabilities, obligations and
commitments of each Seller for consequential damages, punitive damages, or
exemplary damages however caused, whenever or wherever arising, or to whomsoever
owed, (p) that are liabilities, obligations and commitments of each Seller for
any pre- or post-petition claims for fees, interest, late fees, charges,
penalties, court costs or attorneys fees claimed by any party, or by any
creditor, including any Person asserting such claims under any Contract, (q)
that are liabilities, obligations and commitments of each Seller for any matter
retained by a Seller under Section 4.3, including severance or retention
agreement or plan of a Seller and (r) that are liabilities, obligations and
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commitments of each Seller, whether direct or indirect, for contribution,
indemnity, restitution or any other form of reimbursement, related to, resulting
from or revived by virtue of the avoidance of one or more transfers by a Seller
in its Bankruptcy Case, whether such avoidance arises under Sections 544, 545,
547, 548, 549, 550, 553(b), or 724(a) of the Bankruptcy Code, by state avoidance
laws, or otherwise (collectively, the "Retained Liabilities"). Notwithstanding
anything to the contrary contained in this Agreement, Purchaser shall have no
liability to Sellers with respect to any prepayments or deposits made by Sellers
with any third party except to the extent that Purchaser will refund to Sellers
any such prepayments or deposits erroneously paid to Purchaser and except for
the Prepaid Ad Expense as set forth in Section 1.1(g).
Section 1.5. Transfer of Assets and Assumption of Assumed
Liabilities.
(a) At the Closing, the sale, transfer, assignment, conveyance
and delivery of the Acquired Assets (other than the Owned Real Property (as
defined in Section 2.12) and the Trademarks and Patents) shall be effected
pursuant to a xxxx of sale and assignment substantially in the form of Exhibit
1.5(a) attached hereto (the "Xxxx of Sale").
(b) At the Closing, the transfer of each Owned Real Property
shall be effected pursuant to a special limited warranty or bargain or sale
deed, without covenants against grantor's acts, in the customary form for the
state in which such Owned Real Property is located (collectively, the "Deeds"),
together with any reasonably necessary transfer declarations or other filings.
(c) At the Closing, the transfer of each Lease (as defined in
Section 2.12(c)), but only to the extent described in Section 2.12(c) of the
Seller Disclosure Schedule and specifically assumed by Purchaser pursuant to
Section 1.3 of this Agreement, shall be effected pursuant to an assignment and
assumption of lease in the form attached hereto as Exhibit 1.5(c) (collectively,
the "Lease Assignments"), together with any reasonably necessary transfer
declarations or other filings.
(d) At the Closing, the transfer of the Trademarks and Patents
owned or held by Seller or any of its Subsidiaries shall be effected pursuant to
customary instruments of assignment or transfer, in form suitable for recording
in the appropriate office or bureau (collectively, the "Intellectual Property
Instruments").
(e) At the Closing, the assumption of the Assumed Liabilities
shall be effected pursuant to an assignment and assumption agreement
substantially in the form of Exhibit 1.5(e) attached hereto (the "Assumption
Agreement") and such other documents and instruments as may be necessary in
order to effect Purchaser's assumption of the Assumed Liabilities.
Section 1.6. Purchase Price. (a) Subject to the terms and
conditions of this Agreement, in consideration of the aforesaid sale, transfer,
assignment, conveyance and delivery of the Acquired Assets, Purchaser shall (i)
assume the Assumed Liabilities and (ii) pay to Seller at Closing by wire
transfer in immediately available funds,
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$370,000,000 (the "Purchase Price"), as such Purchase Price may be adjusted in
accordance with Section 1.6(b) (the "Adjusted Purchase Price"), less the Escrow
Amount (as defined in Section 1.12). The Adjusted Purchase Price shall be
subject to further adjustment following the Closing as provided in Section 1.7.
In addition to the Purchase Price, Purchaser, in consideration of the Acquired
Assets, shall issue, within five Business Days (as defined in Section 1.8) of
the later to occur of the Plan Effective Date (as hereinafter defined) or of the
Order Date (as hereinafter defined), warrants to purchase at an exercise price
of $3.00 per share (assuming that Purchaser, or its successor as provided below,
has issued its shares of common stock under the Equity Commitment Letter at
$1.00 per share) the lesser of (x) 22,500,000 shares of common stock or (y) such
lesser number of shares of common stock as shall represent 15% of the shares of
common stock issued under the terms of the Equity Commitment Letter (the
"Warrants"); provided, however, that if on the date of the issuance of the
Warrants Purchaser is a wholly owned subsidiary of another corporation, then, at
the option of Purchaser, the Warrants may be issued by such corporation
(provided that if the Warrants are issued by such other corporation, they will
be issued on terms and conditions which are substantially identical to the
Warrants that would have been issued by Purchaser so as to be economically
equivalent to such Warrants). The Warrants shall contain terms and conditions
substantially identical to those set forth on Exhibit 1.6(a) attached hereto and
shall be issued, in connection with the confirmation of Sellers' plan of
reorganization, in accordance with the plan of reorganization. It shall be a
condition to the issuance of the Warrants that (x) the Warrants shall have been
distributed and shall be subject to transfer restrictions in such a manner under
Seller's plan of reorganization so as not to cause the issuer thereof to become
a reporting company under the Securities Exchange Act of 1934, unless the issuer
at the time of issuance is otherwise a reporting company thereunder, (y) the
Bankruptcy Court shall have issued an order in a form and substance reasonably
satisfactory to Purchaser (the "Confirmation Order") confirming Seller's plan of
reorganization under section 1129 of the Bankruptcy Code and providing that the
issuance by Purchaser of the Warrants (and the securities underlying the
distribution thereof) and the distribution thereof pursuant to such plan of
reorganization shall be exempt from the registration provisions of the
Securities Act of 1933, as amended, or any state or local laws requiring
registration, pursuant to Section 1145 of the Bankruptcy Code, and (z) that
Purchaser (or such parent corporation, if applicable) and its officers,
directors, employees, attorneys and agents are entitled to the protections set
forth in section 1125(e) of the Bankruptcy Code. As used in this Agreement,
"Order Date" shall mean the date that the order confirming Sellers' plan of
reorganization has become a Final Order (as defined in Section 8.14) and "Plan
Effective Date" shall mean the date under Sellers' plan of reorganization upon
which all conditions to the effectiveness of such plan have been satisfied or
waived). Purchaser shall cooperate with Sellers in connection with the
preparation of the disclosure statement for Sellers' plan of reorganization and
Purchaser shall furnish to Sellers such information and materials (including
financial statements) concerning Purchaser as may be necessary under applicable
law for use in such disclosure statement. Sellers shall allow Purchaser the
opportunity to review and comment on such disclosure statement and the inclusion
of any information concerning Purchaser contained in such disclosure statement
shall be subject to Purchaser's prior approval, which shall not be unreasonably
withheld.
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(b) Not less than five Business Days prior to the scheduled
Closing, Seller will deliver to Purchaser a notice indicating its good faith
estimate of the Net Working Capital (as defined in Section 1.7(a)) for the
Business as of the Closing (the "Estimated Net Working Capital"), along with a
certificate of a duly authorized officer of Seller certifying the foregoing. If
the Estimated Net Working Capital is less than $98,322,000, then such shortfall
shall be deducted from the Purchase Price at Closing. If the Estimated Net
Working Capital is greater than $98,322,000, then such excess shall be added to
the Purchase Price at Closing.
Section 1.7. Working Capital Adjustment.
(a) Closing Balance Sheet. As soon as reasonably practicable
following the Closing Date, and in any event within 90 days thereafter, Seller
shall prepare and deliver to Purchaser (i) the audited balance sheet of the
Business (which shall include a physical inventory) as of the close of business
on the Closing Date (the "Closing Balance Sheet"), together with the audit
reports of PricewaterhouseCoopers LLP ("Seller's Accountant"), and (ii) a
calculation of net working capital based on the ledger accounts included in such
calculation on Exhibit 1.3(a) (which amount shall be (x) decreased by the amount
of the prepaid insurance retained by Sellers as shown in ledger account number
080-010 and (y) increased by the amount of the Prepaid Ad Expense) including,
without duplication, in the calculation thereof all Cure Costs ("Net Working
Capital") as reflected on the Closing Balance Sheet (the "Closing Net Working
Capital Amount") (together with reasonable back-up information providing the
basis for such balance sheet and calculation). In addition, the Closing Balance
Sheet shall set forth, separate and apart from the calculation of the Net
Working Capital, and, therefore, not included in the calculation of the Net
Working Capital, the amount of the post-retirement benefits accrual as of the
Closing as such post-retirement benefits accrual is reflected in ledger account
number 409 and is attributable to employees and former employees of the Business
and determined in the ordinary course of business consistent with past practice
in a manner consistent with GAAP (as defined below) and with past practice (the
"Post-Retirement Benefits Accrual"). Except as set forth on Exhibit 1.7(a), the
Closing Balance Sheet shall be prepared in accordance with generally accepted
accounting principles and practices of the United States in effect from time to
time ("GAAP"), and on a basis consistent with the preparation of the Financial
Statements (as defined in Section 2.5) and Exhibit 1.7(a) and Exhibit 1.3(a),
including appropriate closing adjustments as if the Closing were at a fiscal
year end (provided that, except as set forth on Exhibit 1.7(a), no liabilities
or reserves reflected on the Reference Balance Sheet shall be reduced or
eliminated except by reason of a payment or credit in the ordinary course of
business and consistent with past practice (except for the trade account accrual
under ledger account 450-035 which shall be calculated in a manner consistent
with GAAP and in the ordinary course of business consistent with past practice).
In order for Seller to prepare the Closing Balance Sheet, Purchaser will provide
to Seller and Seller's employees, Seller's Accountant and other advisors prompt
and full on-site access as shall be reasonable under the circumstances to the
personnel and books, records, work papers and all other supporting accounting
documents of the Business (and shall provide copies of such books, records, work
papers and other supporting accounting documents as may be reasonably
requested), to the extent reasonably related to the preparation of the Closing
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Balance Sheet and the calculation of the Closing Net Working Capital Amount.
Purchaser acknowledges that Seller will have primary responsibility for
preparation of the Closing Balance Sheet. Seller shall also give Purchaser and
its representatives, including Xxxxxx Xxxxxxxx LLP ("Purchaser's Accountant"),
access to all work papers and all other supporting accounting documents of the
Business related to the preparation of the Closing Balance Sheet. In addition,
Purchaser and its representatives, including Purchaser's Accountant, shall be
entitled to ask questions, receive answers and request such other data and
information from Seller and 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 solely by
Purchaser's Accountant. Seller shall also cause Seller's Accountant to provide
to Purchaser's Accountant access to work papers prepared pursuant to the audit
of the Closing Balance Sheet; provided, however, that such access shall be in
accordance with generally accepted auditing standards and the policies of
Seller's Accountant.
(b) Disputes. If Purchaser disagrees with the calculation of
the Closing Net Working Capital Amount or Post-Retirement Benefits Accrual, as
applicable, or any element relevant thereto, it shall notify Seller of such
disagreement in writing within 30 days after its receipt of the Closing Balance
Sheet, which notice shall set forth in reasonable detail the particulars of such
disagreement. In the event that Purchaser does not provide such a notice of
disagreement within such 30-day period or Purchaser affirmatively notifies
Seller that it agrees with the calculation of the Closing Net Working Capital
Amount or Post-Retirement Benefits Accrual, as applicable, Purchaser shall be
deemed to have accepted the Closing Balance Sheet and the calculation of the
Closing Net Working Capital Amount or Post-Retirement Benefits Accrual, as
applicable, delivered by Seller, which shall be final, binding and conclusive
for all purposes hereunder. In the event any such notice of disagreement is
timely provided by Purchaser, Purchaser and Seller shall use their reasonable
best efforts for a period of 30 days (or such longer period as they may mutually
agree) to resolve any disagreements with respect to the calculation of the
Closing Net Working Capital Amount or Post-Retirement Benefits Accrual, as
applicable. If, at the end of such period, they are unable to resolve such
disagreements in a written agreement, then an independent accounting firm of
nationally recognized standing mutually selected by Seller and Purchaser (the
"Auditor") shall resolve any remaining disagreements. If Seller and Purchaser do
not promptly agree on the selection of the Auditor, which shall occur no later
than 10 days after the end of the 30-day period referred to above, then each
such party shall select an independent accounting firm of nationally recognized
standing and such two independent accounting firms shall jointly select the
independent accounting firm of nationally recognized standing to act as Auditor
pursuant to this Section 1.7(b). The Auditor shall determine (and written notice
thereof shall be given to Seller and Purchaser) as promptly as practicable, but
in any event within 30 days of the date on which such dispute is referred to the
Auditor, based solely on written submissions detailing the disputed items
forwarded by Seller and Purchaser to the Auditor within 10 days following the
Auditor's selection, (x) whether the Closing Balance Sheet was prepared in
accordance with the standards set forth in this Section 1.7 and (y) (only with
respect to the disputed items submitted to the Auditor) whether and to what
extent (if any) the Closing Net Working Capital Amount or Post-Retirement
Benefits Accrual, as
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applicable, determination requires adjustment. The parties shall share equally
the fees and expenses of the Auditor. The determination of the Auditor shall be
final, conclusive and binding on the parties, and the Auditor's determination of
(x) the amount of the Closing Net Working Capital Amount shall then be deemed to
be the Closing Net Working Capital Amount for purposes of Section 1.7(c) and (y)
the amount of the Post-Retirement Benefits Accrual shall then be deemed to be
the Post-Retirement Benefits Accrual for purposes of Section 1.7(c). The Closing
Balance Sheet as adjusted in accordance with the resolution of any disagreement
with respect thereto pursuant to this Section 1.7, or, if no notice of
disagreement is delivered to Seller by Purchaser in accordance with this Section
1.7(b), as delivered by Seller to Purchaser in accordance with Section 1.7(a),
shall be respectively referred to in this Agreement as the "Final Closing
Balance Sheet."
(c) Payment. The date on which each of the Closing Net Working
Capital Amount and the Post-Retirement Benefits Accrual is accepted or finally
determined in accordance with this Section 1.7 is referred to as the
"Determination Date," such accepted or finally determined Closing Net Working
Capital Amount is referred to as the "Final Net Working Capital Amount," and
such accepted or finally determined Post-Retirement Benefits Accrual is referred
to as the "Final Post-Retirement Benefits Accrual ." On the fifth Business Day
following the Determination Date, the following payments shall be made in
immediately available funds in dollars by wire transfer to an account specified
by the recipient prior to such date:
(i) if the Final Net Working Capital Amount is less than the
Estimated Net Working Capital, an amount in immediately available same
day funds equal to such shortfall (the "Working Capital Shortfall")
will be remitted to Purchaser from the Escrow Account (as defined in
Section 1.12) in accordance with the terms of the Escrow Agreement (as
defined in Section 1.12), together with interest on the Working Capital
Shortfall at an annual rate equal to the prime rate of interest
calculated on a 365-day year (as quoted daily by the Wall Street
Journal) (the "Interest Rate") from the Closing Date to the date of the
payment of the Working Capital Shortfall to Purchaser (collectively,
the "Principal Amount"); provided, however, that in no event shall
Purchaser be entitled to receive, in the aggregate, funds in excess of
the amount held in the Escrow Account either pursuant to this Section
1.7, pursuant to Section 4.17, pursuant to Section 8.9 or pursuant to
any other provision of this Agreement, and, provided further, all
payments to Purchaser pursuant to this Section 1.7(c)(i) shall only be
made by the Escrow Agent out of the Escrow Account;
(ii) if the Final Net Working Capital Amount is greater than
the Estimated Net Working Capital, Purchaser shall promptly pay to
Seller an amount equal to such excess, together with interest on such
amount at the Interest Rate from the Closing Date to the date of the
payment of such amount to Seller; and
(iii) if the Final Post-Retirement Benefits Accrual is more
than $31,200,000, an amount in immediately available same day funds
equal to such excess (the "Post-Retirement Benefits Excess") will be
remitted to Purchaser from
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the Escrow Account in accordance with the terms of the Escrow
Agreement, together with interest on the Post-Retirement Benefits
Excess at an annual rate equal to the Interest Rate from the Closing
Date to the date of the payment of the Post-Retirement Benefits Excess
to Purchaser; provided, however, that in no event shall Purchaser be
entitled to receive, in the aggregate, funds in excess of the amount
held in the Escrow Account either pursuant to this Section 1.7,
pursuant to Section 4.17, pursuant to Section 8.9 or pursuant to any
other provision of this Agreement, and, provided further, all payments
to Purchaser pursuant to this Section 1.7 shall only be made by the
Escrow Agent out of the Escrow Account.
(d) Purchaser and Seller agree that once each of the Final Net
Working Capital Amount and the Final Post-Retirement Benefits Accrual is finally
determined pursuant to this Section 1.7, they will promptly prepare and send a
written notice to the Escrow Agent, in accordance with the terms and conditions
of the Escrow Agreement, which states (i) either (x) that the Principal Amount,
if the Final Net Working Capital Amount is less than the Estimated Net Working
Capital, or (y) that Purchaser is not entitled to receive any payment from the
Escrow Fund pursuant to this Section 1.7, if the Final Net Working Capital
Amount is equal to or greater than the Estimated Net Working Capital, and (ii)
the amount, if any, of the Post-Retirement Benefits Excess.
(e) The parties acknowledge and agree that the reserve for
trade promotions and deductions contained in the Final Closing Balance Sheet
shall be the amount of such reserve finally determined in accordance with this
Section 1.7, and, accordingly, notwithstanding anything to the contrary
contained in this Agreement, Purchaser agrees that it will not, and will not
allow its Subsidiaries and Affiliates to, make any claims against Seller or any
of its Subsidiaries or Affiliates, with respect to such trade promotions and
deductions associated with trade promotions under any provision of this
Agreement or any Collateral Agreement, including any claim for a breach of any
representation, warranty, covenant or agreement contained in this Agreement or
any Collateral Agreement.
(f) Purchaser and Sellers agree that no entry in excess of
$500 per individual deduction or $10,000 in the aggregate per customer
remittance or any other entry will be made by Purchaser to the trade marketing
accrual account as included in the current liabilities accounts on the Closing
Balance Sheet unless it can be conclusively demonstrated to the staff of
Seller's Accountant that such entry is conclusively demonstrated to be a proper
charge against marketing programs which were in force as of the Closing Date.
(g) It is understood and agreed by Purchaser and Sellers that
in connection with the transfer of transaction processing from Sellers to
Purchaser for the revenue process Purchaser will obtain and retain proper
documentation for customer deductions and cash receipts which would be available
for Seller's Accountant to complete its audit in accordance with generally
accepted auditing standards of the trade marketing accrual and accounts
receivable components of Net Working Capital.
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Section 1.8. Time and Place of Closing. Upon the terms and
subject to the conditions of this Agreement, the closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, Xxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, at 10:00 a.m. eastern standard time upon the first Business Day
following the satisfaction or waiver (subject to Applicable Law) of the
conditions precedent specified in Article VI (other than those conditions that
by their nature are to be fulfilled only at the Closing, but subject to the
fulfillment or waiver (subject to Applicable Law) of such conditions) or at such
other time and place as the parties hereto may mutually agree (such date, the
"Closing Date"). For purposes of this Agreement, the term "Business Day" means
any day other than a Saturday, Sunday or a day on which banks in New York City
are authorized or obligated by Applicable Law or executive order to close or are
otherwise generally closed.
Section 1.9. Deliveries by Seller. At the Closing, Seller
shall deliver or cause to be delivered to Purchaser the following:
(a) the officer's certificate contemplated by Sections 6.2(a)
and 6.2(b);
(b) the Xxxx of Sale duly executed by Seller;
(c) each of the Deeds duly executed by Seller together with
any necessary transfer declarations or other filings;
(d) each of the Lease Assignments duly executed by Seller,
together with any reasonably necessary transfer declarations or other filings;
(e) [intentionally omitted];
(f) each of the title policies set forth in Section 6.2(i);
(g) each of the surveys set forth in Section 6.2(j);
(h) each of the Intellectual Property Instruments duly
executed by the appropriate Sellers;
(i) a certificate of non-foreign status as provided in
Treasury Regulation Section 1.1445-2(b);
(j) each of the Collateral Agreements duly executed by Seller;
(k) [intentionally omitted];
(l) [intentionally omitted]; and
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(m) such other duly executed documents, instruments and
certificates as may be necessary or appropriate to be delivered by Sellers
pursuant to the terms of this Agreement.
Section 1.10. Deliveries by Purchaser. At the Closing,
Purchaser shall deliver or cause to be delivered to Seller, or, with respect to
Section 1.10(f), to the Escrow Agent, the following:
(a) an amount of cash equal to the Adjusted Purchase Price
(less the Escrow Amount) by wire transfer of immediately available same day
funds to an account or accounts designated by Seller;
(b) the officer's certificate contemplated by Sections 6.3(a)
and 6.3(b);
(c) the Assumption Agreement duly executed by Purchaser;
(d) each of the Lease Assignments duly executed by Purchaser;
(e) each of the Collateral Agreements duly executed by
Purchaser;
(f) an amount of cash equal to the Escrow Amount by wire
transfer of immediately available same day funds to an account designated by the
Escrow Agent; and
(g) such other duly executed documents, instruments and
certificates as may be necessary or appropriate to be delivered by Purchaser
pursuant to this Agreement.
Section 1.11. Post-Closing Arrangements. Except as agreed to
in the Collateral Agreements, at the Closing all data processing, accounting,
insurance, banking, personnel, legal, communications and other products and
services provided to the Business by Seller or its Affiliates, including any
agreements or understandings (written or oral) with respect thereto, will
terminate without any further action or liability on the part of the parties
thereto.
Section 1.12. Escrow Agreement. At the Closing, Seller,
Purchaser and a bank in the United States to be mutually agreed upon by the
parties within ten days of the date of this Agreement (the "Escrow Agent"), will
enter into an escrow agreement in form and substance customary in similar
transactions and substantially the form attached hereto as Exhibit 1.12 (the
"Escrow Agreement"), and Purchaser will deposit $6,000,000 (the "Escrow Amount")
with the Escrow Agent to be held and disposed of by the Escrow Agent pursuant to
the terms and conditions of the Escrow Agreement (the "Escrow Account").
Delivery of funds by the Escrow Agent to the applicable parties shall be made
pursuant to the terms of the Escrow Agreement and all earnings thereon shall be
distributed on a monthly basis to Seller. Once the Final Net Working Capital
Amount and the Final Post-Retirement Benefits Accrual are determined pursuant to
Section 1.7
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and, if required, the corresponding distribution of funds out of the Escrow
Account is made by the Escrow Agent to Purchaser, and once the Adjustment Amount
(as defined in Section 4.17) is determined pursuant to Section 4.17, and, if
required, the corresponding distribution of funds out of the Escrow Account is
made by the Escrow Agent to Purchaser, on the fifth Business Day thereafter (the
"Expiration Date") the Escrow Agent shall be required to promptly distribute to
Seller the excess, if any, of (i) all funds then held in the Escrow Account over
(ii) the sum of (x) the aggregate amount of funds, if any, distributed to
Purchaser out of the Escrow Account pursuant to Sections 1.7, 4.17 and 8.9, plus
(y) the aggregate amount of funds, if any, held in reserve by the Escrow Agent
to satisfy unresolved claims for Losses (as defined in Section 8.9) made
pursuant to Section 8.9 and the terms and provisions of the Escrow Agreement.
The distribution referred to in the preceding sentence, if made, is referred to
as the " Distribution."
Section 1.13. Treatment of Seller Guarantees. Following the
Closing, Purchaser shall use its reasonable best efforts to obtain or release
and cancel the agreements as set forth on Exhibit 1.13 attached hereto (the
"Seller Guarantees"); provided, however, that to the extent that any Seller
Guarantees cannot be so released and cancelled, Purchaser shall use its
reasonable best efforts to cause itself to be substituted for Seller or any of
its Affiliates in respect of the Seller Guarantees (or if not possible, added as
the primary obligor with respect thereto). In any event, Purchaser shall
indemnify, defend and hold harmless Seller or its Affiliates with respect to all
liabilities or expenses that might arise or be incurred by Seller or its
Affiliates after the Closing with respect to the Seller Guarantees.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth in the disclosure schedule being delivered
by Sellers to Purchaser on the date hereof (the "Seller Disclosure Schedule"),
Sellers represent and warrant to Purchaser as of the date hereof and as of the
Closing Date as follows:
Section 2.1. Corporate Existence and Power. (a) Each Seller is
a corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation. Each Seller has the corporate power
and authority required to own or lease all of its properties and assets and to
carry on its business as it is now being conducted. Each Seller is duly
qualified or licensed to do business and is in good standing in each of the
jurisdictions specified opposite its name in Section 2.1 of the Seller
Disclosure Schedule, which are the only jurisdictions in which the operation of
its portion of the Business or the character of the properties owned, leased or
operated by it in connection with the Business makes such qualification or
licensing necessary, except where the failure to be so licensed or qualified has
not had, and is not reasonably expected to have, a Business Material Adverse
Effect (as defined in Section 2.1(b)).
(b) For purposes of this Agreement, "Business Material Adverse
Effect" means any event, occurrence, fact, condition, change or effect that,
individually or in the aggregate, is materially adverse to the business,
operations, assets, liabilities
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(contingent or otherwise), results of operations or condition (financial or
otherwise) of the Business or the ability of Seller to consummate the
transactions contemplated by this Agreement, excluding the effects of (i)
general economic, political or financial market conditions that do not have a
disproportionate impact on the Business, (ii) the rejection by any Seller of any
Contract not assumed by the Purchaser hereunder or (iii) the failure of any
Seller to pay pre-petition claims.
Section 2.2. Authority of Seller; Binding Effect. (a) Subject
to the entry of the order of the Bankruptcy Court approving the consummation by
Purchaser of the transactions contemplated by this Agreement under Sections 105,
363 and 365 of the Bankruptcy Code (the "Sale Order"), each Seller has the
requisite corporate power and authority to execute and deliver, and to perform
its obligations under, this Agreement and, as of the Closing, each applicable
Collateral Agreement and to consummate the transactions contemplated hereby and
thereby. Subject to the entry of the Sale Order, the execution and delivery by
each Seller of this Agreement and each applicable Collateral Agreement and the
performance of its obligations hereunder and thereunder, have been duly
authorized by all necessary corporate action on the part of each such Seller and
the performance by each Seller of its obligations under this Agreement and each
applicable Collateral Agreement has been duly authorized by all necessary
corporate action on the part of such Seller. The Board of Directors of each
Seller (excluding VFCI) has resolved to request that the Bankruptcy Court
approve this Agreement, and the transactions contemplated hereby; provided that
such request may be withdrawn, modified or amended only in accordance with the
provisions of Section 4.16. Subject to the entry of the Bidding Procedures Order
(as defined in Section 4.15), each Seller has full power and authority to grant
the Break-Up Fee and the Expense Reimbursement (each as defined in Section 4.16)
without further order of the Bankruptcy Court, and the Break-Up Fee and Expense
Reimbursement shall constitute allowed administrative expenses of Sellers
(excluding VFCI) under section 503(b)(1) of the Bankruptcy Code.
(b) This Agreement has been, and as of the Closing, each
applicable Collateral Agreement will be, duly executed and delivered by each
Seller and, subject to the entry of the Sale Order and assuming the due
authorization, execution and delivery of each such agreement by Purchaser, each
such agreement will be a valid and binding obligation of each Seller,
enforceable against each Seller in accordance with its terms, except as (i) the
enforceability hereof may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting the enforcement of creditors' rights generally, and
(ii) the availability of equitable remedies may be limited by equitable
principles of general applicability.
Section 2.3. Governmental Authorization. (a) Except as (i) may
be required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act") and any applicable foreign antitrust or competition laws
or regulations, or (ii) as set forth in Section 2.3 of the Seller Disclosure
Schedule, and subject to the entry of the Sale Order, the execution, delivery
and performance by each Seller of this Agreement and each applicable Collateral
Agreement, and the consummation by each Seller of the transactions contemplated
hereby and thereby, do not require any Seller to obtain any consent, approval,
Permit or Order (as defined below) of, make any filing
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with, or give any notice to, any Governmental Authority under any Applicable
Laws, except where the failure to obtain such consent, approval, Permit or
Order, or to make such filing, or to give such notice, would not reasonably be
expected to (x) result, individually or in the aggregate, in a Business Material
Adverse Effect or (y) prevent or delay the consummation of the transactions
contemplated hereby by Sellers.
(b) For purposes of this Agreement:
(i) "Governmental Authority" means any court, legislative,
executive or regulatory authority or agency of the United States,
Canada or any other country in which the Business conducts any business
operations (or any other state or other political subdivision thereof)
or any supranational body such as the European Union.
(ii) "Order" means any judgment, order, writ, injunction or
decree of any Governmental Authority or arbitrator.
(iii) "Permit" means any license, permit, approval,
registration, waiver, exemption, consent, authorization, qualification
and filing, notice or report with and under all federal, state, local
or foreign laws or Governmental Authorities.
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Section 2.4. Non-Contravention. Except as disclosed in Section
2.4 of the Seller Disclosure Schedule, and subject to the entry of the Sale
Order, the execution, delivery and performance by each Seller of this Agreement
and each applicable Collateral Agreement and the consummation by each Seller of
the transactions contemplated hereby and thereby, will not (i) violate any
provision of the charter, bylaws or any other organizational document of any
Seller (unless the same is rendered inapplicable by order of the Bankruptcy
Court), (ii) except for breaches and defaults of the type referred to in Section
365(b)(2) of the Bankruptcy Code, violate, conflict with, result in the breach
of or default under (or with notice, lapse of time, or both would result in such
a breach or default), result in any modification of the effect of, provide the
other contracting party the right to terminate or materially amend, or require
the other contracting party to consent to the assignment or continuation of, any
Contract to which any Seller is a party or to which any Seller or any Acquired
Asset is bound or subject, (iii) result in or require the creation or imposition
of any Liens on the Acquired Assets, except for Permitted Liens or Liens created
by Purchaser, (iv) violate any Order against or binding upon any Seller, (v)
except for breaches and defaults of the type referred to in Section 365(b)(2) of
the Bankruptcy Code, violate any agreement with, or condition imposed by, any
Governmental Authority upon any Seller, (vi) subject to obtaining the
governmental authorizations referred to in Section 2.3, violate any Applicable
Law, or (vii) result in a breach or violation of any of the terms or conditions
of, constitute a default under, or otherwise cause an impairment or a revocation
of, any Permit utilized in the operation of the Business, except in the case of
clauses (ii), (iii), (iv), (v), (vi) and (vii) above, for violations, conflicts,
breaches, impairments, modifications, terminations, revocations or defaults
which, or consents or waivers the absence of which, individually or in the
aggregate, have not had, or are not reasonably expected to have, a Business
Material Adverse Effect.
Section 2.5. Financial Statements. Section 2.5 of the Seller
Disclosure Schedule contains complete and correct copies of (a) the unaudited
balance sheet of the Business as of July 30, 2000 and the related unaudited
management statement of earnings before interest and income taxes for the 52
weeks then ended (including any notes thereto), and (b) the unaudited balance
sheet of the Business as of January 28, 2001 (the "Reference Balance Sheet") and
the related unaudited management statement of earnings before interest and
income taxes for the Business for the six months then ended (including any notes
thereto) (collectively, the "Financial Statements"). The Financial Statements
(i) have been prepared from the books and records of Sellers which contain all
properly recorded transactions of the Business and (ii) have been prepared in
accordance with GAAP on a consistent basis. The balance sheets included in the
Financial Statements fairly present in all material respects the financial
position of the Business as of the dates thereof and the management statements
of earnings before interest and income taxes included in the Financial
Statements fairly present the results of the operations in all material respects
of the Business for the respective fiscal periods or as of the respective dates
therein set forth.
Section 2.6. Absence of Undisclosed Liabilities. No Seller has
any liabilities or obligations of any nature (whether known or unknown,
absolute, accrued,
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contingent or otherwise and whether due or to become due) arising out of or
relating to the Business except:
(a) liabilities or obligations as and to the extent accrued or
reserved against as set forth in the Reference Balance Sheet;
(b) liabilities or obligations incurred after the date of the
Reference Balance Sheet (i) in the ordinary course of business consistent with
past practice, (ii) in accordance with the terms of this Agreement, and (iii)
that do not and will not materially impair the ability of any Seller to perform
such Seller's obligations hereunder or under any Collateral Agreement; and
(c) liabilities or obligations as and to the extent disclosed
in Section 2.6 of the Seller Disclosure Schedule.
Section 2.7. Absence of Certain Changes. (a) Since January 28,
2001, except (x) as disclosed in Section 2.7 of the Seller Disclosure Schedule
and (y) for the transactions contemplated hereby, (i) Seller and its
Subsidiaries have conducted the Business in the ordinary course of business
consistent with past practice, (ii) the Business has not suffered a Business
Material Adverse Effect, and (iii) neither Seller nor any of its Subsidiaries
has taken any of the actions set forth in Section 4.1. For purposes of this
Section 2.7, the filing with the Bankruptcy Court of the Petition in and of
itself shall not constitute a Business Material Adverse Effect, it being
understood, however, that the effects of the filing of the Petition will be
taken into consideration in determining whether or not there has been, or is
reasonably likely to be, a Business Material Adverse Effect.
(b) Between the period of time commencing on July 30, 2000 and
ending on January 28, 2001, Sellers have not (i) changed any of the accounting
principles used by the Business unless required by GAAP or Applicable Law, or
(ii) transferred or granted any rights or licenses under, or entered into any
settlement regarding the breach or infringement of, any United States or foreign
license of any Intellectual Property, or modified any existing rights with
respect thereto or entered into any licensing or similar agreements or
arrangements, except in the ordinary course of business consistent with past
practice.
Section 2.8. Contracts. (a) Section 2.8(a) of the Seller
Disclosure Schedule contains a correct and complete list of all Contracts (the
"Material Contracts") pursuant to which any Seller has any rights or benefits or
undertakes any obligations or liabilities with respect to the Business, in each
case that:
(i) have a duration of one year or more and are not terminable
without penalty upon 90 days or less prior written notice by any party;
(ii) require or could reasonably be expected to require any
party thereto to pay $100,000 or more in any 12 month period, or
$250,000 or more in the aggregate;
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(iii) require any severance or retention payments to employees
of the Business after the Closing Date;
(iv) contain any non-competition covenant or exclusivity
arrangement;
(v) constitute a lease, license, arrangement and other
contract providing in whole or in part for the use of, or limiting the
use of, any Intellectual Property;
(vi) regard the employment, services, consulting, termination
or severance from employment relating to or for the benefit of any
director, officer, employee, sales agent, distributor, dealer,
independent contractor or consultant of the Business;
(vii) constitute (x) a trust indenture, mortgage, promissory
note, loan agreement, security agreement, pledge agreement, deeds of
trust, guarantees, keep well agreement or other contract for the
borrowing of money or guarantee of obligation in an amount exceeding
$10,000, and (y) letters of credit and surety, indemnity, performance
and similar bonds;
(viii) constitute a collective bargaining agreement;
(ix) constitute licenses, permits, franchises, Governmental
Approvals and other contracts concerning or relating to the Real
Property or with a Governmental Authority (excluding immaterial
licenses, permits, franchises and Government Approvals, the failure of
which to have do not significantly affect the use or normal operation
of the Business or the Acquired Assets);
(x) constitute joint venture, partnership and similar
contracts involving a sharing of profits or expenses (including but not
limited to joint research and development and joint marketing
contracts);
(xi) constitute asset purchase agreements and other
acquisition or divestiture agreements, including, but not limited to,
any agreements relating to the sale, lease or disposal of any Acquired
Assets (other than sales of inventory in the ordinary course of
business) or involving continuing indemnity or other obligations;
(xii) constitute broker, sales agency, manufacturer's
representative, marketing or distributorship agreements;
(xiii) constitute contracts, agreements or arrangements with
respect to the representation of the Business in foreign countries;
(xiv) constitute master lease agreements providing for the
leasing of material personal property primarily used in, or held for
use primarily in connection with, the Business;
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(xv) constitute any contract under which any Liens, except for
Permitted Liens, exist with respect to any Acquired Asset;
(xvi) constitute contracts, agreements or arrangements with
Seller's former parent company or any of its Affiliates (other than a
Seller);
(xvii) constitute any other contracts, agreements or
commitments that are material to the Business; or
(xviii) constitute a contract entered into by any of Seller or
any of its Subsidiaries relating primarily to the Business other than
in the ordinary course consistent with past practice.
(b) Except as set forth in Section 2.8(b) of the Seller
Disclosure Schedule: (i) all of the Material Contracts are in full force and
effect, (ii) except for breaches and defaults of the type referred to in Section
365(b)(2) of the Bankruptcy Code, Sellers are not, and to the Knowledge of
Seller none of the other parties to the Material Contracts are, in material
default under, and no event has occurred which, with the passage of time or
giving of notice or both, would result in Sellers, or to the Knowledge of Seller
any of the other parties to the Material Contracts, being in material default
under, any of the terms of the Material Contracts, and (iii) none of the
Material Contracts requires the consent of any other party thereto in connection
with the transactions contemplated by this Agreement except, in the case of
clause (i) above, for failures to be in full force and effect which have not
had, or would not reasonably be expected to have, a Business Material Adverse
Effect, in the case of clause (ii) above, for such defaults which have not had,
or would not reasonably be expected to have, a Business Material Adverse Effect,
and in the case of clause (iii) above, for consents the absence of which have
not had, or would not reasonably be expected to have, a Business Material
Adverse Effect.
Section 2.9. Litigation. Except as set forth in Section 2.9 of
the Seller Disclosure Schedule, (i) there are no outstanding Orders that relate
to the Business or the Acquired Assets and (ii) there are no claims, actions,
suits, arbitrations or proceedings pending or, to the Knowledge of Seller (as
defined below), threatened, against any Seller which, with respect to the
preceding clauses (i) and (ii) above are likely, individually or in the
aggregate, to (A) have or reasonably be expected to have a Business Material
Adverse Effect or (B) materially and adversely affect the ability of Sellers to
consummate the transactions contemplated hereby or by the Collateral Agreements.
For purposes of this Agreement, the term "Knowledge of Seller" means the actual
knowledge after due inquiry of the individuals set forth in Exhibit 2.9 attached
hereto.
Section 2.10. Compliance with Applicable Laws.
(a) Except as set forth in Section 2.10(a) of the Seller
Disclosure Schedule, (i) the Business and the Acquired Assets are, and since
January 1, 2000 have been, in compliance in all material respects with all
significant Applicable Laws, and (ii) no Seller has received any written notice
from a Governmental Authority alleging any
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material violation of any such significant Applicable Law to which the Business
or the Acquired Assets are subject.
(b) Section 2.10(b) of the Seller Disclosure Schedule sets
forth a list of all Permits necessary to conduct the Business in the manner it
is presently conducted (excluding immaterial Permits the failure of which to
have do not significantly affect the use or normal operation of the Business or
the Acquired Assets) or otherwise material to the Business and, except for
breaches and defaults of the type referred to in Section 365(b)(2) of the
Bankruptcy Code, such Permits have been duly obtained and are in full force and
effect. Except for breaches and defaults of the type referred to in Section
365(b)(2) of the Bankruptcy Code or as set forth in Section 2.10(b) of the
Seller Disclosure Schedule, (i) the Business is not in material violation of the
terms of any Permit (excluding immaterial Permits the failure of which to have
do not significantly affect the use or normal operation of the Business or the
Acquired Assets) and (ii) no violation has been alleged by any Governmental
Authority, no proceeding is pending or, to the Knowledge of Seller, threatened
to revoke or materially limit any such Permit, and, to the Knowledge of Seller,
there is no basis for any such allegation or proceeding.
Section 2.11. Environmental Compliance. Except as set forth in
Section 2.11 of the Seller Disclosure Schedule:
(a) The Business is, and has been since January 1, 2000, in
compliance in all material respects with all applicable Environmental Laws (as
defined in Section 2.11(g)), including, but not limited to, possessing and
complying with all Permits and other governmental authorizations required for
its operations under applicable Environmental Laws.
(b) There is no pending or, to the Knowledge of Seller,
threatened claim, lawsuit, complaint, judgment, Order or proceeding, and, to the
Knowledge of Seller, there is no investigation pending or threatened against the
Business under or pursuant to any Environmental Law that has had, or is
reasonably likely to have, individually or in the aggregate, a Business Material
Adverse Effect. No Seller has received notice from any Person (as defined in
Section 8.11), including but not limited to any Governmental Authority, alleging
that the Business has been or is in violation in any material respect or
potentially in violation in any material respect of any applicable Environmental
Law or otherwise may be liable under any applicable Environmental Law, which
violation or liability is unresolved.
(c) With respect to the Real Property, to the Knowledge of
Seller, there have been no releases, spills or discharges of Hazardous
Substances (as defined in Section 2.11(g)) on or underneath any of the Real
Property that have had, or would be reasonably likely to result in, individually
or in the aggregate, a Business Material Adverse Effect.
(d) Elevated levels of nitrate in the groundwater at Seller's
plant in Millsboro, Delaware have been reduced to levels acceptable to the
appropriate Governmental Authority by means of groundwater extraction and
subsequent discharge
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of that water by underground injection. Operation of this remediation system has
been discontinued, but the extraction and discharge system, as well as the
permit for underground injection, remain in place, in each case, as required by
the appropriate Governmental Authority.
(e) Asbestos containing material ("ACM"), including
encapsulated floor tiles in the laboratory at Seller's plant in Xxxxx City,
Michigan, is present at the Seller's facilities in a condition that does not
require abatement, removal or remediation pursuant to Environmental Laws.
(f) Neither any Seller, nor to the Knowledge of Seller, any
other Person, has caused or taken any action that will result in, and no Seller
is subject to, any material liability or obligation relating to environmental
conditions arising from its ownership or operation of the Acquired Assets or to
environmental conditions at, above, on or under the Acquired Assets.
(g) For purposes of this Agreement:
(i) "Environmental Laws" means all federal, state, local and
foreign laws, regulations, rules and ordinances relating to pollution
or protection of human health (as it relates to environmental matters,
such as toxic tort or human exposure matters, but not as it relates to
worker safety or Occupational Safety and Health Act matters, which are
covered elsewhere in this Agreement), or the environment, including,
without limitation, laws relating to releases or threatened releases of
Hazardous Substances into the environment (including, without
limitation, ambient air, surface water, groundwater, land, surface and
subsurface strata).
(ii) "Hazardous Substances" means any chemicals, materials or
substances defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "hazardous
constituents," "restricted hazardous materials," "extremely hazardous
substances," "toxic substances," "contaminants," "pollutants," "toxic
pollutants," or words of similar meaning and regulatory effect under
any applicable Environmental Law including, without limitation,
petroleum, petroleum products, polychlorinated biphenyls and asbestos.
Section 2.12. Real Property; Title to Acquired Assets.
(a) Section 2.12(a) of the Seller Disclosure Schedule contains
a complete and correct list of all Owned Real Property (as defined in Section
2.12(b)) setting forth the address and owner of each parcel of Owned Real
Property including, without limitation, the properties reflected as being so
owned on the Financial Statements. Except as set forth in Section 2.12(a) of the
Seller Disclosure Schedule, each Seller has good and marketable, fee simple
title to all of its Owned Real Property, free and clear of all Liens except for
Permitted Liens (as defined below). As used in this Agreement, the term
"Permitted Liens" means (i) Liens identified in Section 2.12(a)(i) of
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the Seller Disclosure Schedule or reserved against in the Financial Statements
(including any notes thereto) to the extent so reserved, (ii) any Lien that is
shown as an exception and not marked through with a "x", or as otherwise marked
on the title commitments delivered to Purchaser on or before the date hereof
which are attached hereto as Section 2.12(a)(ii) of the Seller Disclosure
Schedule, (iii) mechanics', carriers', workers', repairers', materialmen's,
warehousemen's and other similar Liens arising out of operation of law with
respect to a liability incurred in the ordinary course of business, which are
not individually or in the aggregate material and which are not yet due, (iv)
Liens arising under original purchase price conditional sales contracts and
equipment leases with third parties (provided that there are no such Liens
against the Owned Real Property), (v) Liens for Taxes which are being contested
in good faith by appropriate proceedings and are disclosed on Section 2.12(a)(v)
of the Seller Disclosure Schedule, or Liens for Taxes not yet due, (vi) leases,
subleases and similar agreements disclosed on Section 2.12(a)(vi) of the Seller
Disclosure Schedule, (vii) easements, covenants, rights-of-way and other similar
restrictions of record disclosed on Section 2.12(a)(vii) of the Seller
Disclosure Schedule, (viii) any condition that is shown by the surveys of the
Owned Real Property provided by Seller to Purchaser as specified in Section
6.2(j) herein, (ix) zoning, building and other similar restrictions, and Liens
that have been placed by any developer, landlord or other third party on
property over which the Business has easement rights or on any leased property
and subordination or similar agreements relating thereto, and (x) such other
Liens that, individually or in the aggregate, do not and would not be reasonably
expected to materially detract from the value of or impair the use of the
property subject thereto.
(b) As used in this Agreement, the term "Owned Real Property"
means the real property owned by any Seller which is used or held for use in,
the Business, together with all other structures, facilities, improvements,
fixtures, systems, equipment and items of property, presently or hereafter
located thereon attached or appurtenant thereto or owned by such Seller and
located on Leased Real Property and all easements, licenses, rights and
appurtenances relating to the foregoing.
(c) Section 2.12(c) of the Seller Disclosure Schedule sets
forth a list of all real property which is leased or subleased (each, a "Lease"
and, collectively, the "Leases") by a Seller and is used in the operation of the
Business (the "Leased Real Property") (the Owned Real Property and the Leased
Real Property being collectively referred to herein as the "Real Property"),
setting forth the address, landlord and tenant for each such Lease. Each Seller
holds good and valid leasehold title to the Leased Real Property, in each case
subject to the provisions of the applicable Lease. Each Seller has delivered to
Purchaser correct and complete copies of each of the Leases. Subject to the
provisions of the applicable Lease, each Lease grants the tenant under the Lease
the exclusive right to use and occupy the premises demised thereunder. Each
Seller enjoys peaceful and undisturbed possession under each of the Leases.
Schedule 2.12(c) of the Seller Disclosure Schedule also sets forth all Leases
relating to the Business under which any Seller is a lessor.
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(d) Except as set forth on Section 2.12(d) of the Seller
Disclosure Schedule, each Seller has good title to, or valid leaseholds interest
in, or other valid rights to use, all of the Acquired Assets (excluding the
Owned Real Property).
(e) Except as set forth on Section 2.12(e) of the Seller
Disclosure Schedule, none of the Owned Real Property, and to the Knowledge of
Seller, none of the Leased Real Property, is subject to any pending suit for
condemnation or other taking by any Governmental Authority or other Person, and
to the Knowledge of Seller, no such condemnation or other taking is threatened
or contemplated. Except as set forth on Section 2.12(e) of the Seller Disclosure
Schedule, there is no Order outstanding, nor any action, claim, suit or
proceeding pending or, to the Knowledge of Seller, threatened, relating to the
ownership, lease, use, occupancy or operation by any Person of any Owned Real
Property, and to the Knowledge of Seller, there is no Order outstanding, nor any
action, claim, suit or proceeding, pending or threatened relating to the
ownership, lease, use, occupancy or operation by any Person of any Leased Real
Property.
(f) As of the date of this Agreement, the Leases are in full
force and effect, and constitute the legal, valid and binding obligations of
each Seller, and to the Knowledge of Seller, the other party or parties thereto,
subject to limitations imposed by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium and other Applicable Laws relating to or affecting
creditors' rights generally and general equitable principles. Except as set
forth on Section 2.12(f) of the Seller Disclosure Schedule, there are no
existing defaults or conditions which with the giving of notice or the passage
of time, or both, would constitute a default by a Seller or, to the Knowledge of
Seller, the other party thereto, with respect to the Leases.
(g) The Real Property constitutes all the fee and leasehold
interests in real property held for use in connection with, necessary for the
conduct of, or otherwise material to, the Business.
(h) Except as set forth on Section 2.12(h) of the Seller
Disclosure Schedule, the use and operation of the Real Property in the conduct
of the Business does not violate in any material respect any of the terms of any
Permitted Lien, any instrument of record or any other agreement affecting the
Real Property. Except as set forth on Section 2.12(h) of the Seller Disclosure
Schedule, there is no material violation of any covenant, condition,
restriction, easement or Order of any Governmental Authority having jurisdiction
over such property or of any other Person entitled to enforce the same affecting
the Real Property or the use or occupancy thereof.
(i) Except as set forth on Section 2.12(i) of the Seller
Disclosure Schedule, the Real Property is in material compliance with all
applicable building, zoning, subdivision and other land use and similar
Applicable Laws affecting the Real Property (collectively, the "Real Property
Laws"), and no Seller has received any notice of material violation of any Real
Property Law. Except as set forth on Section 2.12(i) of the Seller Disclosure
Schedule, to the Knowledge of Seller, no current use by any Seller of the Real
Property is dependent on a nonconforming use or other Governmental Approval the
absence of which would materially limit the use of such properties or assets
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held for use in connection with, necessary for the conduct of, or otherwise
material to, the Business; provided, however, that for purposes of this sentence
the term "Knowledge of Seller" means "the actual knowledge (with no obligation
to inquire or independently investigate into the matters covered by this
sentence) of the individuals set forth in Exhibit 2.9 attached hereto."
(j) Each parcel included in the Owned Real Property is
assessed for real property tax purposes as a wholly independent tax lot,
separate from adjoining land or improvements not constituting a part of that
parcel.
Section 2.13. Intellectual Property.
(a) Section 2.13(a) of the Seller Disclosure Schedule sets
forth, for the following Intellectual Property owned by any Seller, a complete
and accurate list of all U.S., state and foreign: (i) patents and patent
applications; (ii) trademark and service xxxx registrations (including Internet
domain name registrations), trademark and service xxxx applications and material
unregistered trademarks and service marks; and (iii) copyright registrations,
copyright applications and material unregistered copyrights.
(b) Section 2.13(b) of the Seller Disclosure Schedule lists
all material agreements granting or obtaining any right to use or practice any
rights under any Intellectual Property to which any Seller is a party or is
otherwise bound, as licensee or licensor thereunder, including, without
limitation, license agreements, settlement agreements and covenants not to xxx
(collectively, the "IP License Agreements").
(c) Except as set forth in Section 2.13(c) of the Seller
Disclosure Schedule:
(i) A Seller owns or possesses adequate licenses or other
legal rights to use, sell or license all Intellectual Property, free
and clear of all Liens, except for any Liens listed on Section 2.13(b)
of the Seller Disclosure Schedule;
(ii) any registered Trademark or Patent owned by any Seller
or, to the Knowledge of Seller, used but not owned by any Seller, has
been duly maintained, and has not been cancelled, expired or abandoned;
(iii) all registered Trademarks are valid and subsisting and
in full force and effect, and, to the Knowledge of Seller as of the
Closing Date, all registered Patents are valid and subsisting and in
full force and effect;
(iv) no claims, or to the Knowledge of Seller, threat of
claims, have been asserted by any third party against any Seller
related to the use in the conduct of the Business of any Intellectual
Property rights or challenging or questioning the validity or
effectiveness of any IP License Agreement, and to the Knowledge of
Seller, the practice or use of the Intellectual Property in the conduct
of the Business does not infringe, misappropriate, violate or dilute
any intellectual property rights of any third party;
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(v) no claims, demands or proceedings are pending charging any
third party with infringement, misappropriation, dilution or violation
of any Intellectual Property owned by any Seller, and to the Knowledge
of Seller, no third party is misappropriating, infringing, diluting or
violating any Intellectual Property owned by any Seller;
(vi) no settlement agreements, consents, judgments, orders,
forbearance to xxx or similar obligations limit or restrict any
Seller's rights in and to any Intellectual Property;
(vii) no Seller has licensed its rights in any Intellectual
Property, or received or been granted any such rights, other than
pursuant to the IP License Agreements;
(viii) except for breaches and defaults of the type referred
to in Section 365(b)(2) of the Bankruptcy Code, each IP License
Agreement is a valid and binding obligation of the Seller party
thereto, enforceable in accordance with its terms, and to the Knowledge
of Seller no event or condition has occurred which will result in a
violation or breach of, or constitute a default by the Seller party
thereto under, any such IP License Agreement; and
(ix) the consummation of the transactions contemplated hereby
will not result in the loss or impairment of any Seller's rights to own
or use any of the Intellectual Property, nor will such consummation
require the consent of any third party in respect of any Intellectual
Property.
Section 2.14. Employee Benefit Plans; ERISA.
(a) Section 2.14(a) of the Seller Disclosure Schedule sets
forth a true and correct list of each of the material Plans (as defined below).
Each Seller has heretofore delivered or made available to Purchaser, with
respect to each of the material Plans, true and correct copies of each of the
following documents if applicable: (i) the Plan document (or if the Plan is not
a written Plan, a description thereof); (ii) the most recent annual report (Form
5500) filed with the Internal Revenue Service (the "IRS"), (iii) the most recent
actuarial report for such Plan, (iv) the most recent determination letter from
the IRS for such Plan and (v) the most recent summary plan description and
related summaries of material modifications, if available.
(b) For purposes of this Agreement, the term "Plan" means (i)
each "employee benefit plan" (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")); (ii) each
retention, consulting, termination or severance agreement, arrangement or
commitment; or (iii) each other employee benefit, fund, program, commitment,
policy or agreement or arrangement, in each case, that is sponsored, maintained
or contributed to or required to be contributed to by any Seller or any trade or
business, whether or not incorporated, that together with any Seller would be
deemed a "single employer" within the meaning of Section 4001(b) of ERISA (an
"ERISA Affiliate"), for the benefit of any employee or
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former employee of the Business, and the beneficiaries and dependents of any
such employee.
(c) No liability under Title IV or Section 302 of ERISA has
been incurred by any Seller or any ERISA Affiliate with respect to any of the
Plans that has not been satisfied in full, and no condition exists that presents
a material risk to any Seller or any ERISA Affiliate of incurring any such
liability, other than liability for premiums due the Pension Benefit Guaranty
Corporation (which premiums have been paid when due).
(d) Each Plan has been operated and administered in all
material respects in accordance with its terms and applicable law, including but
not limited to ERISA and the Interval Revenue Code of 1986, as amended (the
"Code"), and each Plan intended to be "qualified" within the meaning of section
401(a) of the Code is so qualified and the trusts maintained thereunder are
exempt from taxation under section 501(a) of the Code.
(e) Except as provided in Section 2.14(e) of the Seller
Disclosure Schedule, no Plan provides retiree medical or retiree life insurance
benefits to any former or current employee of the Business, other than (A)
coverage mandated by Applicable Law or (B) benefits the full cost of which is
borne by such current or former employee (or his or her beneficiary).
(f) Except as provided in Section 2.14(f) of the Seller
Disclosure Schedule, the consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee or officer of the
Business to severance pay, unemployment compensation or any other payment,
except as expressly provided in this Agreement, or (ii) accelerate the time of
payment or vesting, or increase the amount of compensation due any such employee
or officer.
(g) Except as disclosed in Section 2.14(g) of the Seller
Disclosure Schedule, there are no pending, or to the Knowledge of the Seller,
threatened material claims by or on behalf of any Plan, by any employee of the
Business or any beneficiary of such employee covered under any such Plan, or
otherwise involving any such Plan (other than routine claims for benefits).
Section 2.15. Labor Relations and Employment. Except to the
extent set forth in Section 2.15 of the Seller Disclosure Schedule, (i) there is
no labor strike, lockout or other material work stoppage pending, or to the
Knowledge of Seller, threatened against the Business; (ii) no Seller is a party
to, or bound by, any collective bargaining agreement with any labor organization
applicable to employees of the Business; (iii) to the Knowledge of Seller, there
is currently no union organizing activities among employees of the Business;
(iv) there is no material unfair labor practice charge or complaint against the
Business pending or, to the Knowledge of Seller, threatened before the National
Labor Relations Board; and (v) there is no pending material arbitration arising
out of any collective bargaining agreement.
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Section 2.16. Taxes. Except as set forth in Section 2.16 of
the Seller Disclosure Schedule:
(a) Each Seller (i) has filed (or has caused to be filed) with
the appropriate taxing authorities, all income and other material Tax Returns
(as defined below) relating to the Acquired Assets and the Business required to
be filed by it, and all such Tax Returns are true and correct in all material
respects, and (ii) subject to any of Sellers' obligations as debtors or
debtors-in-possession under the Bankruptcy Code, has paid or made adequate
provision in accordance with GAAP for the payment of all Taxes shown to be due
and payable on such Tax Returns;
(b) there is no action, suit, claim, assessment or, to the
Knowledge of Seller, audit pending or proposed in writing with respect to Taxes
relating to the Business and the Acquired Assets; and
(c) there are no Liens for Taxes upon the Acquired Assets,
except for Liens for current Taxes not yet due and payable or Liens for Taxes
being contested in good faith.
(d) No Seller that will be a transferor of a "United States"
real property interest (as defined by Section 897(c) of the Code) is a "foreign
person" as defined by Section 1445 of the Code.
(e) For purposes of this Agreement, the term "Tax" or "Taxes"
means taxes of any kind, levies or other like assessments, customs, duties,
imposts, charges or fees, including income, gross receipts, ad valorem, value
added, excise, real or property, asset, sales, use, license, payroll,
transaction, capital, net worth, withholding, estimated, social security,
utility, workers' compensation, severance, production, unemployment
compensation, occupation, premium, windfall profits, transfer and gains taxes
imposed by or payable to any Governmental Authority, together with any interest,
penalties or additions with respect thereto. For purposes of this Agreement, the
term "Tax Return" shall mean all returns, reports, statements, declarations,
estimates and forms or other documents (including any related or supporting
information), required to be filed with respect to any Taxes.
Section 2.17. Brokerage and Financial Advisers. No broker,
finder or financial adviser has acted, directly or indirectly, as such for, or
is entitled to any compensation from, any Seller or their respective Affiliates
in connection with this Agreement or the transactions contemplated hereby,
except Lazard Freres & Co., LLC, whose fees for services rendered in connection
therewith will be paid by Seller or an Affiliate of Seller.
Section 2.18. Customers; Suppliers. (a) Section 2.18(a) of the
Seller Disclosure Schedule sets forth each customer of the Business that
individually accounts for more than 5% of the gross sales of the Business for
the six months ended January 28, 2001. Except as set forth in Section 2.18(a) of
the Seller Disclosure Schedule, no Seller has, since the date of the Reference
Balance Sheet, received any notice that any
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significant customer of the Business (i) has ceased, or will cease, to use the
products, goods or services of the Business, or (ii) has substantially reduced
or will substantially reduce, the use of products, goods or services of the
Business, including in each case after the consummation of the transactions
contemplated hereby.
(b) Section 2.18(b) of the Seller Disclosure Schedule sets
forth each supplier of the Business that individually accounts for more than 5%
of the operating expenses of the Business for the six-month period ended January
28, 2001.
Section 2.19. Inventory. (a) Except as set forth in Section
2.19 of the Seller Disclosure Schedule, the Inventory and all products sold or
delivered by or on behalf of the Business for sale to consumers within 18 months
of the Closing Date consists or consisted of merchandise of a quality and
quantity usable and saleable in the ordinary course of business, are or were fit
for their intended purpose and were neither adulterated nor misbranded within
the meaning of the Federal Food Drug and Cosmetic Act of 1938, as amended, the
Federal Fair Packaging or Labeling Act of 1966, as amended, and any other
applicable federal, state or local food and drug, consumer safety or consumer
protection law or regulation, and will comply, or complied, with all other
applicable state and local laws and regulations. The Inventory, at the time of
the Closing Balance Sheet, will be valued at the lower of cost (standard cost
adjusted for variance allocation which approximates average cost) or market in
accordance with GAAP.
(b) The existing manufacturing practices, ingredients,
composition and labeling for each of the products of the Business are in
compliance in all material respects with, and subject to Purchaser's continuing
to adhere to such practices, and assuming no change in existing laws, Purchaser
may produce, distribute and sell each of such products on and after the Closing
Date without violating in any material respect, any federal, state or local food
and drug, consumer safety or consumer protection laws or regulations. All
labeling used on the Inventory and the products sold or delivered by or on
behalf of the Business for sale to consumers within 18 months of the Closing
Date has been filed or registered with and/or approved by each state regulatory
agency which requires such filing, registration and/or approval.
(c) Except as set forth in Section 2.19 of the Seller
Disclosure Schedule, since January 1, 1998, there have been no recalls or
withdrawals of Inventory produced or sold by or as part of the Business as
conducted by Sellers or any predecessor thereto or other similar Federal, state
or private actions with respect to such Inventory and, to the Knowledge of
Seller, no facts or circumstances exist that could reasonably be expected to
result in such actions.
Section 2.20. Insurance. Section 2.20 of the Seller Disclosure
Schedule contains a complete and correct list and summary description of all
insurance policies maintained by any Seller for the benefit of or in connection
with the Acquired Assets or the Business. Sellers have delivered to Purchaser
complete and correct copies of all such policies together with all riders and
amendments thereto. Such policies are in full force and effect, and all premiums
due thereon have been paid. Sellers have complied in all material respects with
the terms and provisions of such policies. Section 2.20 of the
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Seller Disclosure Schedule sets out all material claims made by Sellers under
any policy of insurance during the one year period prior to the execution of
this Agreement with respect to the Business.
Section 2.21. Receivables. All of Sellers' receivables
(including accounts receivable, loans receivable and advances) that are
reflected in the Reference Balance Sheet, and all receivables that have arisen
since the date of the Reference Balance Sheet until the date hereof, have arisen
only from bona fide transactions in the ordinary course of business.
Section 2.22. Trade Spending. On or prior to the date hereof,
Seller has provided to Purchaser a true and complete copy of Seller's (i)
national trade merchandising (the "Trade Events Calendar") and (ii) national
consumer promotions (the "Consumer Events Calendar"), provided that Seller shall
not disclose to Purchaser data relating to specific customer trade promotions,
deal rates and net pricing contained in the Trade Events Calendar and coupon
values contained in the Consumer Events Calendar (collectively, the "Excluded
Information"). On or prior to the date hereof, Seller has provided a copy of the
Trade Events Calendar and the Consumer Events Calendar with the Excluded
Information to Purchaser.
Section 2.23. Information Technology.
(a) Exhibit 1.1(n) sets forth all of the applications and
software, hardware systems and networking and communication assets: (i) which
are used in connection with the acquired facilities located at Xxxxx City,
Michigan, Millsboro, Delaware, Fayetteville, Arkansas and Omaha, Nebraska and at
Seller's corporate headquarters at Cherry Hill, New Jersey and (ii) which are
used in connection with the operation of the Business.
(b) Except as set forth in Section 2.23(b) of the Seller
Disclosure Schedule:
(i) Seller owns or possesses adequate licenses or other legal
rights to use, sell or license all Information Technology free and
clear of all Liens, subject to the terms of the licenses listed on
Exhibit 1.1(n);
(ii) no claims, or to the Knowledge of Seller, threat of
claims, have been asserted by any third party against Seller related to
the use in the conduct of the Business of any Information Technology or
challenging or questioning the validity or effectiveness of any
Information Technology license or lease agreement; and to the Knowledge
of Seller, the practice or the use of the Information Technology in the
conduct of the Business does not infringe, misappropriate, violate or
dilute any intellectual property rights of any third party;
(iii) no claims, demands or proceedings are pending charging
any third party with infringement, misappropriation, dilution or
violation of any rights in any Information Technology owned by Seller
and to the Knowledge of Seller, no
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third party is infringing, misappropriating, diluting or violating any
rights in any Information Technology used by Seller;
(iv) no settlement agreements, consents, judgments, orders,
forbearance to xxx or similar obligations limit or restrict any
Seller's rights in and to any Information Technology;
(v) all Information Technology is in good working condition
(normal wear and tear excepted);
(vi) Seller has not licensed rights in any Information
Technology or received or been granted any such rights other than
pursuant to the Information Technology license and lease agreements to
be transferred to Purchaser pursuant to this Agreement;
(vii) except for breaches and defaults of the type referred to
in Section 365(b)(2) of the Bankruptcy Code, each Information
Technology license and lease agreement is a valid and binding
obligation of the Seller party thereto, and is enforceable in
accordance with its terms, and to the Knowledge of Seller no event or
condition has occurred which will result in a violation or breach of,
or cause to default by the Seller party thereto under, any such
Information Technology license and lease agreement; and
(viii) the consummation of the transactions contemplated
hereby will not result in a loss or impairment of any Seller's rights
to own or use any of the Information Technology, nor will such
consummation require the consent of any third party in respect of any
Information Technology.
Section 2.24. Assets Necessary to the Business. Except as set
forth in Section 2.24 of the Seller Disclosure Schedule, the Acquired Assets and
the services to be provided pursuant to the Collateral Agreements constitute all
of the assets, properties and services utilized to conduct the Business as
presently conducted in all material respects. All material Acquired Assets
actively used in the normal operation of the Business are in reasonably good
repair and operating condition (subject to normal wear and tear).
Section 2.25. Title to Transferred Assets. At the Closing,
Purchaser will receive good and marketable title to the Acquired Assets, free
and clear of any Liens, encumbrances, Retained Liabilities and other interests
other than Permitted Liens that are not to be released and discharged prior to
the Closing.
Section 2.26. No Interest in Other Entities. Except as
provided in Section 2.26 of the Seller Disclosure Schedule, no shares of any
corporation or any ownership or other investment interest, either of record,
beneficially or equitable, is held by any Seller in any Person other than
another Seller, Freshbake, Stratford or VL Payroll Corp., and no such equity
interests are included in the Acquired Assets.
Section 2.27. No Other Representations. Except for the
representations and warranties contained in this Article II, no Seller or any
other Person makes any
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representation or warranty, express or implied, on behalf of Seller, its
Subsidiaries or the Business.
Section 2.28. Termination of Heinz Agreement. Prior to the
execution of this Agreement, Seller and VFG have terminated the Heinz Agreement
in accordance with its terms (other than in respect of the obligations
thereunder as provided for in the Prior Bidding Procedures Order to pay the
Expense Reimbursement and the Break-Up Fee thereunder).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Except as set forth in the disclosure schedule being delivered
by Purchaser to Seller on the date hereof (the "Purchaser Disclosure Schedule"),
Purchaser represents and warrants to each Seller as of the date hereof and as of
the Closing Date as follows:
Section 3.1. Corporate Existence and Power. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all corporate powers required to carry on its
business as now conducted.
Section 3.2. Authority. Purchaser has all requisite power and
authority to execute and deliver, and to perform its obligations under this
Agreement and, as of the Closing, each Collateral Agreement and to consummate
the transactions contemplated hereby and thereby, and the execution and delivery
by Purchaser of this Agreement and each Collateral Agreement, and the
performance by Purchaser of its obligations under this Agreement and each
Collateral Agreement, have been duly authorized by all necessary corporate
action on the part of Purchaser. This Agreement has been, and as of the Closing,
each Collateral Agreement will be, duly executed and delivered by Purchaser, and
subject to the entry of the Sale Order and assuming the due authorization,
execution and delivery by each Seller, as applicable, each such agreement will
be a valid and binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms, except as (i) the enforceability hereof may be
limited by bankruptcy, insolvency, moratorium or other similar Applicable Laws
affecting the enforcement of creditors' rights generally, and (ii) the
availability of equitable remedies may be limited by equitable principles of
general applicability.
Section 3.3. Governmental Authorization. Except as required
under the HSR Act and any applicable foreign antitrust or competition laws or
regulations, and subject to the entry of the Sale Order, the execution, delivery
and performance by Purchaser of this Agreement and each Collateral Agreement and
consummation of the transactions contemplated hereby and by each Collateral
Agreement do not require Purchaser to obtain any consent, approval or action of,
make any filing with, or give any notice to, any Governmental Authority.
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Section 3.4. Non-Contravention. Except as set forth in Section
3.4 of the Purchaser Disclosure Schedule and subject to the entry of the Sale
Order, the execution, delivery and performance by Purchaser of this Agreement
and each Collateral Agreement and the consummation by Purchaser of the
transactions contemplated hereby and thereby will not (i) violate any provision
of the charter, bylaws or any other organizational document of Purchaser, (ii)
violate, conflict with, result in the breach of or default under (or with
notice, lapse of time, or both would result in such a breach or default), result
in any modification of the effect of, provide the other contracting party the
right to terminate or materially amend, or require the other contracting party
to consent to the assignment or continuation of, any material contract to which
Purchaser is a party or to which Purchaser is subject, (iii) violate any Order
against or binding upon Purchaser, (iv) violate any agreement with, or condition
imposed by, any Governmental Authority upon Purchaser, (v) subject to obtaining
the governmental authorizations referred to in Section 3.3, violate any
Applicable Law, or (vi) result in a breach or violation of any of the terms or
conditions of, constitute a default under, or otherwise cause an impairment or a
revocation of, any Permit related to Purchaser's business, except in the case of
clauses (ii), (iii), (iv), (v) and (vi) above, for violations, conflicts,
breaches, impairments, modifications, terminations, revocations or defaults
which, or consents or waivers the absence of which, would not have a material
adverse effect on Purchaser or which would not prevent or materially delay the
consummation of the transactions contemplated by this Agreement.
Section 3.5. Compliance with Applicable Laws. Purchaser is in
compliance with all Applicable Laws, except where such non-compliance would not,
individually or in the aggregate, be reasonably expected to prevent or
materially delay consummation of the Closing.
Section 3.6. Litigation. As of the date hereof, there are no
claims, actions, suits, investigations or proceedings pending or, to the
knowledge of Purchaser, threatened against Purchaser that would prevent or
materially delay consummation of the Closing or any other transactions
contemplated hereby or by the Collateral Agreements.
Section 3.7. Purchaser's Brokerage Agreements. Neither
Purchaser nor any of its Affiliates has, directly or indirectly, entered into
any agreement with any Person that would obligate any Seller to pay any
commission, brokerage fee or "finder's fee" in connection with the transactions
contemplated herein.
Section 3.8. Financing. Prior to the execution of this
Agreement (a) Purchaser has received and executed a commitment letter, dated as
of the date hereof (the "Bank Commitment Letter"), from Bankers Trust Company
and Deutsche Bank Alex. Xxxxx Inc. (the "Banks"), pursuant to which the Banks
have committed, subject to the terms and conditions set forth therein, to
provide Purchaser with up to $255 million of debt financing (the "Bank
Financing") and (b) Purchaser's affiliate ("Parent") has received and executed a
commitment letter, dated as of the date hereof (the "Equity Commitment Letter"
and, together with the Bank Commitment Letter, the "Commitment Letters") from
Hicks, Muse, Xxxx & Xxxxx Equity Fund V, L.P. (the "Fund"), pursuant to which
the Fund has committed, subject to the terms and conditions set forth therein,
to
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provide to Purchaser with up to $150 million of common equity (and as provided
in the Equity Commitment Letter up to an additional $70 million of debt or
equity financing on terms satisfactory to the Banks) (the "Equity Financing"
and, together with the Bank Financing, the "Financing"). The Financing is
adequate to enable Purchaser to pay at the Closing the Adjusted Purchase Price
in full, and to make any other payments necessary to consummate the transactions
contemplated hereby. True and complete copies of the Commitment Letters have
been furnished to Sellers.
Section 3.9. No Other Representations. Except for the
representations and warranties contained in this Article III, neither Purchaser
nor any other Person makes any representation or warranty, express or implied,
on behalf of Purchaser.
ARTICLE IV
COVENANTS OF THE PARTIES
Section 4.1. Conduct of Business. Except (w) as to those
matters set forth on Exhibit 4.1 attached hereto, (x) as otherwise set forth in
this Agreement, (y) with the consent of Purchaser (which consent shall not be
unreasonably withheld or delayed), or (z) as required by Applicable Law, during
the period from the date of this Agreement to the Closing Date, Sellers shall,
in connection with or relating to the Business or the Acquired Assets:
(a) conduct the Business in the ordinary course consistent
with past practice, and use reasonable best efforts to preserve intact its
business organization and maintain its customary relationships with suppliers,
employees and customers of the Business, subject to any of Sellers' obligations
as debtors or debtors-in-possession under the Bankruptcy Code;
(b) not terminate or amend in any material respect any
Material Contract, except in the ordinary course of business consistent with
past practice;
(c) not make any material capital expenditure with respect to
the Business not previously committed or make any new commitment for capital
expenditures in excess of $250,000 individually or $1,000,000 in the aggregate
other than (i) capital expenditures made in the ordinary course of business,
(ii) the capital expenditures set forth in the capital expenditure budget for
fiscal year 2001 previously made available to Purchaser and (iii) maintenance
capital expenditures made in the ordinary course of business;
(d) not permit the Business to: (i) incur or assume any
long-term debt relating to the Business; (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other Person; (iii) make any loans,
advances or capital contributions to any other Person; or (iv) mortgage or
pledge any of the Acquired Assets or create any Lien upon the Acquired Assets
except for Permitted Liens;
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(e) not change any of the accounting principles used by the
Business unless required by GAAP or Applicable Law;
(f) not incur any material obligation or liability, except
current liabilities for trade or business obligations incurred in connection
with the purchase of goods or services in the ordinary course of business
consistent with prior practice;
(g) not sell, transfer, lease to others or otherwise dispose
of any of the Acquired Assets, except for inventory sold in the ordinary course
of business, or cancel or compromise any debt or claim in excess of $10,000, or
waive or release any right of substantial value;
(h) not transfer or grant any rights or licenses under, or
enter into any settlement regarding the breach or infringement of, any United
States or foreign license of any Intellectual Property, or modify any existing
rights with respect thereto or enter into any licensing or similar agreements or
arrangements, except in the ordinary course of business consistent with past
practice, provided, however, that, with respect to any material Intellectual
Property, Seller shall obtain Purchaser's prior consent, such consent not to be
unreasonably withheld or delayed;
(i) not make any increase in the rate of compensation,
commission, bonus or other direct or indirect remuneration payable, or pay or
agree or orally promise to pay, conditionally or otherwise, any bonus,
incentive, retention or other compensation, retirement, welfare, fringe or
severance benefit or vacation pay, to or in respect of any non-union Plant
Employee (as defined in Section 4.3) except, (i) as required under Plans or
agreements in effect as of the date hereof, or (ii) in the ordinary course of
business consistent with past practice;
(j) adopt or amend any employment, collective bargaining,
bonus, profit-sharing, compensation, stock option, pension, retirement,
vacation, severance, deferred compensation or other plan, agreement, trust, fund
or arrangement for the benefit of any Affected Employee (whether or not legally
binding), to the extent the obligations under such plan, agreement, trust, fund
or arrangement will be an Assumed Liability;
(k) not enter into or assume any material agreement, contract
or instrument relating to the Business, or enter into or permit any material
amendment, supplement, waiver or other modification in respect thereof;
(l) not settle or agree to settle any litigation, action or
proceeding relating to an Assumed Liability other than in the ordinary course of
business consistent with past practices but not in any case involving amounts in
excess of $50,000;
(m) not make any material change in the selling, distribution,
advertising, terms of sale or collection practices for the Business from those
planned or budgeted, or enter into any practices, programs or long-term
allowances not previously used during the past twelve months.
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(n) not purchase, order or otherwise acquire inventory for the
Business in excess of the reasonably forecast requirements of the Business;
(o) pay accounts payable and other obligations of the Business
when they become due and payable in the ordinary course of business consistent
with prior practice, subject to any of Sellers' obligations as debtors or
debtors-in-possession under the Bankruptcy Code;
(p) except for breaches and defaults of the type referred to
in Section 365(b)(2) of the Bankruptcy Code, use reasonable best efforts to
perform in all material respects all of its obligations under all Contracts and
other agreements and instruments relating to or affecting the Business or the
Acquired Assets;
(q) not take any action or omit to take any action that would
result in the occurrence of any of the foregoing actions set forth in Sections
4.1(b) through and including Section 4.1(n);
(r) (i) satisfy, extinguish, terminate, and cause to be
removed from the applicable public records, the following liens and encumbrances
listed as exceptions on the title commitments described in Section 2.12(a)(ii)
of the Seller Disclosure Schedule: (1) with respect to Xxxxx City, MI: Schedule
B-1 items 6, 7, 9, 11, 12, 13; Schedule B-2 exceptions 8 through 10, (2) with
respect to Millsboro, DE: Schedule B-2 exceptions 1, 3-1, 3-3, 3-7, 3-8, 3-9,
3-10, 3-15, 3-16, 3-17, 3-19, 3-20, 3-21, 3-22, 3-27, 3-28, 3-29, 3-30, 3-31,
and 3-32; (3) with respect to Omaha, NE: Schedule B-2 exceptions 7, 22 through
25; and (4) with respect to Fayetteville, AR: Schedule B-1(b) items 1 through
12; Schedule B-II exceptions 10 through 20, and (ii) use all commercially
reasonable efforts to satisfy, extinguish, terminate, and cause to be removed
from the applicable public records, the following liens and encumbrances listed
as exceptions on the title commitments described in Section 2.12(a)(ii) of the
Seller Disclosure Schedule: (1) with respect to Xxxxx City, MI: Schedule B-2
exceptions 1 through 7 and 25; (2) with respect to Millsboro, DE: Schedule B-2
exception 2; (3) with respect to Omaha, NE: Schedule B-2 exceptions 1 through 6;
and (4) with respect to Fayetteville, AR: Schedule B-II exceptions 1 through 8;
provided, however, with respect to Fayetteville, AR: exceptions 10, 11, and 12
shall only be caused to be removed from the applicable public records to the
extent same do not affect the real property owned by Vlasic Foods International
Inc.
(s) have on hand at the Closing the Inventory listed on
Exhibit 4.1(s); and
(t) use its reasonable best efforts to either (i) renew or
extend that certain Listowel Supply Agreement (the "Listowel Agreement") on
terms reasonably satisfactory to the Purchaser prior to the Closing or (ii)
obtain one or more alternative sources of the Products (as set forth on Schedule
A to the Listowel Agreement) on terms reasonably satisfactory to the Purchaser
prior to the Closing.
Section 4.2. Reasonable Best Efforts.
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(a) Each of Sellers and Purchaser agrees to cooperate with
each other with respect to the notices and filings to be made in connection with
the consents, approvals, waivers, authorizations, licenses, Permits,
qualifications and Orders necessary to consummate the transactions contemplated
hereby. Each of Seller and Purchaser shall use its reasonable best efforts to
obtain, as promptly as practicable, the consents, approvals, waivers,
authorizations, licenses, Permits, qualifications and Orders required to be
obtained by it prior to Closing in order to consummate the transactions
contemplated by this Agreement, if not rendered inapplicable by order of the
Bankruptcy Court, and all other things reasonably necessary to consummate and
make effective the transactions contemplated hereby by the expected Closing
Date, provided that nothing in this Agreement shall be construed as requiring
Purchaser to litigate or agree to hold separate or to dispose of any assets or
property in order to obtain approval of the consummation of the transactions
contemplated hereby.
(b) Sellers and Purchaser shall, as soon as practicable,
promptly file the appropriate applications and documentary materials required to
be filed by them in connection with obtaining all necessary regulatory consents,
approvals, waivers and authorizations required to be obtained prior to Closing,
including making the filings pursuant to the HSR Act (and any foreign
competition laws or regulations applicable to the transactions contemplated by
this Agreement) ("Regulatory Authorizations"), and promptly file any additional
information required in connection with such filings as soon as practicable
after receipt of request therefor. Each of Sellers and Purchaser agrees to
cooperate with and to consult promptly with the other party and the other
party's counsel with respect to the Regulatory Authorizations and to provide
advance drafts and copies of all presentations and filings to be made in
connection with the Regulatory Authorizations, and any reasonably available
information with respect to such presentations and filings, to the other party's
counsel with appropriate confidentiality provisions.
(c) At all times prior to the Closing, each party hereto shall
promptly notify the other party hereto in writing of any fact, condition, event
or occurrence that will or may result in the failure of any of the conditions
applicable to such other party's obligation to effect the Closing pursuant to
Article VI, promptly upon such party becoming aware of the same.
(d) Seller shall use reasonable best efforts to assist
Purchaser in accomplishing a smooth transition of the Business from Sellers to
Purchaser, including, without limitation, providing customer information to
Purchaser as appropriate. Purchaser acknowledges and agrees that (i) unless and
until the Closing occurs, any information concerning customers of the Business
provided by Sellers to Purchaser, or any of its Affiliates, Subsidiaries,
directors, officers, employees, representatives or agents (collectively, the
"Purchaser Representatives"), shall be subject to the terms and conditions of
the Confidentiality Agreement (as defined in Section 7.2).
Section 4.3. Employee Matters.
(a) (i) Prior to the Closing Date, Purchaser shall offer in
writing to employ all of the employees located at Seller's plants (collectively,
the "Plant
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Employees"), and such additional employees of the Business who are designated by
Purchaser to Seller at least ten days before the Closing Date (the "Additional
Employees") (the Plant Employees and the Additional Employees are collectively
referred to as the "Affected Employees"); and provided, further, that all Plant
Employees shall be offered employment with Purchaser in the same geographical
area as employed immediately prior the Closing Date. Such offer shall be
effective as of the Closing Date with respect to Affected Employees who are
active employees of the Business immediately prior to the Closing Date and upon
the cessation of disability or any other approved leave of absence with respect
to Affected Employees who, as of the Closing Date, are employees of the Business
but who are inactive due to disability or other approved leave of absence.
(ii) Purchaser shall have no responsibility for and Sellers
shall reimburse Purchaser for any costs or liabilities that may be
incurred by Purchaser directly or indirectly in connection with any
employee of a Seller who is not a Transferred Employee (as defined in
Section 4.3(b) below), it being the intent of this Agreement that all
costs and liabilities associated with the employment and termination of
employment of such employees (including any duplicated costs that may
be incurred by reason of the foregoing provisions) be entirely borne by
Sellers. In the event that any claims are made within the applicable
statute of limitations which are based upon Purchaser's exercise of its
discretion in connection with the selection process set forth in this
Section 4.3(a) or, after the Closing, Purchaser's conduct with respect
to the hiring or employment of any Transferred Employee, Purchaser will
bear the litigation costs and damages and shall indemnify and hold
Sellers harmless against any and all such claims. Sellers shall remain
solely liable for any employment claims based on acts occurring before
the Closing Date or as a result of the consummation of the transactions
contemplated hereby or the entering into of this Agreement other than
claims based upon Purchaser's exercise of its discretion in connection
with the selection process set forth in this Section 4.3(a).
(iii) Purchaser will pay severance to any Transferred Employee
terminated by Purchaser other than "for cause" after the Closing Date
in accordance with Purchaser's applicable severance plans; provided,
however, that nothing contained in this Agreement shall be construed to
limit the right of Purchaser to terminate the employment of any
Transferred Employee, for cause or otherwise, at any time after the
Closing. Sellers shall be responsible for and shall indemnify and hold
Purchaser harmless against any and all severance or other claims
(including, but not limited to, any claims for litigation costs and
damages) made by any and all employees of Seller or its Subsidiaries or
of the Business (other than as a result of a termination by Purchaser
of a Transferred Employee after the closing as described above or
claims based upon Purchaser's exercise of its discretion in connection
with the selection process set forth in this Section 4.3(a) or, after
the Closing, Purchaser's conduct with respect to the hiring or
employment of any Transferred Employee), including any claims alleging
that their employment was terminated upon or as a result of the
consummation of the transactions contemplated hereby or the entering
into of this Agreement and
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including any claims by Transferred Employees alleging that the "same
desk" rule would not be applicable.
(b) Except to the extent necessary to avoid duplication of
benefits, Purchaser shall cause each Affected Employee who accepts Purchaser's
offer of employment and commences employment with Purchaser or a Subsidiary of
Purchaser (collectively, the "Transferred Employees") to be given full credit
for all service with Seller or any Subsidiary of Seller prior to the Closing
Date (and service credited by Seller and/or any Subsidiary of Seller) for
eligibility and vesting purposes under any employee benefit plans or
arrangements of Purchaser or any Subsidiary of Purchaser in which such
Transferred Employees participate from and after the Closing Date, to the same
extent such service was recognized by Seller or any Subsidiary of Seller
immediately prior to the Closing Date. Purchaser shall, or shall cause a
Subsidiary of Purchaser to, (i) waive all limitations as to preexisting
conditions, exclusions and waiting periods with respect to participation and
coverage requirements applicable to Transferred Employees under any welfare plan
in which such employees may be eligible to participate after the Closing Date,
other than limitations or waiting periods that are already in effect with
respect to such employees and that have not been satisfied as of the Closing
Date under any welfare plan of Seller or any Subsidiary of Seller in which
Transferred Employees participate immediately prior to the Closing Date, and
(ii) provide each Transferred Employee with credit for any co-payments and
deductibles paid prior to the Closing Date in satisfying any applicable
deductible or out-of-pocket requirements under any welfare plans in which such
employees are eligible to participate after the Closing Date, as if those
deductibles or co-payments had been paid under the welfare plans in which such
employees are eligible to participate after the Closing Date.
(c) In connection with this Agreement, Purchaser shall not
assume Sellers' defined contribution plans (and related trusts) listed in
Section 2.14(a) of the Seller Disclosure Schedule ("Sellers' Defined
Contribution Plans") and Sellers shall remain responsible for all liabilities
and obligations under Sellers' Defined Contribution Plans. Each Transferred
Employee shall cease to accrue any further benefits under Sellers' Defined
Contribution Plans effective as of the Closing Date, and each Transferred
Employee who is a participant in any of the Sellers' Defined Contribution Plans
shall be given the opportunity to receive, as soon as practicable following the
Closing Date, a distribution of his or her account balance(s) under such Plan(s)
and, if Purchaser agrees, shall be given the opportunity to elect to have such
account balance transferred directly to a tax qualified defined contribution
plan maintained by Purchaser, subject to and in accordance with Applicable Law.
Sellers' Defined Contribution Plans shall be a Retained Asset and Retained
Liability of Sellers.
(d) Effective as of the Closing Date, Purchaser shall assume
the Vlasic Foods International Inc. Retirement and Pension Plan for Employees
Covered by Collective Bargaining Agreements (and related trust) (the "Bargaining
Pension Plan"). Purchaser's assumption of the Bargaining Pension Plan shall not
preclude Purchaser from amending or terminating such plan following Closing. The
Vlasic Foods International Inc. Retirement and Pension Plan for Employees Not
Covered by Collective Bargaining Agreements (and related trust) ("Non-Bargaining
Pension Plan") shall not be assumed by
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Purchaser pursuant to this Section 4.3(d) and shall be a Retained Asset and
Retained Liability of Sellers. Each Transferred Employee shall cease to accrue
any further benefit under the Non-Bargaining Pension Plan and Sellers shall make
distributions to each Transferred Employee who is a participant in such plan
pursuant to the terms thereof.
(e) Effective as of Closing, Purchaser shall assume the
following post-retirement medical benefit plans insofar as they provide coverage
or benefits to employees and former employees of the Business: (1) Vlasic Foods
International Inc. Retiree Medical Plan For Union Employees, (2) Vlasic Foods
International Inc. Retiree Medical Plan For Non-Union Hourly Employees, and (3)
Vlasic Foods International Inc. Retiree Medical Plan For Salaried Employees
(collectively, "Sellers' Retiree Medical Plans"). Purchaser's assumption of
Sellers' Retiree Medical Plans shall not preclude Purchaser from amending or
terminating such plans following Closing. To the extent not assumed by
Purchaser, a Sellers' Retiree Medical Plan shall be a Retained Liability of
Sellers.
(f) Purchaser shall be responsible for any workers'
compensation benefits for Transferred Employees that relate to events occurring
on or after the Closing Date. Sellers shall be responsible for all workers'
compensation benefits, whether reported or unreported on the Closing Date and
regardless of when notices of such benefits or claims are filed, brought by or
in respect of any Transferred Employee that relate to events occurring prior to
the Closing Date.
(g) To the extent that any obligations might arise under the
Worker Adjustment Retraining Notification Act ("WARN"), 29 U.S.C. Section 2101
et seq., or under any similar provision of any federal, state, regional, foreign
or local law, rule or regulation (hereinafter referred to collectively as "WARN
Obligations") as a consequence of the transactions contemplated by this
Agreement, Sellers shall be responsible for any WARN Obligations arising as a
result of any employment losses to employees of the Business occurring prior to
the Closing Date. Purchaser shall be responsible for any WARN Obligations
arising as a result of any employment losses to employees of the Business
occurring on or after the Closing Date with respect to all employees of the
Business who are not offered employment by Purchaser; provided that, prior to
the Closing Date, Seller and Purchaser shall cooperate with each other as may be
reasonable in connection with any WARN Obligations for which Purchaser is
responsible hereunder, including providing any employees of the Business, and
any other person or entity, designated by Purchaser, with notices in the form
and manner, and at the time, requested by Purchaser.
(h) Effective as of the Closing, Purchaser shall assume and
continue in full force and effect the collective bargaining agreements set forth
on Exhibit 4.3(h) attached hereto, including all employee benefit obligations
thereunder. During the period between the signing of this Agreement and the
Closing Date, Purchaser and Seller shall reasonably cooperate with each other
with respect to any unions representing employees of the Business.
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Section 4.4. Seller's Trademarks. It is expressly agreed that
Purchaser is not purchasing, acquiring or otherwise obtaining, any right, title
or interest in the trademark and the trade name "Deli Classics."
Section 4.5. Further Assurances. At any time after the Closing
Date, Sellers and Purchaser shall promptly execute, acknowledge and deliver any
other assurances, documents, instruments or conveyances reasonably requested by
Seller or Purchaser, as the case may be, or necessary for Sellers or Purchaser,
as the case may be, to satisfy their respective obligations hereunder or obtain
the benefits contemplated hereby.
Section 4.6. Post-Closing Cooperation. After the Closing, upon
reasonable written notice, each of Purchaser and Sellers shall, in a prompt and
timely manner, furnish or cause to be furnished to the other party and its
employees, counsel, auditors and representatives access during normal business
hours to such party's employees, counsel, auditors and representatives,
including but not limited to, access to any transferred personnel, in connection
with any matter relating to the Business as is reasonably necessary for
financial reporting and accounting matters, the preparation and filing of any
Tax Returns, reports or forms or the defense of any tax audit, claim or
assessment. Each party shall reimburse the other for reasonable out-of-pocket
costs and expenses incurred in assisting the other pursuant to this Section 4.6.
Neither party shall be required by this Section 4.6 to take any action that
would unreasonably interfere with the conduct of its business or unreasonably
disrupt its normal operations.
Section 4.7. Announcement. Neither Seller nor Purchaser will
issue, or permit any of its Affiliates to issue, any press release or otherwise
make any public statement with respect to this Agreement or the transactions
contemplated hereby without the prior written consent of the other (which
consent shall not be unreasonably withheld), except as may be required by
Applicable Law or stock exchange regulation. Notwithstanding anything in this
Section 4.7 to the contrary, Seller and Purchaser will, to the extent
practicable, consult with each other before issuing, and provide each other the
opportunity to review and comment upon, any such press release or other public
statements with respect to this Agreement and the transactions contemplated
hereby, whether or not required by Applicable Law or stock exchange regulation.
Section 4.8. Access to Information.
(a) Subject to Section 4.2(d), from the date of this Agreement
to the Closing, Seller will, and will cause each of its Subsidiaries, to (i)
give Purchaser and its authorized representatives reasonable access to all the
books, records, personnel, offices, properties and other facilities relating to
the Business, or expected to be used in connection with the provision of
transitional services under any Collateral Agreement, and to Seller's
accountants, (ii) permit Purchaser to make such copies and inspections thereof
as Purchaser may reasonably request, (iii) permit Purchaser to visit major
customers of the Business and (iv) cause the officers of Seller to furnish
Purchaser with such financial and operating data and other information with
respect to the Business as Purchaser may from time to time reasonably request;
provided, however, that any such
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access shall be conducted at a reasonable time, upon reasonable prior notice,
under the supervision of Seller's personnel and in such a manner as to maintain
the confidentiality of this Agreement and the transactions contemplated hereby
and not to interfere unreasonably with the normal operation of the Business or
other business operations of Seller. Seller will keep Purchaser generally
informed as to the affairs of the Business.
(b) Prior to the date hereof, Seller has delivered to
Purchaser unaudited consolidated financial statements of the Business as at, and
for the monthly period ending February 25, 2001 and from the date of this
Agreement to the Closing, on or before the 20th day of each month, Seller shall
deliver to Purchaser unaudited consolidated financial statements of the Business
as at and for the monthly period ending the last day of the preceding month
(collectively, the "Subsequent Monthly Financial Statements"), which shall
include a balance sheet and management statement of earnings before interest and
income taxes. At the time that the Subsequent Monthly Financial Statements are
delivered to Purchaser, Seller shall by such delivery be deemed to have made the
representations and warranties to Purchaser with respect to such Subsequent
Monthly Financial Statements set forth in Section 2.5; provided, that for all
purposes of this Agreement, Seller shall be deemed to have made such
representations and warranties to Purchaser with respect to the Subsequent
Monthly Financial Statements for each monthly period as of the date of delivery
of such financial statements and as of the Closing Date.
(c) From the date of this Agreement to the Closing, Seller
shall deliver to Purchaser on a weekly basis a true and correct copy of Seller's
daily activity report of sales and order activity for each of the Pickles
Business, the Sauce Business and the Xxxxxxx Business in the format set forth on
Exhibit 4.8(c).
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Section 4.9. Maintenance of Books and Records. Each of the
parties hereto shall preserve, until at least the seventh anniversary of the
Closing Date, all pre-Closing Date records possessed or to be possessed by such
party relating to the Business. After the Closing Date and up until at least the
seventh anniversary of the Closing Date, upon any reasonable request from a
party hereto or its representatives, the party holding such records shall (x)
provide to the requesting party or its representatives reasonable access to such
records during normal business hours and (y) permit the requesting party or its
representatives to make copies of such records, in each case at no cost to the
requesting party or its representatives (other than for reasonable out-of-pocket
expenses). Such records may be sought under this Section 4.9 for any reasonable
purpose, including, without limitation, to the extent reasonably required in
connection with the audit, accounting, tax, litigation, federal securities
disclosure or other similar needs of the party seeking such records.
Notwithstanding the foregoing, any and all such records may be destroyed by a
party if such destroying party sends to the other party hereto written notice of
its intent to destroy such records, specifying in reasonable detail the contents
of the records to be destroyed; such records may then be destroyed after the
30th day following such notice unless the other party hereto notifies the
destroying party that such other party desires to obtain possession of such
records, in which event the destroying party shall transfer the records to such
requesting party and such requesting party shall pay all reasonable expenses of
the destroying party in connection therewith.
Section 4.10. Non-Solicitation of Employees.
(a) From and after the date hereof, each Seller shall not, and
shall cause its Subsidiaries not to, without the prior written approval of
Purchaser, for a period of two years from the Closing Date, directly or
indirectly, (i) solicit, encourage, entice or induce any person who is an
employee of the Business at the date hereof or who becomes an employee of the
Business after the date hereof but prior to the Closing Date, to terminate his
or her employment with the Business, or (ii) hire or employ any person who is an
employee of the Business at the date hereof or who becomes an employee of the
Business after the date hereof but prior to the Closing Date; provided, that the
foregoing shall not apply to persons who approach a Seller or any Subsidiary of
Seller for the purposes of employment or who are hired as a result of the use of
an independent employment agency where contact between such person and the
independent employment agency was initiated by such person or as a result of the
use of a general solicitation (such as an advertisement) not specifically
directed to employees of the Business.
(b) [Intentionally Omitted]
(c) If it is ever held by any court of competent jurisdiction
that the restriction placed on any party to this Agreement by this Section 4.10
is too onerous and is not necessary for the protection of the other party or
parties hereto, each party to this Agreement agrees that any court of competent
jurisdiction may impose lesser restrictions which such court may consider to be
necessary or appropriate to properly protect the other party or parties hereto.
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Section 4.11. Transfers Not Effected as of Closing. Nothing herein
(other than Section 6.2(q)) shall be deemed to require the conveyance,
assignment or transfer of any Acquired Asset that by its terms or by operation
of Applicable Law cannot be freely conveyed, assigned, transferred or assumed.
To the extent the parties hereto have been unable to obtain any governmental or
any third party consents or approvals required under Applicable Law for the
transfer of any Acquired Asset and to the extent not otherwise prohibited by the
terms of any Acquired Asset, Sellers shall continue to be bound by the terms of
such applicable Acquired Asset and Purchaser shall pay, perform and discharge
fully all of the obligations of Sellers thereunder from and after the Closing to
the extent that the corresponding benefit is received. Sellers shall, without
consideration therefor, pay, assign and remit to Purchaser promptly all monies,
rights and other consideration received in respect of such performance. Sellers
shall exercise or exploit its rights in respect of such Acquired Assets only as
reasonably directed by Purchaser and at Purchaser's expense. Subject to and in
accordance with Section 4.2, for not more than 90 days following the Closing
Date, the parties hereto shall continue to use their reasonable best efforts to
obtain all such unobtained consents or approvals required to be obtained by it
at the earliest practicable date. If and when any such consents or approvals
shall be obtained, then Sellers shall promptly assign its rights and obligations
thereunder to Purchaser without payment of consideration and Purchaser shall,
without the payment of any consideration therefor, assume such rights and
obligations. The parties shall execute such good and sufficient instruments as
may be necessary to evidence such assignment and assumption.
Section 4.12. Bulk Sales Laws. Purchaser waives compliance by Sellers,
and Sellers waive compliance by Purchaser, with the provisions of any applicable
bulk sales, fraudulent conveyance or other law for the protection of creditors.
Section 4.13. Transition Services.
(a) Purchaser agrees that, after the Closing, it shall provide
to Sellers such services in connection with the administration of the Bankruptcy
Case, the implementation of Sellers' (excluding VFCI) bankruptcy plan and the
winding down of the affairs of Sellers and their respective Affiliates, as
Sellers may reasonably require after the Closing. Purchaser shall provide such
services to Sellers at a fixed cost rate of $200.00 per employee hour. Sellers
shall also be required to reimburse Purchaser for all third party costs and
expenses related to the provision of services by Purchaser to Sellers.
(b) As may be necessary for purposes of Section 4.13(a),
Purchaser agrees that, after the Closing, it shall (i) give Sellers and their
authorized representatives reasonable access to all the books, records,
personnel, offices, properties and other facilities relating to the Business, or
expected to be used in connection with the provision of transitional services as
contemplated by this Section 4.13, and to Purchaser's accountants, (ii) permit
Sellers to make such copies and inspections thereof as Sellers may reasonably
request and (iii) cause the officers and employees of Purchaser to furnish
Sellers with such financial and operating data and other information with
respect to the Business as Sellers may from time to time reasonably request in a
form reasonably usable by Sellers, in each case to the extent that such access
or information is related to the
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administration of the Bankruptcy Case, the implementation of Sellers' (excluding
VFCI) bankruptcy plan and the winding down of the affairs of Sellers and their
respective Affiliates; provided, however, that any such access shall be
conducted at a reasonable time, upon reasonable prior notice, under the
supervision of Purchaser's personnel and in such a manner as to maintain the
confidentiality of this Agreement and the transactions contemplated hereby and
not to interfere unreasonably with the normal operation of the Business or other
business operations of Purchaser.
Section 4.14. Trademark Matters.
(a) Purchaser hereby grants to Seller and its Affiliates
("Licensees"), effective upon the Closing Date, a non-transferable,
non-exclusive, royalty free worldwide transitional right and license to use the
Trademarks set forth on Exhibit 4.14 (a) attached hereto, together with all
slogans, logos, designs and trade dress associated therewith, which are, in each
case, in existence at Closing and currently being used in the conduct of the
Business (the "Marks"). This transitional license shall permit use of the Marks
solely for the purposes set forth in this Section 4.14. The transitional license
shall permit use of the Marks solely as follows (except as set forth in the next
sentence): (i) on existing packaging and labeling inventory of Stratford for a
period equal to the earlier of the exhaustion of such inventory or 6 months and
(ii) on finished product inventory of Stratford for such inventory's shelf life
(not to exceed 18 months), provided however, that in each case of (i) or (ii),
such use shall be solely in the form and consistent with the manner in which
such Marks have heretofore been used by Stratford in its business (the
"Transitional License"). In addition, each Seller agrees (x) to use its best
efforts to obtain an order from the Bankruptcy Court in connection with the Sale
Hearing (as defined in Section 4.16) changing its name to a name which does not
include the word "Vlasic" or any word contained in any of the Marks other than
words of general use or a word that is confusingly similar to the word "Vlasic"
or any word contained in any of the Marks other than words of general use, and
(y) to use the Marks for administrative, corporate and legal use for no more
than three months after the Closing Date except to the extent reasonably
necessary in the manner set forth on Exhibit 4.14 (a)(x) or for compliance with
the notice or other requirements of the Bankruptcy Code or compliance with other
Applicable Law or to use the Marks for administrative, corporate and legal use
for no more than 12 months to the extent necessary to sell the business of
Stratford. Notwithstanding the foregoing, Purchaser hereby permits Seller to
grant a sublicense in sub-sections (i) and (ii) of this Transitional License
with respect to certain of the Marks set forth on Exhibit 4.14(b) ("Transitional
Sublicense"), to the purchaser(s) of Stratford's businesses. Any Transitional
Sublicense shall become effective upon the closing date of the sale of the
applicable business, and shall be in effect for the remainder of the
transitional license periods, as applicable. No other use of the Marks shall be
made by Licensees or sublicensees during applicable transitional license periods
without Purchaser's express written consent, such consent not to be unreasonably
withheld or delayed. Any and all rights and goodwill arising from the use of the
Marks by Licensees pursuant to this Transitional License, or their assigns
pursuant to any Transitional Sublicense, shall inure solely to Purchaser's
benefit. Licensees agree that neither Seller, nor any of its Affiliates, or
sublicensees shall use, directly or indirectly, the Marks in any other way that
suggests that there is a relation or affiliation between Licensees or
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sublicensees and Purchaser or any of its Affiliates other than that as created
by this Agreement, or as a trademark, service xxxx or trade name for Licensees
or sublicensees. Nothing in this Agreement or in the performance thereof, or
that might otherwise be implied by law, shall operate to grant Licensees any
right, title or interest in and to the Marks. Licensees shall and shall cause
any sublicensees to assign to Purchaser, and do hereby assign to Purchaser, any
rights they may acquire, if any, by the operation of law or otherwise, in the
Marks pursuant to this Transitional License or any Transitional Sublicense. As
between the parties, Purchaser shall have the sole right, and in its sole
discretion, may commence, prosecute, defend and control any action concerning
the Marks.
(b) [Intentionally Omitted]
(c) Each Seller agrees that it will not submit or seek
confirmation of, and will oppose the confirmation of, any plan of reorganization
or plan of liquidation that does not contain a provision providing that the name
of such Seller, and each subsidiary of such Seller which has a name containing
the word "Vlasic" or any word contained in any of the Marks other than words of
general use, shall be changed to a name which does not include such words or a
word that is confusingly similar to such words. Each Seller acknowledges that
this Section 4.14(c) relates to a special, unique and extraordinary matter and
that a violation of this Section 4.14(c) will cause Purchaser irreparable injury
for which adequate remedies are not available at law. Each Seller agrees that
Purchaser shall be entitled to equitable relief, including injunction, in the
event of any breach of this Section 4.14(c) and that such Seller shall not
oppose the granting of such relief.
Section 4.15. Submission for Court Approval.
(a) As promptly as practicable, but in no event later than
April 10, 2001, Sellers (excluding VFCI) shall file with the Bankruptcy Court a
motion, notices and a proposed order, as may be appropriate (the "Bidding
Procedures Order"), seeking the approval of Section 4.16 hereof and authorizing
the observance and performance of such terms by Sellers (excluding VFCI) and
Purchaser during the pendency of the Bankruptcy Case.
(b) As promptly as practicable, but in no event later than
April 10, 2001, Seller shall file with the Bankruptcy Court a motion, notices
and a proposed Sale Order, as may be appropriate, seeking the approval of this
Agreement, Sellers' performance hereunder, the sale of the Acquired Assets
(excluding Acquired Assets owned by VFCI) free and clear of all liens, claims
(as defined in Section 101(5) of the Bankruptcy Code) and interests (excluding
Acquired Assets owned by VFCI), and the assumption and assignment of the
Contracts as provided in this Agreement (excluding VFCI's interests in such
Contracts). Purchaser shall reasonably cooperate with Sellers in obtaining such
Bankruptcy Court approval, including providing evidence, if requested, of
Purchaser's ability to perform the obligations of Sellers under the Contracts to
be assumed by Purchaser pursuant to Section 1.3(b) (excluding VFCI's interests
in such Contracts).
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(c) Notice of the Hearing, the Sale Order and the objection
deadline shall be served by Sellers in accordance with Rules 2002, 6004, 6006
and 9014 of the Federal Rules of Bankruptcy Procedure and any applicable local
rules of the Bankruptcy Court on all Persons required to receive notice under
such rules including all Persons which have asserted Liens, encumbrances or
other interests in the Acquired Assets, all non-debtor parties to the Contracts,
on the official committees of unsecured creditors appointed in the Bankruptcy
Case, the United States Trustee, each indenture trustee for any Seller and each
of Sellers' creditors, including:
(i) all creditors listed in the schedule of assets and
liabilities filed in the Bankruptcy Case by any Seller;
(ii) all creditors who have filed proofs of claim in the
Bankruptcy Case; and
(iii) all creditors who have otherwise appeared in the
Bankruptcy Case.
In addition, notice of the motion for the Sale Order, the Sale Hearing
thereon and the objection deadline shall be given by Sellers by publication of a
notice (the "Publication Notice") in the New York Times and the Wall Street
Journal National Edition. Such notice shall be published at Sellers' expense.
The sale motion for the Bidding Procedures Order and the Sale Order and such
publication notice shall each be in form and substance reasonably satisfactory
to Purchaser.
Section 4.16. Bidding Procedures. Each Seller acknowledges that this
Agreement is the culmination of an extensive process undertaken by Sellers to
identify and negotiate a transaction with a bidder who was prepared to pay the
highest and best purchase price for the Acquired Assets while assuming or
otherwise satisfying certain liabilities in order to maximize value for Seller's
constituents. Set forth below are the bidding procedures (the "Bidding
Procedures") to be employed with respect to this Agreement concerning the sale
of the Acquired Assets of each Seller and its Subsidiaries to Purchaser (the
"Sale"). The Sale is subject to competitive bidding as set forth herein and
approval by the Bankruptcy Court at a hearing under Sections 363 and 365 of the
Bankruptcy Code (the "Sale Hearing"). The following overbid provisions and
related bid protections are designed to compensate Purchaser for its efforts and
agreements to date and to facilitate a full and fair process designed to
maximize the value of the Acquired Assets for the benefit of each Seller's
stakeholders.
(a) Bid Deadline. All Bids must be submitted to Sellers c/o
Xxxxx XxXxxxxx Xxxxx at Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, Xxxx Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, with a copy to Xxxxxx X. Xxxxxxxx at Lazard
Freres & Co., LLC, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, not later
than 11:00 a.m. (EST) on the date which is four Business Days prior to the date
scheduled by the Bankruptcy Court for the Sale Hearing (the "Bid Deadline").
Seller will immediately distribute by facsimile transmission, personal delivery
or reliable overnight courier service in accordance with Section 8.1 a copy of
each Bid upon receipt to (i) counsel to any official committee of unsecured
creditors appointed in the Bankruptcy Case, (ii) counsel to
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Seller's proposed debtor-in-possession lenders one or more, and (iii) counsel to
Purchaser. For purposes of this Agreement, "Bid" shall mean one or more letters
from one or more Persons who the Board of Directors of Seller has determined in
the exercise of its fiduciary duty is financially able to consummate the
purchase, either jointly or separately, of all of the Acquired Assets (each a
"Qualified Bidder") stating that (i) such Qualified Bidder offers to purchase
all of the Acquired Assets upon the terms and conditions set forth in a copy of
this Agreement, together with all Exhibits and Schedules hereto (the "Definitive
Sale Documentation"), marked to show those amendments and modifications to the
Definitive Sale Documentation, including, but not limited to, price and the time
of closing, that such Qualified Bidder proposes, (ii) each such Qualified Bidder
is prepared to enter into and consummate the transaction within not more than
ten days after approval by the Bankruptcy Court of the Sale Order, subject to
receipt of any governmental or regulatory approvals, and (iii) each such
Qualified Bidders' offer is irrevocable until the closing of a purchase of all
of the Acquired Assets. For purposes of determining the existence of a Bid, a
Bid may be in the form of a joint bid from more than one Person, or may be in
the form of separate bids from more than one Person, with each such separate bid
being for a portion of the Acquired Assets, but all of such separate bids,
collectively, seeking to purchase all of the Acquired Assets.
(b) Qualified Bid. Only Qualified Bids will qualify for
consideration at the Auction (as defined below). For purposes of this Agreement,
a "Qualified Bid" is a Bid that:
(i) complies in all respects with Section 4.16(a);
(ii) has a cash component of at least an amount sufficient to satisfy
the Expense Reimbursement and the Break-Up Fee (each as defined in Section
4.16(d));
(iii) is a proposal that Seller determines, in the good faith opinion
of the Board of Directors of Seller after consultation with the independent
financial advisor of Seller, is not materially more burdensome or
conditional than the terms of this Agreement and has a value greater than
or equal to the sum of (x) the value, as reasonably determined by the
independent financial advisor of Seller, of Purchaser's offer plus (y) the
amount of the Expense Reimbursement and the Break-Up Fee plus (z) in the
case of the initial Qualified Bid, $5,000,000, and in the case of any
subsequent Qualified Bids, $1,000,000 over the preceding Qualified Bid;
(iv) is substantially on the same or better terms and conditions as set
forth in a copy of Definitive Sale Documentation; and
(v) is accompanied by satisfactory evidence of committed financing or
other ability to perform.
If Seller does not receive any Qualified Bids, Seller will report the same to
the Bankruptcy Court and will proceed with a sale and assignment of the Acquired
Assets to
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Purchaser. This Agreement executed by Purchaser shall constitute a Qualified Bid
for all purposes.
(c) Auction, Bidding Increments, and Bids Remaining Open.
(i) If Seller receives a Qualified Bid, Seller will conduct an auction
(the "Auction") at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
on the date that is one Business Day prior to the date scheduled by the
Bankruptcy Court for the Sale Hearing, beginning at 11:00 a.m. (EST) or
such later time or other place as Seller shall notify all Qualified Bidders
who have submitted Qualified Bids. Only Purchaser, Seller, any
representative of any official committee appointed in the Bankruptcy Case,
Xxxxxx Guaranty Trust Company of New York, as administrative agent and
collateral agent (the "Administrative Agent") under the debtor-in-
possession credit and guaranty agreement, dated on or about the date
hereof, among Seller, the guarantors party thereto, the banks party
thereto, the Administrative Agent and The Chase Manhattan Bank, as
syndication agent, counsel to the Administrative Agent and any Qualified
Bidders who have timely submitted Qualified Bids shall be entitled to
attend the Auction, and only Purchaser and Qualified Bidders will be
entitled to make any subsequent Qualified Bids at the Auction. Bidding at
the Auction will continue until such time as the highest and best offer is
determined. Seller may announce at the Auction additional procedural rules
that are reasonable under the circumstances (e.g., the amount of time
allotted to make subsequent overbids) for conducting the Auction so long as
such rules are not inconsistent with these Bidding Procedures.
(ii) At least one Business Day prior to the Auction, Seller will give
Purchaser and all other Qualified Bidders a copy of the highest and best
Qualified Bid received and copies of all other Qualified Bids. In addition,
Seller will inform Purchaser and each Qualified Bidder who has expressed
its intent to participate in the Auction of the identity of all Qualified
Bidders that may participate in the Auction.
(d) Break-Up Fee and Expense Reimbursement. In the event that
Seller (i) accepts a Bid, other than that of Purchaser, as the highest or best
offer (an "Auction Transaction") or (ii) sells, transfers, leases or otherwise
disposes directly or indirectly, including through an asset sale, stock sale,
merger, reorganization or other similar transaction, of all or substantially all
or a material portion of the Acquired Assets (or agrees to do any of the
foregoing) in a transaction or series of transactions to a party or parties
other than Purchaser within twelve months from the date hereof (either of clause
(i) or (ii) being, an "Alternative Transaction"), Seller shall pay to Purchaser
(i) an amount equal to its reasonable, actual out-of-pocket costs and expenses
(including, without limitation, expenses of counsel, expenses of financial
advisor and expenses of other consultants and the HSR Act filing fee) incurred
by Purchaser in connection with this Agreement and the transactions contemplated
hereby, not to exceed $1,000,000 (the "Expense Reimbursement"), and (ii) a
break-up fee in the amount of $4,000,000 which represents Purchaser's fee for
its work in (x) establishing a bid standard or minimum for other bidders, (y)
placing estate property in a sales configuration mode attracting other
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bidders to the Auction and (z) for serving, by its name and its expressed
interest, as a catalyst for other bidders (the "Break-Up Fee"); provided,
however, that in no event shall the Expense Reimbursement or the Break-Up Fee be
payable to Purchaser (x) if Purchaser terminates this Agreement (other than in
the event of an Auction Transaction) for any reason other than the willful
breach by Sellers of any representation, warranty, covenant or agreement set
forth in this Agreement, or (y) if this Agreement is terminated by Seller
pursuant to Section 7.1(c) or 7.1(d). The Break-Up Fee and the Expense
Reimbursement shall be paid as an allowed administrative priority expense of
Sellers under Section 503(b)(1) of the Bankruptcy Code upon the earlier to occur
of the closing of the Alternative Transaction and the consummation of a plan of
reorganization or plan of liquidation.
(e) Heinz Payment. No provision contained in this Agreement
(including the Bidding Procedures) shall be interpreted or construed in any
manner that limits or restricts the right of Heinz to receive its "Expense
Reimbursement" or "Break-Up Fee" that may be otherwise payable to it under the
terms of the Heinz Agreement.
Section 4.17. Accounts Receivable. (a) Promptly after the later of (x)
120 days from the Closing Date and (y) five Business Days after the
determination of the Final Closing Balance Sheet in accordance with Section 1.7
(the "Adjustment Date"), Purchaser shall deliver a written notice (the
"Purchaser Receivables Notice") to Seller (after receipt of a report from Seller
indicating the amount of Accounts Receivable collected by Seller after the
Closing Date) which states either (i) that as of the Adjustment Date Purchaser
has not been paid in full in respect of all Accounts Receivable (net of reserves
for doubtful accounts and allowances for valid promotional discounts)
outstanding as of the Closing as set forth on the Final Closing Balance Sheet
(the "Final Accounts Receivable"), and, accordingly, Purchaser shall be entitled
to receive out of the Escrow Fund the excess of (x) the amount of the Final
Accounts Receivable (net of reserves for doubtful accounts and allowances for
valid promotional discounts) over (y) the amount of payments actually received
by Purchaser or any of its Affiliates in respect of the Final Accounts
Receivable (such excess, the "Adjustment Amount"), or (ii) that Purchaser has
been paid in full in respect of all Final Accounts Receivable (net of reserves
for doubtful accounts and allowances for valid promotional discounts). Upon
receipt of the Purchaser Receivables Notice by Seller, Purchaser and Seller
shall promptly prepare and deliver a written notice to the Escrow Agent, in
accordance with the terms and conditions of the Escrow Agreement, which restates
the information set forth in the Purchaser Receivables Notice (the "Receivables
Notice"). Upon receipt of the Receivables Notice, and only if the Receivables
Notice indicates that Purchaser is entitled to receive an amount of funds set
forth therein pursuant to this Section 4.17, the Escrow Agent shall promptly
remit to Purchaser, in exchange for Purchaser's transfer of all unpaid Final
Accounts Receivable to Seller, a sum, in immediately available same day funds,
equal to the Adjustment Amount. In calculating the Adjustment Amount pursuant to
this Section 4.17, payments received by Purchaser or its Affiliates in respect
of Final Accounts Receivable before the transfer of any unpaid Final Accounts
Receivable to Seller pursuant to this Section 4.17 shall be credited as directed
by the account debtor, or if no direction is provided, first to the oldest Final
Account Receivable of that customer until all Final Accounts Receivable with
respect to
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that customer are paid in full; provided, however, that once Seller receives a
non-directed payment from an account debtor, it will promptly forward to
Purchaser all payment support information related to such payment for review
and, if Purchaser and Seller jointly determine that such non-directed payment
should be credited to another Final Accounts Receivable, or to an Accounts
Receivable that is recorded after the Closing Date, of such account debtor
instead of such account debtor's oldest Final Accounts Receivable, the parties
will credit the account of such account debtor accordingly. Further, in
calculating the Adjustment Amount pursuant to this Section 4.17, any payments
received by Purchaser or its Affiliates in respect of Final Accounts Receivable
after the transfer of any Accounts Receivable to Seller pursuant to this Section
4.17 shall be credited as directed by the account debtor. If any unpaid Final
Accounts Receivable are, after the transfer of such Final Accounts Receivable by
Purchaser to Seller, ultimately collected by Purchaser or its Affiliates,
Purchaser shall promptly notify Seller in writing of such collection and will
transfer to Seller, in immediately available same day funds, such collected
Reimbursed Accounts Receivable. In connection with the transfer by Purchaser to
Seller of the unpaid Final Accounts Receivable, Purchaser agrees to execute and
cause its Affiliates to execute such assignments, notices and other instruments
as are reasonably requested by Seller in order to effectively transfer to Seller
or its designee(s) such unpaid Final Accounts Receivable and vest in Seller or
its designee(s) all rights in respect thereof. Purchaser shall not disclose the
provisions of this Section 4.17 to any person who is an account debtor under the
Accounts Receivable; provided, however, that it is acknowledged and agreed that
any disclosure made pursuant to applicable law (including any filing made by
Purchaser in the Bankruptcy Case) shall not constitute a violation of this
Section 4.17.
(b) If Purchaser is entitled to receive funds equal to the
Adjustment Amount pursuant to Section 4.17(a), an amount equal to the Adjustment
Amount, in immediately available same day funds, will promptly be remitted to
Purchaser from the Escrow Account in accordance with the terms of the Escrow
Agreement; provided, however, that in no event shall Purchaser be entitled to
receive, in the aggregate, funds in excess of the amount held in the Escrow
Account, either pursuant to this Section 4.17, pursuant to Section 1.7, pursuant
to Section 8.9 or pursuant to any other provision of this Agreement; and,
provided further, all payments to Purchaser pursuant to this Section 4.17 shall
only be made by the Escrow Agent out of the Escrow Account.
(c) At and after such time as Purchaser assumes responsibility
for the collection of the Final Accounts Receivable, Purchaser shall use its
commercially reasonable efforts to collect all of the Final Accounts Receivable
(including, but not limited to, the Reimbursed Accounts Receivable) at their
full face value. In addition, so long as Seller has responsibility for the
collection of the Final Accounts Receivable pursuant to any Collateral
Agreement, Purchaser shall use its reasonable commercial efforts to assist
Seller in collecting any Final Accounts Receivable. Purchaser shall not (i)
release, waive or compromise any right in respect of any Final Account
Receivable, or (ii) encourage or facilitate any failure or refusal to pay an
Final Account Receivable. Each party hereto shall provide reasonable assistance
to the other with respect to the collection of the Final Accounts Receivable.
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Section 4.18. Environmental Matters. (a) Purchaser acknowledges the
existence of nitrates in the groundwater at Seller's plant in Millsboro,
Delaware. Purchaser agrees that it will not bring any claim for indemnification
against Seller or any of its Subsidiaries or Affiliates with respect to the such
condition unless (i) nitrate levels in the groundwater increase above levels
permitted under applicable Environmental Law and such non-compliance following
the Closing is not caused by the actions of Purchaser or third parties, (ii)
there has been an actual claim against Purchaser with respect to such condition
by a Governmental Authority or third party, and (iii) the remediation ultimately
required with respect to nitrates in the groundwater constitutes more than
reactivation of the inactive extraction and discharge system in place as of the
date of this Agreement.
(b) Purchaser agrees that the presence of ACM in a condition
that does not require abatement, removal or other remediation pursuant to
Environmental Laws as of the Closing Date will not constitute a "Retained
Liability" hereunder and that Purchaser will bring no claim for indemnification
for removal or other remediation with respect to such ACM; provided, however,
that any claim by Purchaser for indemnification with respect to ACM that is in a
condition that requires removal or other remediation pursuant to Environmental
Law as of the Closing Date will not be subject to the monetary limitations of
Section 8.9, including the provisions in Section 8.9(d).
(c) Purchaser agrees that it will have no claim for
indemnification pursuant to this Agreement for a breach of (x) any
representation, warranty, covenant or agreement of Sellers arising under or
relating to Environmental Law or (y) a violation of, or liability under,
Environmental Law, unless remediation or any other action by Purchaser is
required by a Governmental Authority or other third party or if remediation or
any other action by Purchaser is otherwise required by Applicable Law.
Section 4.19. Trade Strategy and Consumer Strategy. Seller shall
execute the Trade Events Calendar and the Consumer Events Calendar without
material variation from their respective terms; provided that Purchaser has not
requested in writing by Friday, April 6, 2001, that Seller refrain from
purchasing the Prepaid Pickles Advertising as contemplated in the Consumer
Events Calendar with respect to the month of May, the month of June or both
months. On the date hereof, Seller shall notify (in writing with a copy to
Purchaser) all of its sales employees and brokers of, and shall direct its
employees and brokers to comply with, its policy not to load customers with
product and its policy that all trade promotion funds must be used to drive
consumption based programs or distribution only. Seller shall not engage in the
practice of loading or any program, activity or other action that would
reasonably be expected to result, directly or indirectly, in a trade buy-in that
is significantly in excess of normal customer purchasing patterns consistent
with past practice over the past twelve months.
Section 4.20. Assumption Notice. Within 5 Business Days from the date
that Sellers have executed and delivered to Purchaser a counterpart of this
Agreement, Purchaser shall provide Seller with the Assumption Notice.
Section 4.21. Subsequent Sale.
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(a) In the event that Purchaser, on or before the first
anniversary of the Closing Date, shall have (i) entered into an agreement to
sell or dispose of, or (ii) consummated a sale or other disposition of, all or
substantially all of the assets comprising the Pickles Business or the Pickles
Business and Sauce Business (whether by asset sale, merger, recapitalization,
restructuring or other similar transaction) to any Person or Persons (in one
transaction or series of transactions) who is not an Affiliate of Purchaser
(each of clause (i) or (ii), a "Divestiture"), then Sellers, as provided in this
Section 4.21, shall be entitled to receive fifty percent (50%) of all Profit
received by Purchaser from the consummation of such Divestiture and that is
attributable to the Acquired Assets comprising the Pickles Business or the
Pickles Business and Sauce Business.
(b) "Profit" shall be calculated as of the date of the
consummation of a Divestiture (the "Divestiture Closing Date") and shall mean
the excess, if any, of (i) the Divestiture Consideration (as defined in Section
4.21(c)), over (ii) $180,000,000 if the Divestiture involves the Pickles
Business and Sauce Business or $160,000,000 if the Divestiture involves only the
Pickles Business.
(c) "Divestiture Consideration" shall mean all cash,
securities, settlement or termination amounts, notes or other debt instruments,
and any other consideration received or to be received, directly or indirectly,
by Purchaser as a result of a Divestiture and that is attributable to the
Acquired Assets comprising the Pickles Business or the Pickles Business and
Sauce Business, as appropriate. The Divestiture Consideration shall be reduced
by the amount of all attorneys' fees and expenses, brokerage fees and expenses,
indemnification claims, adjustments and other similar post-Divestiture Closing
Date payments made by Purchaser.
(d) For purposes of determining whether a Profit exists and
the value of applicable Divestiture Consideration (i) all securities and other
non-cash items shall be valued as mutually agreed, and, absent such agreement,
based upon the fair market value thereof as determined by an independent expert
selected by Purchaser and who is reasonably acceptable to the Sellers (the cost
of which shall be equally borne by Purchaser and Sellers) and, (ii) all deferred
or contingent payments or consideration ("Deferred Consideration") shall be
discounted to the net present value thereof at a discount rate as mutually
agreed or as determined by such independent expert to be a market rate.
(e) If a Profit is determined to exist then Sellers shall be
entitled to participate in such Profit as follows:
(i) If Divestiture Consideration received by Purchaser is comprised
solely of cash proceeds, or solely of a single non-cash item including, but
not limited to, Deferred Compensation, then Purchaser shall promptly, but
in any event no later than five Business Days, after receipt by Purchaser
of such Divestiture Consideration, pay and assign to Sellers or their
designee fifty percent of the Profit attributable to such Divestiture
Consideration in the form of cash proceeds or such single non-cash item, as
applicable.
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(ii) If Divestiture Consideration received by Purchaser is comprised of
cash proceeds and one or more non-cash items, including, but not limited
to, Deferred Compensation, or of one or more non-cash items, including, but
not limited to, Deferred Compensation, then Purchaser shall promptly, but
in any event no later than five Business Days, after receipt by Purchaser
of such Divestiture Consideration, pay and assign to Sellers or their
designee fifty percent of the Profit attributable to such Divestiture
Consideration, with such payment and assignment being comprised of cash
and/or one or more non-cash items received in the same ratio as such items
comprised the Divestiture Consideration received by Purchaser.
(f) Any assignment of non-cash items of Divestiture
Consideration by Purchaser hereunder shall be free and clear of all liens,
claims and encumbrances (other than those arising under the terms of the
Divestiture Consideration assigned) and shall include any registration or
similar rights to which Purchaser is entitled.
Section 4.22. Remittance of Accounts Receivable. Sellers shall send a
written notice, dated as of the Closing Date, to each account debtor owing
amounts under the Accounts Receivable, and such notice shall (i) notify such
account debtor that such account debtor's Accounts Receivable have been
transferred to Purchaser as of the Closing Date and (ii) instruct such account
debtor that any and all payments in respect of such account debtor's Accounts
Receivable shall be made to such accounts as Purchaser (or any assignee of
Purchaser's right to receive such payments) shall designate. Each Seller further
agrees that to the extent such Seller receives any payment with respect to any
Accounts Receivable on or after the Closing Date, such Seller shall (w)
immediately notify Purchaser of such receipt, (x) cause such payment to be held
in trust for sole the benefit of Purchaser or its assignee, (y) refrain from
commingling such payment with any funds of such Seller and (z) within two
Business Days of the date of such Seller's receipt of such payment, remit such
payment to such accounts as Purchaser or its assignee may designate, by wire
transfer of immediately available same day funds. Each Seller also grants
Purchaser a power of attorney to endorse in the name of such Seller all checks
that Purchaser may receive in respect of the Accounts Receivable and that name a
Seller as the payee therein. Each Seller further agrees to take any and all
actions necessary in order to effect the provisions of this Section 4.23,
including, but not limited to, causing the Sale Order to contain provisions
giving effect to this Section 4.23.
Section 4.23. Cherry Hill Corporate Headquarters. Sellers shall
reasonably cooperate with Purchaser in connection with any negotiations that
Purchaser may wish to initiate with the landlord under the Lease governing the
Sellers' corporate headquarters located in Cherry Hill, New Jersey (the "Cherry
Hill Lease") regarding (i) the sublease of all or part of the premises subject
to the Cherry Hill Lease or (ii) the renegotiation of the terms of the Cherry
Hill Lease.
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ARTICLE V
CERTAIN INCOME TAX MATTERS
Section 5.1. Tax Matters. (a) Transfer Taxes. All excise, sales
(including, without limitation, bulk sales), use, transfer (including real
property transfer or gains), stamp, documentary, filing, recordation and other
similar taxes, if any, together with any interest, additions or penalties with
respect thereto and any interest in respect of such additions or penalties,
arising out of, in connection with, or attributable to the transactions effected
pursuant to this Agreement (the "Transfer Taxes"), shall be borne and paid 50%
by Seller and 50% by Purchaser, except with respect to real property transfer
taxes which shall be borne by Seller. Any Tax Returns that must be filed in
connection with Transfer Taxes shall be prepared and filed when due by the party
primarily or customarily responsible under the applicable local law for filing
such Tax Returns, and such party will use its reasonable efforts to provide such
Tax Returns to the other party at least 10 days prior to the date for such Tax
Returns are due to be filed (taking into account any valid extension). Except
with respect to real property transfer taxes, if Seller is required under this
Section 5.1(a) to file any such Tax Return, Seller shall notify Purchaser in
writing of the amount of the Transfer Tax shown to be due on such Tax Return,
and Purchaser shall reimburse Seller for 50% of the amount of such Transfer Tax
in immediately available funds within 10 days of receipt of such notice. If
Purchaser is required under this Section 5.1(a) to file any such Tax Return,
Purchaser shall notify Seller in writing of the amount of the Transfer Tax shown
to be due on such Tax Return, and Seller shall reimburse Purchaser for 50% of
the amount of such Transfer Tax in immediately available funds within ten days
of receipt of such notice.
(b) Allocation of Purchase Price. Prior to Closing, the
parties shall use their best efforts to agree to a written schedule allocating
the Purchase Price and the Assumed Liabilities among the Acquired Assets and the
Transition Services Agreement. Each of the parties hereto shall report the
federal, state, local and other tax consequences of the purchase and sale
contemplated hereby (including the filing of Internal Revenue Service Form 8594)
in a manner consistent with such Purchase Price allocation schedule. Neither of
the parties hereto shall, nor shall it permit any of its Affiliates to, take a
position (except as required by Applicable Law) on any tax return, before any
Governmental Authority charged with the collection of any Tax, or in any
judicial proceeding, that is inconsistent with such Purchase Price allocation
schedule.
(c) Assistance and Cooperation. After the Closing Date, each
Seller and Purchaser shall (and shall cause their respective Affiliates to):
(i) timely sign and deliver such certificates or forms as may be
necessary or appropriate to establish an exemption from (or otherwise
reduce), or file Tax Returns or other reports with respect to Transfer
Taxes;
(ii) reasonably assist the other party in preparing any Tax Returns
which such other party is responsible for preparing and filing in
accordance with this Section 5.1; and
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(iii) reasonably cooperate in preparing for any audits of, or disputes
with taxing authorities regarding, any Tax Returns relating to the
Business.
Notwithstanding the foregoing or any other provision in this Agreement, neither
Purchaser nor any of its Affiliates shall have the right to receive or obtain
any information relating to Taxes of Seller, any of its Affiliates, or any of
its predecessors other than information relating to the Business.
(d) Endorsement. In accordance with Section 1146(c) of the
Bankruptcy Code and subject to entry of the Sale Order, the instruments
transferring the Acquired Assets to Purchaser shall contain the following
endorsement:
"This instrument has been authorized pursuant to order of the United
States Bankruptcy Court for the District of Delaware, which order
provides that it is exempt from transfer taxes, stamp taxes or similar
taxes pursuant to 11 U.S.C. Section 1146(c)."
ARTICLE VI
CONDITIONS TO CLOSING
Section 6.1. Conditions to the Obligations of Purchaser and Sellers.
The obligations of the parties hereto to effect the Closing are subject to the
satisfaction (or waiver by the parties) prior to the Closing Date of the
following conditions:
(a) No Injunctions; Orders. There shall not be in effect any
writ, Order or Applicable Law by any Governmental Authority of competent
jurisdiction that prohibits, enjoins, materially delays or interferes with the
sale or purchase of the Acquired Assets, the Business or the assumption of the
Assumed Liabilities in accordance with this Agreement or that requires Purchaser
to hold the Acquired Assets separate, restricts Purchaser's control of the
Acquired Assets or the Business or requires Purchaser to divest any asset or
business in connection with the acquisition of the Acquired Assets.
(b) Certain Pending Litigation. There shall not be pending any
material litigation brought by a Governmental Authority of competent
jurisdiction seeking to prohibit, enjoin, materially delay or interfere with the
sale or purchase of the Acquired Assets or the assumption of the Assumed
Liabilities in accordance with this Agreement or that seeks to require Purchaser
to hold the Acquired Assets separate, restrict Purchaser's control of the
Acquired Assets or the Business or require Purchaser to divest any asset or
business in connection with the acquisition of the Acquired Assets.
(c) HSR and Foreign Competition Laws. All waiting periods and
review periods under the HSR Act and any foreign antitrust or competition laws
or regulations applicable to the transactions contemplated by this Agreement
shall have expired or been earlier terminated.
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(d) Security Interest. The Sale Order entered by the
Bankruptcy Court shall provide that the Acquired Assets (excluding any Acquired
Assets owned by VFCI) shall be transferred to Purchaser free and clear of any
and all Liens held by the agent for Seller's banks, and Liens on such Acquired
Assets, other than Permitted Liens (excluding those Permitted Liens required to
be removed by Seller pursuant to Section 4.1(r)), shall have been released,
expunged from such Acquired Assets or otherwise transferred to the proceeds of
sale received by Sellers from Purchaser at the Closing.
(e) Security Interest VFCI. The Acquired Assets transferred by
VFCI to Purchaser shall be transferred in a manner that Purchaser receives good
and marketable title to such Acquired Assets, free and clear of any Liens,
encumbrances, Retained Liabilities and other interests other than Permitted
Liens.
(f) Escrow Agreement. The Escrow Agent shall have duly
executed and delivered to Seller and Purchaser the Escrow Agreement.
Section 6.2. Conditions to the Obligations of Purchaser. The obligation
of Purchaser to effect the Closing is subject to the satisfaction (or waiver by
Purchaser) on the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Sellers contained herein shall be true and correct in all material
respects (in the case of any representation or warranty without any materiality
or Business Material Adverse Effect qualification) and in all respects (in the
case of any representation or warranty with any materiality or Business Material
Adverse Effect qualification), in each case as of the date of this Agreement and
as of the Closing as if made as of the Closing, except that the representations
and warranties that are made as of a specific date need be true and correct in
all material respects (in the case of any representation or warranty without any
materiality or Business Material Adverse Effect qualification) and in all
respects (in the case of any representation or warranty with any materiality or
Business Material Adverse Effect qualification) only as of such date. Purchaser
shall have received a certificate from Seller signed by an officer thereof with
respect to the foregoing.
(b) Covenants. The covenants and agreements of Sellers to be
performed on or prior to the Closing shall have been duly performed in all
material respects. Purchaser shall have received a certificate from Seller
signed by an officer thereof with respect to the foregoing.
(c) Xxxx of Sale. Seller shall have duly executed and
delivered to Purchaser the Xxxx of Sale.
(d) Deeds. Seller shall have duly executed and delivered to
Purchaser each of the Deeds together with any reasonably necessary transfer
declaration or other filings.
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(e) Lease Assignments. Seller shall have duly executed and
delivered to Purchaser each of the Lease Assignments together with any
reasonably necessary transfer declarations or other filings.
(f) Intellectual Property Instruments. Seller shall have duly
executed and delivered to Purchaser each of the Intellectual Property
Instruments.
(g) Collateral Agreements. Seller shall have duly executed and
delivered to Purchaser each of the Collateral Agreements.
(h) [Intentionally omitted].
(i) Title Policies. Seller shall have caused Purchaser to have
received from a nationally recognized title insurance company (the "Title
Company") satisfactory to Purchaser at Purchaser's expense, a fee owner's title
insurance policy issued to Purchaser with respect to each Owned Real Property in
form and substance satisfactory to Purchaser, together with endorsements
reasonably requested by Purchaser, including, without limitation, access,
zoning, comprehensive and contiguity endorsements, in an amount determined by
Purchaser, insuring Purchaser and issued as of the Closing Date by the Title
Company, showing Purchaser to have a fee simple title to each Owned Real
Property, and a valid leasehold estate in each Leased Real Property, in each
case subject only to Permitted Liens (excluding those Liens described in Section
2.12(a)(iii)). Seller shall have delivered to the Title Company any affidavits
or indemnities required by the Title Company in connection with the delivery of
the owner's title policies and leasehold title policies.
(j) Surveys. Seller shall have caused Purchaser to have
received, at Purchaser's expense, a survey of each Owned Real Property, dated no
earlier than the date of this Agreement, prepared by a certified or registered
surveyor reasonably acceptable to Purchaser and the Title Company and certified
to Purchaser and the Title Company, in form and substance satisfactory to
Purchaser and the Title Company, complying with the current Minimum Standard
Detail Requirements for ALTA/ACSM Land Title Surveys and (i) setting forth an
accurate description of each parcel of Owned Real Property, (ii) locating all
improvements, Liens (setting forth the recording information of any recorded
instruments), setback lines, alleys, streets and roads, (iii) showing any
encroachments upon or by any improvements on each Owned Real Property, and (iv)
showing all dedicated public streets providing access to each Owned Real
Property and the municipal address of any improvements located on each Owned
Real Property.
(k) Certificate of non-foreign status. Each Seller (excluding
VFCI) shall have duly executed and delivered to Purchaser a certificate of
non-foreign status as provided in Treasury Regulations Section 1.1445-2(b).
(l) No Business Material Adverse Effect. No event, occurrence,
fact, condition, change, development or effect shall exist or have occurred,
exist or come to exist since the date hereof that, individually or in the
aggregate, has constituted or
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resulted in, or is reasonably likely to constitute or result in, a Business
Material Adverse Effect.
(m) Bidding Procedures Order and Sale Order. The Bankruptcy
Court shall have entered (i) the Bidding Procedures Order in form and substance
reasonably satisfactory to Purchaser no later than 30 days after the date of
this Agreement, and (ii) the Sale Order (together with any related findings of
fact or conclusions of law) in form and substance reasonably satisfactory to
Purchaser no later than 53 days after the date of this Agreement. The Sale Order
shall include the matters set forth in Section 6.2(q) and shall have become a
Final Order. The Sale Order shall also contain (or be accompanied by) findings
of fact and conclusions of law by the Bankruptcy Court that, among other things,
find and conclude that (x) the transactions contemplated hereby are in good
faith and otherwise satisfy the provisions of Sections 363 and 365, including
Section 363 (m), of the Bankruptcy Code, (y) that the Heinz Agreement, except
for the payment of the Expense Reimbursement and Break-Up Fee thereunder, has
been terminated in full in accordance with its terms without a breach thereunder
and otherwise in accordance with the Prior Bidding Procedures and (z) that
Sellers have complied with the notice requirements of Rules 2002, 6004, 6006 and
9014 of the Federal Rules of Bankruptcy Procedure and any applicable rules of
the Bankruptcy Court with respect to the transactions contemplated by this
Agreement.
(n) Certain Third Party Consents. Notwithstanding Section
1.2(a) or Section 4.11 or anything else to the contrary in this Agreement,
Seller shall have obtained and delivered to Purchaser, in form and substance
reasonably satisfactory to Purchaser, the consents of third parties, if the
Bankruptcy Court does not otherwise approve the assignment in form and substance
reasonably satisfactory to Purchaser of such Contracts to Purchaser, listed on
Exhibit 6.2(n) attached hereto (and to the extent that the Assumption Notice has
been delivered with respect to a Contract listed on Exhibit 6.2(n)) and such
consents shall be in full force and effect.
(o) Crop Requirements. Seller shall be required, within two
days after the Bankruptcy Court has entered the Sale Order, to demonstrate to
the reasonable satisfaction of Purchaser that Seller has committed crops
consistent with previous purchasing practices that are reasonably likely to be
delivered in an amount sufficient to meet the requirements of the Business
determined by reference to the requirements of the Business in prior years.
(p) Financing. Parent and Purchaser shall have received the
finds necessary for the payment of the Adjusted Purchase Price pursuant to the
Financings contemplated by the Commitment Letters.
(q) IP Agreements. Notwithstanding Section 1.2(a) or Section
4.11 or anything else to the contrary contained in this Agreement, in addition
to the matters described in Section 6.2(m), the Sale Order shall provide and
declare that all right, title and interest of each Seller under each of the
Contracts described on Exhibit 6.2(q) hereto (the "IP Agreements") shall, upon
Closing, be transferred and assigned to and fully and irrevocably vest in
Purchaser and remain in full force and effect, unless
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Sellers shall have obtained consent to the assignment and assumption by
Purchaser of the IP Agreements in form and substance reasonably satisfactory to
Purchaser. The Sale Order shall also declare and include or be accompanied by
findings of fact and conclusions of law of the Bankruptcy Court which, among
other things, shall determine and declare: (a) that each IP Agreement is an
executory contract of Sellers under Section 365 of the Bankruptcy Code; (b) that
Sellers may assume each IP Agreement in accordance with Section 365 of the
Bankruptcy Code; (c) that the Sellers may assign each IP Agreement in accordance
with Sections 363 and 365 of the Bankruptcy Code; (d) that all other
requirements and conditions under Sections 363 and 365 of the Bankruptcy Code
for the assumption by Sellers and assignment to Purchaser of each IP Agreement
have been satisfied; (e) that upon Closing, in accordance with Sections 363 and
365 of the Bankruptcy Code, Purchaser shall be fully and irrevocably vested in
all right, title and interest of each licensee or sublicensee under each IP
Agreement and that following the Closing, each IP Agreement shall remain in full
force and effect; (f) [that the assignments of each IP Agreement is in good
faith under Section 363(m) of the Bankruptcy Code; and (g)] that Sellers gave
due and proper notice of such assumption and assignment to each licensor,
sublicensor and other non-debtor party under each IP Agreement as well as to any
sublicensees and parties in interest in the Bankruptcy Case. The Sale Order, and
any related findings of fact and conclusions of law, with respect to the matters
set forth in this Section 6.2(q) shall be in form and substance reasonably
satisfactory to Purchaser.
Section 6.3. Conditions to the Obligations of Sellers. The obligation
of Sellers to effect the Closing is subject to the satisfaction (or waiver by
Sellers) on the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Purchaser contained herein shall be true and correct in all
material respects (in the case of any representation or warranty without any
materiality or Business Material Adverse Effect qualification) and in all
respects (in the case of any representation of warranty with any materiality or
Business Material Adverse Effect qualification), in each case as of the date of
this Agreement and as of the Closing as if made as of the Closing (except for
changes permitted or contemplated by this Agreement and except that the
representations and warranties that are made as of a specific date need be true
and correct in all material respects (in the case of any representation or
warranty without any materiality or Business Material Adverse Effect
qualification) and in all respects (in the case of any representation or
warranty with any materiality or Business Material Adverse Effect qualification)
only as of such date). Seller shall have received a certificate from Purchaser
signed by an officer thereof with respect to the foregoing.
(b) Covenants. The covenants and agreements of Purchaser to be
performed on or prior to the Closing shall have been duly performed in all
material respects. Seller shall have received a certificate from Purchaser
signed by an officer thereof with respect to the foregoing.
(c) Receipt of Adjusted Purchase Price. Seller shall have
received from Purchaser the Adjusted Purchase Price (less the Escrow Amount) by
wire transfer of immediately available same day funds.
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(d) Assumption Agreement. Purchaser shall have duly executed
and delivered to Seller the Assumption Agreement.
(e) Receipt of Escrow Amount. The Escrow Agent shall have
received from Purchaser the Escrow Amount by wire transfer of immediately
available same day funds.
(f) Collateral Agreements. Purchaser shall have duly executed
and delivered to Purchaser each of the Collateral Agreements.
(g) Sales Order. The Bankruptcy Court shall have approved this
Agreement and the transactions contemplated hereby by entry of the Sale Order.
(h) Lease Assignments. Purchaser shall have duly executed and
delivered to Seller each of the Lease Assignments.
ARTICLE VII
TERMINATION
Section 7.1. Termination. This Agreement may be terminated at any time
prior to the Closing Date:
(a) by written agreement of Seller and Purchaser;
(b) by either Seller or Purchaser, by giving written notice of
such termination to the other party, if the Closing shall not have occurred on
or prior to a date which is the first business day after 65 days from the date
of this Agreement (the "Termination Date") provided that if the Sale Order has
been entered but has not become a Final Order by 65 days from the date of this
Agreement the "Termination Date" shall be extended to the end of the Extension
Period (as defined in Section 7.1(i)) (unless the failure to consummate the
Closing by such date shall be due to the failure of the party seeking to
terminate this Agreement to have fulfilled any of its obligations under this
Agreement);
(c) by either Seller or Purchaser in the event that any
Governmental Authority shall have issued a final, non-appealable Order or ruling
or taken any other final, non-appealable action, or adopted any applicable
state, federal or foreign law, in each case permanently restraining, enjoining
or otherwise prohibiting the transactions contemplated by this Agreement;
(d) by Seller, so long as any Seller is not then in breach of
its obligations under this Agreement, upon a breach of any covenant or agreement
on the part of Purchaser set forth in this Agreement, or if any representation
or warranty of Purchaser shall have been or become untrue, in each case such
that the conditions set forth in Section 6.3(a) or (b) would not be satisfied;
provided, however, that if any such breach is curable prior to the Termination
Date by Purchaser through the use of its reasonable best efforts, for so long as
Purchaser, following written notice with respect to
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such breach from Seller, shall be using its reasonable best efforts to cure such
breach, Seller may not terminate this Agreement pursuant to this Section 7.1(d);
(e) by Purchaser, so long as Purchaser is not then in breach
of its obligations under this Agreement, upon a breach of any covenant or
agreement on the part of Sellers set forth in this Agreement, or if any
representation or warranty of Seller shall have been or become untrue, in each
case such that the conditions set forth in Section 6.2(a) or (b) would not be
satisfied; provided, however, that if any such breach is curable prior to the
Termination Date by Sellers through the use of their reasonable best efforts,
for so long as Sellers, following written notice with respect to such breach
from Purchaser, shall be using their reasonable best efforts to cure such
breach, Purchaser may not terminate this Agreement pursuant to this Section
7.1(e);
(f) by Purchaser, if the Bankruptcy Court has not entered the
Bidding Procedures Order within the time frame specified in Section 6.2(m);
provided, however, that if the Bankruptcy Court has not entered the Bidding
Procedures Order within the time frame specified in Section 6.2(m), and
Purchaser does not exercise its right to terminate this Agreement pursuant to
this Section 7.1(f) within 35 days after the date of this Agreement, then
Purchaser shall be deemed to have irrevocably waived (x) its right to terminate
this Agreement pursuant to this Section 7.1(f) and (y) the condition set forth
in Section 6.2(m)(i) of this Agreement to the extent it requires the Procedures
Order to have been entered by such date;
(g) by Purchaser, if the Bankruptcy Court has not entered the
Sale Order within the time frame specified in Section 6.2(m); provided, however,
that if the Bankruptcy Court has not entered the Sale Order within the time
frame specified in Section 6.2(m), and Purchaser does not exercise its right to
terminate this Agreement pursuant to this Section 7.1(g) within 61 days after
the date of this Agreement, then Purchaser shall be deemed to have irrevocably
waived (x) its right to terminate this Agreement pursuant to this Section 7.1(g)
and (y) the condition set forth in Section 6.2(m)(ii) of this Agreement to the
extent that it requires the Sale Order to have been entered by such date;
(h) by Seller, if Seller accepts or is about to accept a
Qualified Bid at the Auction other than that of Purchaser, provided that such
termination shall be of no effect if Seller does not accept such Qualified Bid
immediately after termination hereunder;
(i) by Purchaser, if the Sale Order has not become a Final
Order; provided, however, that if such condition is not met and Purchaser does
not exercise its right to terminate this Agreement pursuant to this Section
7.1(i) by the later of (x) the date specified in Section 7.1(b) without giving
effect to the proviso contained therein or (y) if the Sale Order has not become
a Final Order by the date provided for in clause (x), then a date which is 20
days after the date the Sale Order was entered (the period in this clause (y)
being referred to herein as the "Extension Period"), then Purchaser shall be
deemed to have irrevocably waived (x) its right to terminate this Agreement
pursuant to this Section 7.1(i) and (y) the condition set forth in the second
sentence of Section 6.2(m)
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of this Agreement regarding that the Sale Order shall have become a Final Order
by the date specified therein;
(j) by Purchaser, if Seller gives written notice to Purchaser
that it is unable to obtain a consent required by Section 6.2(n); provided,
however, that if Seller so notifies Purchaser and Purchaser does not exercise
its right to terminate this Agreement pursuant to this Section 7.1(j) within
five Business Days of receiving such notice from Seller, then, with respect to
Seller's obligation to obtain such consent, Purchaser shall be deemed to have
irrevocably waived (x) its right to terminate this Agreement pursuant to this
Section 7.1(j), and (y) the condition set forth in Section 6.2(n) insofar as it
relates to the failure to obtain such consent;
(k) by Purchaser, in the event of an Auction Transaction; and
(l) by Purchaser, if any Seller's Bankruptcy Case is converted
to a case under Chapter 7 of the Bankruptcy Code or is dismissed, if a trustee
is appointed in any Seller's Bankruptcy Case, or if the periods of exclusivity
under Sections 1121(b) and 1121(c) of the Bankruptcy Code is terminated or
reduced by the Bankruptcy Court pursuant to Section 1121(d) in any Seller's
Bankruptcy Case.
Section 7.2. Effect of Termination. (a) In the event of the termination
of this Agreement in accordance with Section 7.1, this Agreement shall
thereafter become void and have no effect, and no party hereto shall have any
liability to the other party hereto or their respective Affiliates, directors,
officers, employees or representatives, except for the obligations of the
parties hereto contained in this Section 7.2, Sections 4.2(d), 4.7, 4.16(d),
8.1, 8.6, 8.7, 8.8 and the Confidentiality Agreement by and between Seller and
Purchaser, dated July 10, 2000 (the "Confidentiality Agreement"), and except
that nothing herein will relieve any party from liability for any willful breach
of any representation, warranty, covenant or agreement set forth in this
Agreement prior to such termination (a "Willful Breach"); it being understood
that (i) the acceptance by Sellers of a Bid other than Purchaser's and seeking
the approval of the Bankruptcy Court of a Bid other than Purchaser's in each
case in compliance with Section 4.16 and (ii) any reasonable act taken in good
faith by Sellers after consultation with Purchaser and due consideration of
Purchaser's comments and suggestions which is in violation of Section 4.1 but is
necessary to protect the Business against a Business Material Adverse Effect,
shall not constitute a Willful Breach for purposes of this Section 7.2 only.
(b) The parties acknowledge and agree that any claim for a
Willful Breach must be brought within 30 days after this Agreement is
terminated.
(c) Purchaser acknowledges and agrees that it may assert no
claim against Sellers under this Agreement with respect to any breach of Section
4.16(d) by any Seller more than 13 months after the date of this Agreement.
(d) Sellers acknowledge and agree that no Seller may assert
any claim against Purchaser under this Agreement with respect to any breach of
Section 4.2(d) more than 24 months after the termination of this Agreement.
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ARTICLE VIII
MISCELLANEOUS
Section 8.1. Notices. All notices and other communications hereunder
shall be in writing and shall be effective upon receipt. Notice shall be given
(i) by personal delivery to the appropriate address as set forth below (or at
such other address for the party as shall have been =previously specified in
writing to the other party), (ii) by reliable overnight courier service (with
confirmation) to the appropriate address as set forth below (or at such other
address for the party as shall have been previously specified in writing to the
other party), or (iii) by facsimile transmission (with confirmation) to the
appropriate facsimile number set forth below (or at such other facsimile number
for the party as shall have been previously specified in writing to the other
party) with follow-up copy by reliable overnight courier service that next
Business Day:
if to Seller, to:
Vlasic Foods International Inc.
Vlasic Plaza
Six Executive Campus
Cherry Hill, New Jersey 08002-4112
Attention:General Counsel
Telecopy: (000) 000-0000
Telephone:(000) 000-0000
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:Xxxxx X. Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
Telephone:(000) 000-0000
if to Purchaser to:
HMTF Foods Acquisition Corp.
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention:General Counsel
Telephone:(000) 000-0000
Telecopy: (000) 000-0000
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with a copy (which shall not constitute notice) to:
Xxxxxx & Xxxxxx L.L.P,
0000 Xxxxxxx Xxxx Xxxxxx
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: A. Xxxxxxx Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Section 8.2. Amendment; Waiver; Invalidity. Any provision of this
Agreement may be amended, superseded, cancelled, renewed or extended, and the
terms hereof may be waived, only by a written instrument signed by each of the
parties hereto, or, in the case of a waiver, by the party against whom the
waiver is to be effective. No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any waiver on the part of any party of any right, power or privilege, or any
single or partial exercise of any such right, power or privilege, preclude any
further exercise thereof or the exercise of any other such right, power or
privilege. The rights and remedies herein provided are cumulative and are not
exclusive of any rights or remedies that any party may otherwise have at law or
in equity.
Section 8.3. Assignment; Binding Effect. Except as provided otherwise
in this Section 8.3, neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
party. Except as provided otherwise in this Section 8.3, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties hereto
and their respective successors and permitted assigns. Notwithstanding the
foregoing, Purchaser may assign its rights under this Agreement in whole or in
part to any other one or more Persons who are Affiliates thereof; provided,
however, that any such assignment shall not relieve Purchaser from any of its
obligations hereunder.
Section 8.4. Entire Agreement; Disclosure Schedules. This Agreement
(including the Seller Disclosure Schedule, the Purchaser Disclosure Schedule and
all Exhibits hereto), the Collateral Agreements (when executed and delivered)
the Bidding Procedures Order, the Sales Order and the documents, agreements,
certificates and instruments referred to herein and therein contain the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersede all prior agreements and understandings, oral or written, with
respect to such matters, except for the Confidentiality Agreement, which will
remain in full force and effect for the term provided for therein, and other
than any written agreement of the parties that expressly provides that it is not
superseded by this Agreement.
Section 8.5. No Third Party Beneficiaries. Except as provided in
Section 8.9 with respect to indemnification of Indemnified Parties (as defined
in Section 8.9) hereunder, nothing in this Agreement, express or implied, is
intended to confer upon any Person other than Purchaser, Seller or their
respective successors or permitted assigns
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any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision contained herein.
Section 8.6. Fees and Expenses. Except as provided in Section 4.16 with
respect to the Expense Reimbursement, whether or not this Agreement and the
transactions contemplated hereby are consummated, and except as otherwise
expressly set forth herein, each of the parties hereto shall bear its own costs
and expenses (including legal, accounting and financial advisory fees and
expenses) incurred in connection with, or in anticipation of, this Agreement and
the transactions contemplated hereby.
Section 8.7. Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future
Applicable Law or Order, and if the rights or obligations of any party hereto
under this Agreement will not be materially and adversely affected thereby, (i)
such provision will be fully severable, (ii) this Agreement will be construed
and enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof, and (iii) the remaining provisions of this Agreement
will remain in full force and effect and will not be affected by any such
illegal, invalid or unenforceable provision or by its severance herefrom.
Section 8.8. Governing Law. THE AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OR CHOICE OF LAWS OR ANY OTHER LAW THAT WOULD MAKE THE
LAWS OF ANY OTHER JURISDICTION OTHER THAN THE STATE OF DELAWARE APPLICABLE
HERETO. The parties hereby agree that, without limitation of any party's right
to appeal any order of the Bankruptcy Court, (a) the Bankruptcy Court shall
retain exclusive jurisdiction to enforce the terms of this Agreement and to
decide any claims or disputes which may arise or result from, or be connected
with, this Agreement, any breach or default hereunder, or the transactions
contemplated herein, and (b) any and all claims, actions, causes of action,
suits and proceedings relating to the foregoing shall be filed and maintained
only in the Bankruptcy Court, and the parties hereby consent and submit to the
jurisdiction of the Bankruptcy Court.
Section 8.9. Indemnification.
(a) By Sellers. Sellers covenant and agree to defend,
indemnify and hold harmless Purchaser, its Affiliates and the officers,
directors, employees, agents, advisers and representatives of each such Person
(collectively, the "Purchaser Indemnitees") from and against, and pay or
reimburse the Purchaser Indemnitees for, any and all claims, liabilities,
obligations, losses, fines, costs, royalties, proceedings, deficiencies or
damages (whether absolute, accrued, conditional or otherwise and whether or not
resulting from third party claims), including out-of-pocket expenses and
reasonable attorneys' and accountants' fees incurred in the investigation or
defense of any of the same or in asserting any of their respective rights
hereunder (collectively, "Losses"), resulting from or arising out of:
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(i) any inaccuracy of any representation or warranty made by any Seller
herein, or in any certificate delivered by an officer of any Seller
pursuant hereto (a "Seller Certificate") or in any Collateral Agreement or
in connection herewith or therewith;
(ii) any failure of any Seller to perform any covenant or agreement
hereunder or under any Collateral Agreement or fulfill any other obligation
in respect hereof or of any Collateral Agreement;
(iii) any and all Retained Liabilities or Retained Assets;
(iv) any and all Taxes of any Seller and all Affiliates thereof; and
(v) any and all liabilities in respect of employees of Seller or its
Affiliates or Plans except to the extent assumed by Purchaser pursuant to
Section 4.3.
Cap on Sellers' Indemnification Obligations. Sellers' obligation to indemnify
Purchaser Indemnitees pursuant to this Agreement, any Seller Certificate or any
Collateral Agreement for breaches or inaccuracies of representations or
warranties, and for breaches or failures to perform covenants or agreements or
to fulfill any other obligations set forth in this Agreement, in any Seller
Certificate or in any Collateral Agreement, shall not exceed the amount of funds
held in the Escrow Account at the time such claims are made. Notwithstanding
anything to the contrary contained in this Agreement, Purchaser and Sellers
acknowledge and agree (i) that the Escrow Account is the sole source of funding
for any claims for indemnification by any Purchaser Indemnitee pursuant to this
Agreement, any Seller Certificate or any Collateral Agreement and (ii) that once
any funds have been released out of the Escrow Account to Sellers as expressly
contemplated by this Agreement, such funds shall cease to be subject to any
claims for indemnification by any Purchaser Indemnitee pursuant to this
Agreement, any Seller Certificate or any Collateral Agreement, including the
Escrow Agreement.
(b) By Purchaser. Purchaser covenants and agrees to defend,
indemnify and hold harmless Sellers, their respective Affiliates and the
officers, directors, employees, agents, advisers and representatives of each
such Person (collectively, the "Seller Indemnitees") from and against any and
all Losses resulting from or arising out of:
(i) any inaccuracy in any representation or warranty by Purchaser made
or contained herein, in any certificate delivered by an officer of
Purchaser pursuant hereto (a "Purchaser Certificate") or in any Collateral
Agreement or in connection herewith or therewith;
(ii) any failure of Purchaser to perform any covenant or agreement made
or contained herein or in any Collateral Agreement or fulfill any other
obligation in respect thereof;
(iii) the Assumed Liabilities; and
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(iv) the operation of the Business by Purchaser or Purchaser's
ownership, operation or use of the Acquired Assets following the Closing
Date, except, in the case of this clause (iv), to the extent such Losses
result from the Retained Liabilities or constitute Losses for which Sellers
are required to indemnify the Purchaser Indemnitees under Section 8.9(a)
with such requirement to indemnify Purchaser Indemnitees being determined
(solely for purposes of this clause (iv)) without regard to the limitations
on such indemnification set forth in this Section 8.9.
(c) Indemnification Procedures. In the case of any claim
asserted by a third party against a party entitled to indemnification under this
Agreement (the "Indemnified Party"), written notice shall be given by the
Indemnified Party to the party required to provide indemnification (the
"Indemnifying Party") promptly after such Indemnified Party has actual knowledge
of any claim as to which indemnity may be sought, and the Indemnified Party
shall permit the Indemnifying Party (at the expense of such Indemnifying Party)
to assume the defense of any claim or any litigation resulting therefrom,
provided that (i) the counsel for the Indemnifying Party who shall conduct the
defense of such claim or litigation shall be reasonably satisfactory to the
Indemnified Party, (ii) the Indemnified Party may participate in such defense at
such Indemnified Party's expense, and (iii) the omission by any Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying Party
of its indemnification obligation under this Agreement except to the extent that
such omission results in a failure of actual notice to the Indemnifying Party
and such Indemnifying Party is prejudiced as a result of such failure to give
notice. Except with the prior written consent of the Indemnified Party, no
Indemnifying Party, in the defense of any such claim or litigation, shall
consent to entry of any judgment or order, interim or otherwise, or enter into
any settlement that provides for injunctive or other nonmonetary relief
affecting the Indemnified Party or that does not include as an unconditional
term thereof the giving by each claimant or plaintiff to such Indemnified Party
of a release from all liability with respect to such claim or litigation. In the
event that the Indemnified Party shall in good faith determine that the conduct
of the defense of any claim subject to indemnification hereunder or any proposed
settlement of any such claim by the Indemnifying Party might be expected to
affect adversely the Indemnified Party's Tax liability or the ability of the
Purchaser to conduct its business, or that the Indemnified Party may have
available to it one or more defenses or counterclaims that are inconsistent with
one or more of those that may be available to the Indemnifying Party in respect
of such claim or any litigation relating thereto, the Indemnified Party shall
have the right at all times to take over and assume control over the defense,
settlement, negotiations or litigation relating to any such claim at the sole
cost of the Indemnifying Party, provided that if the Indemnified Party does so
take over and assume control, the Indemnified Party shall not settle such claim
or litigation without the written consent of the Indemnifying Party, such
consent not to be unreasonably withheld. In the event that the Indemnifying
Party does not accept the defense of any matter as above provided, the
Indemnified Party shall have the full right to defend against any such claim or
demand and shall be entitled to settle or agree to pay in full such claim or
demand. In any event, the Indemnifying Party and the Indemnified Party shall
cooperate in the defense of any claim or litigation subject to this Section 8.9
and the records of each shall be available to the other with respect to such
defense.
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(d) Indemnification Limitations. No indemnification under
Section 8.9(a)(i) (except with respect to Section 2.11(d) or Section 2.11(e))
shall be required with respect to any individual item of Loss unless the
aggregate of all Losses of the Purchaser Indemnified Parties described in
Section 8.9(a) of this Agreement shall exceed $1,000,000, in which case Sellers
shall be liable only for the Losses in excess of such amount.
(e) Remedies Exclusive; Limitations on Remedies in this
Agreement and the Collateral Agreements. Except with respect to the obligations
of each party under Section 4.13 and Section 4.16(d) in respect of the payment
of the Expense Reimbursement and Break-Up Fee as such may be approved by the
Bankruptcy Court pursuant to the Bidding Procedures Order, the rights and
remedies provided in this Section 8.9 and Section 4.3 shall be the sole and
exclusive remedy for any breach of or inaccuracy in any representation or
warranty or any breach of any covenant or agreement contained in this Agreement,
in any Seller Certificate, in any Purchaser Certificate or in any Collateral
Agreement.
(f) Survival of Representations, Warranties, Covenants and
Agreements.
(i) Sellers' Representations, Warranties, Covenants and Agreements. The
representations and warranties of Seller contained in this Agreement shall
survive the execution and delivery of this Agreement, any examination by or
on behalf of the parties hereto and the completion of the transactions
contemplated herein, for a period ending on the Expiration Date. The
covenants and agreements of Seller set forth in this Agreement shall
survive in accordance with their terms. The covenants and agreements made
by Sellers and set forth in the Escrow Agreement shall survive the Closing
and shall terminate as provided in Section 9 of the Escrow Agreement. All
claims for indemnification for breaches by Sellers of any representations,
warranties, covenants and/or agreements under this Agreement, any Seller
Certificate or the Collateral Agreements must be asserted in a written
notice to Seller prior to the Expiration Date and if any such claim is not
made before the Expiration Date, Purchaser acknowledges and agrees that it
shall not be entitled to indemnification pursuant to this Section 8.9. So
long as a Purchaser Indemnitee asserts a claim for indemnification before
the Expiration Date, such Purchaser Indemnitee shall be deemed to have
preserved its rights to indemnification pursuant to this Section 8.9
regardless of when such claim is ultimately liquidated.
(ii) Purchaser's Representations, Warranties, Covenants and Agreements.
The representations and warranties of Purchaser contracted in this
Agreement shall survive execution and delivery of this Agreement, any
examination by or on behalf of the parties hereto and the completion of the
transactions contemplated herein, for a period ending on the Expiration
Date. The covenants and agreements of Purchaser set forth in this Agreement
shall survive in accordance with their terms. The covenants and agreements
made by Purchaser and set forth in the Escrow Agreement shall survive the
Closing and
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shall terminate as provided in Section 9 of the Escrow Agreement. All
claims for indemnification for breaches by Purchaser of any
representations, warranties, covenants and/or agreements under this
Agreement, any Purchaser Certificate or the Collateral Agreements must be
asserted in a written notice to Purchaser prior to the expiration of the
relevant survival period set forth above. So long as a Seller Indemnitee
asserts a claim for indemnification before the expiration of the applicable
survival period, such Seller Indemnitee shall be deemed to have preserved
its rights to indemnification pursuant to this Section 8.9 regardless of
when such claim is ultimately liquidated.
(g) Indemnification Adjustment. The amount of any Losses shall
be reduced by 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 such Indemnified Party shall either (i) use reasonable
commercial efforts to collect any amounts available under such insurance
coverage or from such other party alleged to have responsibility or (ii) assign
to the Indemnifying Party responsible for reimbursing such Losses all of its
rights to collect under any insurance coverage or from any other party alleged
to be responsible therefor; provided, however, that such Indemnified Party shall
be restricted from assigning such rights, and such Indemnifying Party shall be
under no obligation to accept any such assignment, if such collection rights are
non-assignable or if such Indemnifying Party reasonably determines that the
assignment of such rights would materially decrease the amount of funds (net of
any cost of recovery) that such Indemnifying Party would otherwise be entitled
to receive pursuant to this Section 8.9(g) with respect to such Losses. If an
Indemnified Party receives an amount under insurance coverage or from such other
party with respect to Losses at any time subsequent to any indemnification
provided by this Section 8.9, then such Indemnified Party shall promptly
reimburse the Indemnifying Party for any payment made to the Indemnified Party
by such Indemnifying Party (net of any cost of recovery) 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 Losses which constitute a
breach of more than one representation, warranty, covenant or agreement
contained herein. The parties acknowledge and agree that if any Purchaser
Indemnitee or any Seller receives funds under any insurance coverage or from any
third party as contemplated by this Section 8.9(g), and at such time funds still
remain in the Escrow Account, then such Purchaser Indemnitee or such Seller
shall promptly deliver such funds (net of any cost of recovery) in an amount,
when added to the funds already held in the Escrow Account, not to exceed the
Escrow Amount.
(h) Escrow Agent Notices.
(i) Purchaser and Seller agree that if Purchaser, or another Purchaser
Indemnitee, submits a claim for indemnification pursuant to this Section
8.9 that Seller does not dispute by delivering written notice to Purchaser
within 20 calendar days of the date it receives written notice of such
claim, Purchaser and Seller shall promptly prepare and deliver a written
notice to the Escrow Agent, in accordance with the terms and conditions of
the Escrow Agreement, which states
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the identity of the appropriate Purchaser Indemnitee and the amount of
Losses suffered by such Purchaser Indemnitee that are subject to
indemnification pursuant to this Section 8.9.
(ii) Purchaser and Seller agree that if Seller disputes any matter with
respect to a claim for indemnification pursuant to this Section 8.9,
whether or not such claim is based on a third party claim, then Purchaser
and Seller shall, once there has been a Final Determination (as defined in
the Escrow Agreement) of such claim, promptly prepare and deliver a written
notice to the Escrow Agent, in accordance with the terms and conditions of
the Escrow Agreement, which states the identity of the appropriate
Purchaser Indemnitee and the amount of Losses, if any, suffered by such
Purchaser Indemnitee that are subject to indemnification pursuant to this
Section 8.9.
(i) [Intentionally Omitted]
(j) [Intentionally Omitted]
Section 8.10. Counterparts. This Agreement may be executed by the
parties hereto in one or more separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
shall together constitute one and the same. Each counterpart may consist of a
number of copies hereof each signed by less than all, but together signed by
all, of the parties hereto.
Section 8.11. Certain Definitions. As used in this Agreement:
(a) the term "Affiliate" means, with respect to any Person,
any other Person directly or indirectly controlling, controlled by, or under
common control with, such Person at any time during the period for which the
determination of affiliation is being made;
(b) the term "Applicable Law" means any domestic or foreign
federal, state or local statute, law (including common law), ordinance, rule,
administrative interpretation, regulation or Order applicable to the parties
hereto;
(c) the term "Collateral Agreements" means this Agreement, the
Escrow Agreement, the Xxxx of Sale and the Assumption of Liabilities;
(d) the term "Institutional and Food Service Industry" means
schools, hospitals, restaurants, delis and other formats, either free-standing
or contained within a Retail Industry outlet, where food is purchased in a form
which does not require further preparation, for on-premises serving and
consumption or "takeout" consumption in transit or at home, as well as the
wholesalers and distributors who sell to the above entities;
(e) the term "Lien" means any mortgage, pledge, hypothecation,
claim, security interest, encumbrance, lease, sublease, license, occupancy
agreement, adverse claim or interest, easement, covenant, encroachment, title
defect, title retention
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agreement, voting trust agreement, equity, option, lien, right of first refusal,
charge or other restrictions or limitations of any nature whatsoever, including
but not limited to such as may arise under any Contracts;
(f) the term "Person" means an individual, a corporation, a
limited liability company, a partnership, an association, a trust or other
entity or organization;
(g) the term "Retail Industry" means stores and other outlets
primarily engaged in retail sales of food products to consumers for off-premises
preparation and consumption; and
(h) the term "Subsidiary" means a Person as to which a
designated Person owns directly or indirectly more than 50% of the voting
equity.
Section 8.12. Sellers' Obligations. Sellers agree that their
obligations hereunder shall be joint and several.
Section 8.13. No Recourse Against Others. Each of the following is
herein referred to as a "Purchaser Affiliate": (a) any direct or indirect holder
of any equity interests or securities in Purchaser (whether limited or general
partners, members, stockholders or otherwise), (b) any Affiliate of Purchaser or
(c) any director, officer, employee, representative or agent of (i) Purchaser,
(ii) any Affiliate of Purchaser or (iii) any such holder of equity interests or
securities referred to in clause (a) above. Except to the extent that a
Purchaser Affiliate is an express party to this Agreement, no Purchaser
Affiliate shall have any liability or obligation of any nature whatsoever in
connection with or under this Agreement or the other agreements or transactions
contemplated hereby or thereby, and each Seller hereby releases all direct or
indirect claims of any such liability and obligation.
Section 8.14. Interpretation. (a) The heading references herein and the
table of contents hereto are inserted for convenience of reference only, do not
constitute a part of this Agreement and shall in no way be construed to define,
explain, modify, amplify, or add to the interpretation, construction or meaning
of any provision of, or scope or intent of, this Agreement nor in any way be
deemed to limit or affect any of the provisions hereof. All references to
"Section," "Sections," "Article" or "Articles" refer to the corresponding
Section, Sections, Article or Articles of this Agreement unless specifically
noted otherwise.
(b) In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement.
(c) Notwithstanding anything to the contrary contained in this
Agreement, the Seller Disclosure Schedule or the Purchaser Disclosure Schedule,
any information disclosed in one section of the Seller Disclosure Schedule or
the Purchaser Disclosure Schedule, as the case may be, shall be deemed to be
disclosed in all sections
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of the Seller Disclosure Schedule or the Purchaser Disclosure Schedule,
as the case may be, to which it would reasonably be deemed to be pertinent.
Certain information set forth in the Seller Disclosure Schedule or the Purchaser
Disclosure Schedule, as the case may be, is included solely for informational
purposes and may not be required to be disclosed pursuant to this Agreement, and
the disclosure of any information shall not be deemed to constitute an
acknowledgment that such information is required to be disclosed in connection
with the representations and warranties made by Seller or Purchaser, as the case
may be, in this Agreement or that it is material, nor shall such information be
deemed to establish a standard of materiality.
(d) The words "hereof," "herein," "hereto" and "hereunder" and
words of similar import, when used in this Agreement, shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
(e) The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(f) The terms "dollars" and "$" shall mean United States
dollars, unless otherwise indicated.
(g) The term "control" shall mean, as applied to any Person,
the possession directly or indirectly of the power to direct or cause the
direction of the management of such Person through the ownership of voting
securities or otherwise and the terms "controlling" and "controlled" have the
correlative meanings.
(h) Whenever the words "include," "includes," or "including"
are used in this Agreement, they shall be deemed to be followed by the words
"without limitation" unless the context requires otherwise.
(i) The term "each Seller" shall mean each of Seller, VFB and
each other Subsidiary of Seller transferring any Acquired Assets to Purchaser
hereunder, and the term "any Seller" shall mean any of Seller, VFB or any other
Subsidiary of Seller transferring any Acquired Assets to Purchaser hereunder.
(j) The following terms when used in the Agreement shall have
the meanings set forth below unless the context shall otherwise require:
"Contingent Obligation" as applied to any Person, means any
direct or indirect liability, contingent or otherwise (except for any
liability or obligation of any Seller that is expressly assumed
pursuant to Sections 1.3(b) through (g) hereof) of that Person: (i)
with respect to any indebtedness, lease, dividend or other obligation
of another Person if the primary purpose or intent of the Person
incurring such liability, or the primary effect thereof, is to provide
assurance to the obligee of such liability that such liability will be
paid or discharged, or that any agreements relating thereto will be
complied with, or that the holders of such liability will be protected
(in whole or in part) against loss with respect thereto; or (ii) with
respect to any demand, suit, action,
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investigation, litigation, claim, judicial or administrative or other
proceedings.
"Final Order" shall mean an order of the Bankruptcy Court or
other Court of competent jurisdiction: (a) as to which no appeal,
notice of appeal, motion to amend or make additional findings of fact,
motion to alter or amend judgment, motion for rehearing or motion for
new trial has been timely filed or, if any of the foregoing has been
timely filed, it has been disposed of in a manner that upholds and
affirms the subject order in all respects without the possibility for
further appeal or rehearing thereon; (b) as to which the time for
instituting or filing an appeal, motion to amend or make additional
findings of fact, motion to alter or amend judgment, motion for
rehearing or motion for new trial shall have expired; and (c) as to
which no stay is in effect; provided, however, that the filing or
pendency of a motion under Federal Rule of Bankruptcy Procedure 9024(b)
shall not cause an order not to be deemed a "Final Order" unless such
motion shall be filed within ten days of the entry of the order at
issue. In the case of the Sale Order, a Final Order shall also consist
of an order as to which an appeal, notice of appeal, motion to amend or
make additional findings of fact, motion to alter or amend judgment,
motion for rehearing or motion for new trial has been filed, but as to
which Purchaser, in its sole and absolute discretion, elects to proceed
with Closing.
"Indebtedness" shall mean, with respect to any Seller, the
following: (i) all obligations, including interest thereon, for
borrowed money; (ii) all obligations, including interest, prepayment
penalties, late charges and collection fees thereon, evidenced by
bonds, debentures, notes or other similar instruments; (iii) all
obligations to pay the deferred purchase price of property or services,
accrued commissions and other similar accrued current liabilities in
respect of such obligations, arising in the ordinary course of the
Business (except for any liability or obligation of any Seller that is
expressly assumed pursuant to Section 1.3 hereof); (iv) capital lease
obligations (except for any liability or obligation of any Seller that
is expressly assumed pursuant to Section 1.3 hereof); (v) all
obligations or liabilities of others secured by a Lien on any asset
owned by such Person or Persons whether or not such obligation or
liability is assumed; (vi) all obligations, contingent or otherwise, in
respect of any letter of credit or bankers acceptances; (vii) all
guaranties; and (viii) all obligations incurred in accordance with
Section 364(b), (c), and (d) of the Bankruptcy Code.
(k) The term "employees of the Business" shall include all
Plant Employees and all employees of Seller who are employed at Seller's
corporate headquarters located in Cherry Hill, New Jersey.
Section 8.15. No Specific Performance. The parties hereto agree that
(i) in no event shall Purchaser be entitled to seek specific performance with
respect to any
76
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Seller's obligations arising under this Agreement and (ii) in no event shall any
Seller be entitled to seek specific performance with respect to any of
Purchaser's obligations arising under this Agreement except, in each case, to
the extent a party seeks specific performance of a party's obligations regarding
the release of the Escrow Amount in accordance with this Agreement.
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79
IN WITNESS WHEREOF, the parties have executed or caused this
Agreement to be executed as of the date first written above.
VLASIC FOODS INTERNATIONAL INC.
By:/s/ Xxxxxx Xxxxx
-------------------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President and Controller
VF BRANDS, INC.
By: /s/ Xxxxxx Xxxxx
-------------------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President and Treasurer
ALGAR, INC.
By: /s/ Xxxxxx Xxxxx
-------------------------------------------
Name: Xxxxxx Xxxxx
Title: President
XXXXXX, INC.
By: /s/ Xxxxxx Xxxxx
-------------------------------------------
Name: Xxxxxx Xxxxx
Title: President
VLASIC FOODS DISTRIBUTION COMPANY
By: /s/ Xxxxxx Xxxxx
-------------------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President and Treasurer
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VLASIC STANDARDS, INC.
By: /s/ Xxxxxx Xxxxx
-------------------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President and Treasurer
VLASIC FOODS CANADA, INC.
By: /s/ Xxxxxx Xxxxx
-------------------------------------------
Name: Xxxxxx Xxxxx
Title: Treasurer
VLASIC INTERNATIONAL BRANDS, INC.
By: /s/ Xxxxxx Xxxxx
-------------------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President and Treasurer
VLASIC INTERNATIONAL SALES INC.
By: /s/ Xxxxxx Xxxxx
-------------------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President and Treasurer
[PURCHASER]
By:/s/ Xxxxxx X. Xxxxx
-------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
79
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TABLE OF CONTENTS
Page
ARTICLE I SALE OF ASSETS ........................................................ 2
SECTION 1.1. ACQUIRED ASSETS ................................................. 2
SECTION 1.2. RETAINED ASSETS ................................................. 4
SECTION 1.3. ASSUMED LIABILITIES ............................................. 5
SECTION 1.4. RETAINED LIABILITIES ............................................ 7
SECTION 1.5. TRANSFER OF ASSETS AND ASSUMPTION OF ASSUMED LIABILITIES ........ 8
SECTION 1.6. PURCHASE PRICE .................................................. 8
SECTION 1.7. WORKING CAPITAL ADJUSTMENT ...................................... 10
SECTION 1.8. TIME AND PLACE OF CLOSING ....................................... 14
SECTION 1.9. DELIVERIES BY SELLER ............................................ 14
SECTION 1.10. DELIVERIES BY PURCHASER ........................................ 15
SECTION 1.11. POST-CLOSING ARRANGEMENTS ...................................... 15
SECTION 1.12. ESCROW AGREEMENT ............................................... 15
SECTION 1.13. TREATMENT OF SELLER GUARANTEES ................................. 16
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER ............................. 16
SECTION 2.1. CORPORATE EXISTENCE AND POWER ................................... 16
SECTION 2.2. AUTHORITY OF SELLER; BINDING EFFECT ............................. 17
SECTION 2.3. GOVERNMENTAL AUTHORIZATION ...................................... 17
SECTION 2.4. NON-CONTRAVENTION ............................................... 19
SECTION 2.5. FINANCIAL STATEMENTS ............................................ 19
SECTION 2.6. ABSENCE OF UNDISCLOSED LIABILITIES .............................. 19
SECTION 2.7. ABSENCE OF CERTAIN CHANGES ...................................... 20
SECTION 2.8. CONTRACTS ....................................................... 20
SECTION 2.9. LITIGATION ...................................................... 22
SECTION 2.10. COMPLIANCE WITH APPLICABLE LAWS ................................ 22
SECTION 2.11. ENVIRONMENTAL COMPLIANCE ....................................... 23
SECTION 2.12. REAL PROPERTY; TITLE TO ACQUIRED ASSETS ........................ 24
SECTION 2.13. INTELLECTUAL PROPERTY .......................................... 27
SECTION 2.14. EMPLOYEE BENEFIT PLANS; ERISA .................................. 28
SECTION 2.15. LABOR RELATIONS AND EMPLOYMENT ................................. 29
SECTION 2.16. TAXES .......................................................... 30
SECTION 2.17. BROKERAGE AND FINANCIAL ADVISERS ............................... 30
SECTION 2.18. CUSTOMERS; SUPPLIERS ........................................... 30
SECTION 2.19. INVENTORY ...................................................... 31
SECTION 2.20. INSURANCE ...................................................... 31
SECTION 2.21. RECEIVABLES .................................................... 32
SECTION 2.22. TRADE SPENDING ................................................. 32
SECTION 2.23. INFORMATION TECHNOLOGY ......................................... 32
SECTION 2.24. ASSETS NECESSARY TO THE BUSINESS ............................... 33
SECTION 2.25. TITLE TO TRANSFERRED ASSETS .................................... 33
SECTION 2.26. NO INTEREST IN OTHER ENTITIES .................................. 33
82
SECTION 2.27. NO OTHER REPRESENTATIONS ....................................... 33
SECTION 2.28. TERMINATION OF HEINZ AGREEMENT ................................. 34
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER ......................... 34
SECTION 3.1. CORPORATE EXISTENCE AND POWER ................................... 34
SECTION 3.2. AUTHORITY ....................................................... 34
SECTION 3.3. GOVERNMENTAL AUTHORIZATION ...................................... 34
SECTION 3.4. NON-CONTRAVENTION ............................................... 35
SECTION 3.5. COMPLIANCE WITH APPLICABLE LAWS ................................. 35
SECTION 3.6. LITIGATION ...................................................... 35
SECTION 3.7. PURCHASER'S BROKERAGE AGREEMENTS ................................ 35
SECTION 3.8. FINANCING ....................................................... 35
SECTION 3.9. NO OTHER REPRESENTATIONS ........................................ 36
ARTICLE IV COVENANTS OF THE PARTIES ............................................. 36
SECTION 4.1. CONDUCT OF BUSINESS ............................................. 36
SECTION 4.2. REASONABLE BEST EFFORTS ......................................... 38
SECTION 4.3. EMPLOYEE MATTERS ................................................ 39
SECTION 4.4. SELLER'S TRADEMARKS ............................................. 43
SECTION 4.5. FURTHER ASSURANCES .............................................. 43
SECTION 4.6. POST-CLOSING COOPERATION ........................................ 43
SECTION 4.7. ANNOUNCEMENT .................................................... 43
SECTION 4.8. ACCESS TO INFORMATION ........................................... 43
SECTION 4.9. MAINTENANCE OF BOOKS AND RECORDS ................................ 45
SECTION 4.10. NON-SOLICITATION OF EMPLOYEES .................................. 45
SECTION 4.11. TRANSFERS NOT EFFECTED AS OF CLOSING ........................... 46
SECTION 4.12. BULK SALES LAWS ................................................ 46
SECTION 4.13. TRANSITION SERVICES ............................................ 46
SECTION 4.14. TRADEMARK MATTERS .............................................. 47
SECTION 4.15. SUBMISSION FOR COURT APPROVAL .................................. 48
SECTION 4.16. BIDDING PROCEDURES ............................................. 49
SECTION 4.17. ACCOUNTS RECEIVABLE ............................................ 52
SECTION 4.18. ENVIRONMENTAL MATTERS .......................................... 54
SECTION 4.19. TRADE STRATEGY AND CONSUMER STRATEGY ........................... 54
SECTION 4.20. ASSUMPTION NOTICE .............................................. 54
SECTION 4.21. SUBSEQUENT SALE ................................................ 54
SECTION 4.22. REMITTANCE OF ACCOUNTS RECEIVABLE .............................. 56
SECTION 4.23. CHERRY HILL CORPORATE HEADQUARTERS ............................. 56
ARTICLE V CERTAIN INCOME TAX MATTERS ............................................ 57
SECTION 5.1. TAX MATTERS ..................................................... 57
ARTICLE VI CONDITIONS TO CLOSING ................................................ 58
SECTION 6.1. CONDITIONS TO THE OBLIGATIONS OF PURCHASER AND SELLERS .......... 58
SECTION 6.2. CONDITIONS TO THE OBLIGATIONS OF PURCHASER ...................... 59
SECTION 6.3. CONDITIONS TO THE OBLIGATIONS OF SELLERS ........................ 62
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83
ARTICLE VII TERMINATION ......................................................... 63
SECTION 7.1. TERMINATION ..................................................... 63
SECTION 7.2. EFFECT OF TERMINATION ........................................... 65
ARTICLE VIII MISCELLANEOUS ...................................................... 66
SECTION 8.1. NOTICES ......................................................... 66
SECTION 8.2. AMENDMENT; WAIVER; INVALIDITY ................................... 67
SECTION 8.3. ASSIGNMENT; BINDING EFFECT ...................................... 67
SECTION 8.4. ENTIRE AGREEMENT; DISCLOSURE SCHEDULES .......................... 67
SECTION 8.5. NO THIRD PARTY BENEFICIARIES .................................... 67
SECTION 8.6. FEES AND EXPENSES ............................................... 68
SECTION 8.7. INVALID PROVISIONS .............................................. 68
SECTION 8.8. GOVERNING LAW ................................................... 68
SECTION 8.9. INDEMNIFICATION ................................................. 68
SECTION 8.10. COUNTERPARTS ................................................... 73
SECTION 8.11. CERTAIN DEFINITIONS ............................................ 73
SECTION 8.12. SELLERS' OBLIGATIONS ........................................... 74
SECTION 8.13. NO RECOURSE AGAINST OTHERS ..................................... 74
SECTION 8.14. INTERPRETATION ................................................. 74
SECTION 8.15. NO SPECIFIC PERFORMANCE ........................................ 76
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INDEX OF DEFINED TERMS
Page
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Accounts Receivable 3
ACM 24
Acquired Assets 3
Additional Employees 41
Adjusted Purchase Price 9
Adjustment Amount 53
Adjustment Date 53
Administrative Agent 52
Affected Employees 41
Affiliate 75
Agreement 1
Aligar 1
Alternative Transaction 52
Applicable Law 75
Assumed Liabilities 6
Assumption Agreement 9
Assumption Notice 6
Auction 52
Auction Transaction 52
Auditor 12
Bank Commitment Letter 36
Bank Financing 37
Bankruptcy Case 1
Bankruptcy Code 1
Bankruptcy Court 1
Banks 36
Bargaining Pension Plan 42
Bid 51
Bid Deadline 50
Bidding Procedures 50
Bidding Procedures Order 49
Xxxx of Sale 8
Break-Up Fee 53
Business 1
Business Material Adverse Effect 17
Xxxxxx 1
Cherry Hill Lease 58
Closing 14
Closing Balance Sheet 10
Closing Date 14
Closing Net Working Capital Amount 10
Code 29
Collateral Agreements 75
85
Commitment Letters 37
Confidentiality Agreement 67
Confirmation Order 9
Consumer Events Calendar 32
Contingent Obligation 78
Contracts 3
Cure Costs 7
Deeds 8
Deferred Consideration 57
Definitive Sale Documentation 51
Determination Date 12
Distribution 16
Divestiture 56
Divestiture Closing Date 56
Divestiture Consideration 56
dollars 77
Environmental Laws 24
Equity Commitment Letter 37
Equity Financing 37
ERISA 29
ERISA Affiliate 29
Escrow Account 16
Escrow Agent 16
Escrow Agreement 16
Escrow Amount 16
Estimated Net Working Capital 10
Excluded Information 33
Existing Bidding Procedures Order 2
Expense Reimbursement 53
Expiration Date 16
Extension Period 66
Final Accounts Receivable 53
Final Closing Balance Sheet 12
Final Net Working Capital Amount 12
Final Order 78
Final Post-Retirement Benefits Accrual 12
Financial Statements 20
Financing 37
Freshbake 5
Fund 37
GAAP 11
Governmental Authority 18
Hazardous Substances 25
Heinz 1
Heinz Agreement 1
HSR Act 18
86
Indebtedness 78
Indemnified Party 72
Indemnifying Party 72
Information Technology 4
Institutional and Food Service Industry 75
Intellectual Property 3
Intellectual Property Instruments 8
Interest Rate 13
Inventory 3
IP Agreements 63
IP License Agreements 27
IRS 29
Knowledge of Seller 23
Lease 26
Lease Assignments 8
Leased Real Property 26
Leases 26
Licensees 48
Lien 76
Listowel Agreement 39
Losses 70
Marks 48
Material Contracts 21
Net Working Capital 10
Non-Bargaining Pension Plan 43
Order Date 10
Owned Real Property 25
Parent 37
Patents 3
Permit 19
Permitted Liens 25
Person 76
Petitions 1
Pickles Business 1
Plan 29
Plan Effective Date 10
Plant Employees 41
Post-Retirement Benefits Accrual 10
Post-Retirement Benefits Excess 13
Prepaid Pickles Advertising 4
Principal Amount 13
Prior Bidding Procedures Order 2
Profit 56
Publication Notice 50
Purchase Price 9
Purchaser 1
3
87
Purchaser Affiliate 76
Purchaser Certificate 71
Purchaser Disclosure Schedule 35
Purchaser Indemnitees 70
Purchaser Receivables Notice 53
Purchaser Representatives 40
Purchaser's Accountant 11
Qualified Bid 51
Qualified Bidder 51
Real Property 26
Real Property Laws 27
Receivables Notice 53
Reference Balance Sheet 19
Regulatory Authorizations 40
Retail Industry 76
Retained Assets 5
Retained Liabilities 8
Sale 50
Sale Hearing 50
Sale Order 17
Sauce Business 1
Seller 1
Seller Certificate 71
Seller Disclosure Schedule 17
Seller Guarantees 16
Seller Indemnitees 71
Sellers 1
Seller's Accountant 10
Sellers' Retiree Medical Plans 43
Stratford 5
Subsequent Monthly Financial Statements 45
Subsidiary 76
Xxxxxxx Business 1
Tax 30
Tax Return 31
Taxes 30
Termination Date 65
Title Company 61
Trade Events Calendar 32
Trademarks 3
Transfer Taxes 58
Transferred Employees 42
Transitional License 48
Transitional Sublicense 48
VFB 1
VFCI 1
4
88
VFDC 1
VIBI 1
VISI 1
VSI 1
WARN 43
WARN Obligations 43
Warrants 9
Willful Breach 67
Working Capital Shortfall 12
5
