Exhibit 4.13
EXECUTION COPY
STANDARD FRUIT & VEGETABLE CO., INC.
STOCK PURCHASE AGREEMENT
dated as of January 27, 2003
by and between
XX. XXX X. PACK,
XX. XXXX X. PACK,
THE XXXXXXX XXXXXX PACK 1997 IRREVOCABLE TRUST,
THE XXXXXXX XXXXXX PACK 1990 TRUST,
THE XXXXXX XXXXX PACK 1997 IRREVOCABLE TRUST,
THE XXXXXX XXXXX PACK 1990 TRUST,
THE XXX AND XXXX PACK FAMILY FOUNDATION,
and
DEL MONTE FRESH PRODUCE N.A., INC.
TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS
Section 1.1. Defined Terms.....................................................................1
Section 1.2. General Interpretive Principles...................................................8
ARTICLE II
PURCHASE AND SALE OF THE SHARES
Section 2.1. Purchase and Sale of the Shares...................................................9
Section 2.2. Consideration.....................................................................9
Section 2.3. Closing Adjustment................................................................9
Section 2.4. Escrow Amount; Holdback Amount...................................................10
Section 2.5. Closing..........................................................................12
Section 2.6. Post-Closing Adjustment..........................................................12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Section 3.1. Authority; Execution.............................................................14
Section 3.2. No Conflict; Required Filings and Consents.......................................15
Section 3.3. Organization, Standing and Authority.............................................16
Section 3.4. Capital Stock; Subsidiaries......................................................16
Section 3.5. Financial Statements.............................................................17
Section 3.6. Books and Records................................................................18
Section 3.7. Accounts Receivable..............................................................18
Section 3.8. Inventory........................................................................18
Section 3.9. No Material Adverse Change.......................................................18
Section 3.10. Absence of Certain Changes and Events............................................18
Section 3.11. Pre-Closing Transactions.........................................................20
Section 3.12. Compliance With Legal Requirements; Governmental Authorizations..................21
Section 3.13. Actions and Proceedings..........................................................22
Section 3.14. Employee Benefit Matters.........................................................22
Section 3.15. Labor Matters....................................................................25
Section 3.16. Intellectual Property............................................................25
Section 3.17. Taxes............................................................................26
Section 3.18. Environmental Matters............................................................27
Section 3.19. Real Property....................................................................29
Section 3.20. Tangible Personal Property.......................................................32
Section 3.21. Material Contracts...............................................................32
Section 3.22. Related Party Transactions.......................................................33
Section 3.23. Insurance........................................................................33
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Section 3.24. Business Relationships...........................................................33
Section 3.25. Brokers..........................................................................33
Section 3.26. Bank Accounts....................................................................34
Section 3.27. Compensation.....................................................................34
Section 3.28. Sellers' Representative..........................................................34
Section 3.29. Disclosure.......................................................................34
Section 3.30. Licentia Agreement...............................................................34
Section 3.31. Balance Sheet Date...............................................................34
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Section 4.1. Organization and Qualification...................................................35
Section 4.2. Authority Relative to this Agreement.............................................35
Section 4.3. No Conflict; Required Filings and Consents.......................................35
Section 4.4. Disclosure.......................................................................35
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
Section 5.1. Conditions to Obligations of the Sellers.........................................36
Section 5.2. Conditions to Obligations of the Purchaser.......................................36
ARTICLE VI
TERMINATION
Section 6.1. Termination......................................................................38
Section 6.2. Effect of Termination............................................................38
ARTICLE VII
TAX MATTERS
Section 7.1. Tax Indemnification..............................................................39
Section 7.2. Apportionment of Taxes...........................................................39
Section 7.3. Calculation of Indemnity Payments................................................39
Section 7.4. Transfer Tax and Other Closing Expenses..........................................39
Section 7.5. Tax Returns......................................................................40
Section 7.6. Survival.........................................................................40
Section 7.7. Exclusive Remedy.................................................................40
Section 7.8. Contests.........................................................................40
Section 7.9. Post Closing.....................................................................41
ARTICLE VIII
INDEMNIFICATION
Section 8.1. Survival.........................................................................41
Section 8.2. Indemnification by the Sellers...................................................42
Section 8.3. Indemnification by the Purchaser.................................................43
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Section 8.4. Procedure for Indemnification for Third Party Claims.............................43
Section 8.5. Character of Indemnity Payments..................................................45
Section 8.6. Exclusion of Tax Claims..........................................................45
ARTICLE IX
ADDITIONAL AGREEMENTS
Section 9.1. Confidentiality..................................................................45
Section 9.2. Public Announcements.............................................................45
Section 9.3. Noncompetition...................................................................45
Section 9.4. Pack Employment..................................................................47
Section 9.5. Severance Obligations............................................................47
ARTICLE X
GENERAL PROVISIONS
Section 10.1. Notices..........................................................................47
Section 10.2. Sellers' Representative..........................................................48
Section 10.3. Escrow Amount; Holdback Amount; Right of Set-Off.................................48
Section 10.4. Successors, Assigns and Transferees..............................................49
Section 10.5. Governing Law; Independent Accountant; Jurisdiction..............................49
Section 10.6. Fees and Expenses................................................................50
Section 10.7. Severability.....................................................................50
Section 10.8. Entire Agreement; Amendment......................................................50
Section 10.9. Counterparts.....................................................................51
Schedules and Exhibits:
Schedules
Exhibit A Escrow Agreement
Exhibit B Form of Nondisclosure and Nonsolicitation Agreement
Exhibit C Form of Nondisclosure and Nonsolicitation Agreement
Exhibit D Form of Legal Opinion of Xxxxxx, Lidji & Werbner
Exhibit E Form of Certificate for Acquired Companies
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT"), dated as of
January 27, 2003, is by and between Xx. Xxx X. Pack, an individual, Xx. Xxxx X.
Pack, an individual, the Xxxxxxx Xxxxxx Pack 1997 Irrevocable Trust, a trust
organized under the laws of Texas (the "1997 LUCY PACK TRUST"), the Xxxxxxx
Xxxxxx Pack 1990 Trust, a trust organized under the laws of Texas (the "1990
LUCY PACK TRUST"), the Xxxxxx Xxxxx Pack 1997 Irrevocable Trust, a trust
organized under the laws of Texas (the "1997 XXXXXX PACK TRUST"), the Xxxxxx
Xxxxx Pack 1990 Trust, a trust organized under the laws of Texas (the "1990
XXXXXX PACK TRUST"), and The Xxx and Xxxx Pack Family Foundation, a non-profit
corporation organized under the laws of Texas (the "FOUNDATION" and together
with Xx. Xxx X. Pack, Xx. Xxxx X. Pack, the 1997 Lucy Pack Trust, the 1990 Lucy
Pack Trust, the 1997 Xxxxxx Pack Trust and the 1990 Xxxxxx Pack Trust, the
"SELLERS"), and Del Monte Fresh Produce N.A., Inc. a corporation organized under
the laws of Florida (the "PURCHASER").
RECITALS
WHEREAS, the Purchaser desires to purchase from the Sellers
and the Sellers desire to sell to the Purchaser, all of the issued and
outstanding shares of capital stock (the "SHARES") of Standard Fruit & Vegetable
Co., Inc., a corporation organized under the laws of Texas (the "COMPANY"); and
WHEREAS, the Purchaser and the Sellers desire to consummate
the purchase and sale of the Shares as of the date of this Agreement.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings:
"1990 XXXXXX PACK TRUST" has the meaning set forth in the
opening paragraph.
"1990 LUCY PACK TRUST" has the meaning set forth in the
opening paragraph.
"1997 XXXXXX PACK TRUST" has the meaning set forth in the
opening paragraph.
"1997 LUCY PACK TRUST" has the meaning set forth in the
opening paragraph.
"ACCOUNTS RECEIVABLE" has the meaning set forth in Section
3.7.
"ACQUIRED COMPANIES" means the Company and its Subsidiaries.
"ACQUIRED COMPANY INTELLECTUAL PROPERTY" means all
Intellectual Property held, owned or used by any Acquired Company.
"ACQUIRED COMPANY PROPERTY" has the meaning set forth in
Section 3.19(b).
"AFFILIATE" means, with respect to any Person, a Person that
controls, is controlled by, or is under common control with such Person (it
being understood that a Person shall be deemed to "control" another Person, for
purposes of this definition, if such Person directly or indirectly has the power
to direct or cause the direction of the management and policies of such other
Person, whether through holding beneficial ownership interests in such other
Person, through Contracts or otherwise).
"AGREEMENT" has the meaning set forth in the opening
paragraph.
"AUDITED COMPANY FINANCIAL STATEMENTS" has the meaning set
forth in Section 3.5(a).
"BALANCE SHEET DATE" shall mean January 24, 2003.
"BASE PRICE" has the meaning set forth in Section 2.2.
"CLOSING" has the meaning set forth in Section 2.5(a).
"CLOSING ADJUSTMENT" has the meaning set forth in Section 2.2.
"CLOSING STATEMENT" has the meaning set forth in Section
2.3(a)
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMONLY CONTROLLED ENTITY" has the meaning set forth in
Section 3.14(a).
"COMPANY" has the meaning set forth in the recitals.
"COMPANY FINANCIAL STATEMENTS" has the meaning set forth in
Section 3.5(a).
"CONFIDENTIALITY AGREEMENT" means the confidentiality
agreement, dated as of June 7, 2002, between Del Monte Fresh Produce Company and
Xx. Xxx X. Pack, as amended and restated on August 28, 2002.
"CONTEST" has the meaning set forth in Section 7.8.
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"CONTRACT" means any agreement, contract, obligation, promise,
or undertaking (whether written or oral and whether express or implied) that is
legally binding.
"DEBT" of any Person means, without duplication, (i) all
indebtedness of such Person for borrowed money; (ii) all obligations of such
Person for the deferred purchase price of property or services; (iii) all
obligations of such Person evidenced by notes, bonds, debentures, or other
similar instruments; (iv) all obligations of such Person created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property); (v) all obligations of such Person as
lessee under leases that have been or should be, in accordance with GAAP,
recorded as capital leases; (vi) all obligations, contingent or otherwise, of
such Person in respect of acceptances, letters of credit or similar extensions
of credit; and (vii) all Debt of others referred to in clauses (i) through (vi)
above guarantied directly or indirectly in any manner by such Person or secured
by any Lien on property owned by such Person, even though such Person has not
assumed or become liable for the payment of such Debt.
"ENVIRONMENT" means any ambient, workplace or indoor air,
surface water, drinking water, groundwater, land surface, subsurface strata,
river sediment, plant or animal life, natural resources, workplace, and real
property and the physical structures and improvements thereon.
"ENVIRONMENTAL LIABILITIES AND COSTS" means any Liabilities
arising from or relating to: (i) any Loss pursuant to Environmental Law alleging
personal injury, property damage, damage to natural resources or the
Environment; (ii) any investigation, study, testing, assessment, remediation,
removal, cleanup, abatement or monitoring of any threatened or actual Release,
whether on-site or off-site, whether conducted by an Acquired Company, third
party or Governmental Entity, related to the current and former facilities and
operations of the Acquired Companies; or (iii) any failure to comply with
applicable Environmental Laws, including without limitation (x) any fines and
penalties assessed, levied or asserted against the Acquired Companies, and (y)
any costs necessary to enable the facilities and operations of the Acquired
Companies to comply with all applicable Environmental Laws currently in effect
and requiring compliance as of Closing.
"ENVIRONMENTAL LAW" means any Law relating to: (i) the
Environment, including, without limitation, pollution, contamination, cleanup,
preservation, protection, or reclamation of the Environment; (ii) public or
employee health or safety; (iii) any Release, including without limitation
notification, investigation, monitoring, or remediation of or other response to
a Release; (iv) the handling, use, manufacture, distribution, treatment,
storage, disposal, or recycling of or exposure to Hazardous Substances; and (v)
the physical structure or condition, or appropriate use of a building, facility,
fixture or other structure.
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"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ESCROW AGENT" has the meaning set forth in Section 2.4(b).
"ESCROW AGREEMENT" has the meaning set forth in Section
2.4(b).
"ESCROW AMOUNT" has the meaning set forth in Section 2.4(a).
"FINAL CLOSING ADJUSTMENT" has the meaning set forth in
Section 2.6(f).
"FINAL CLOSING CASH BALANCE" has the meaning set forth in
Section 2.6(f).
"FINAL CLOSING WORKING CAPITAL BALANCE" has the meaning set
forth in Section 2.6(f).
"FINAL POST-CLOSING STATEMENT" has the meaning set forth in
Section 2.6(c).
"FOUNDATION" has the meaning set forth in the opening
paragraph.
"GAAP" means United States generally accepted accounting
principles.
"GOVERNMENTAL ENTITY" means any United States (federal, state
or local) or foreign government or governmental, regulatory or administrative
authority, agency or commission, court or arbitrator of competent jurisdiction
or stock exchange.
"HAZARDOUS SUBSTANCE" means any pollutant, contaminant,
chemical, product or by-product, raw material, intermediate, petroleum or any
fraction thereof, asbestos or asbestos-containing-material, polychlorinated
biphenyls, or industrial, solid, toxic, radioactive, infectious, disease-causing
or hazardous substance, material, waste or agent.
"HOLDBACK AMOUNT" has the meaning set forth in Section 2.4(a).
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and the rules and regulations thereunder.
"INDEPENDENT ACCOUNTANT" has the meaning set forth in Section
10.5(b).
"INTELLECTUAL PROPERTY" means all intellectual property and
other similar proprietary rights in any jurisdiction, whether owned or held for
use under license, whether registered or unregistered, including without
limitation such rights in and to: (i) trademarks, trade dress, service marks,
and the goodwill associated with the foregoing; (ii) patents and patent
applications, and any and all divisions, continuations, continuations-in-part,
reissues, continuing patent applications, reexaminations, and extensions thereof
and inventions, invention disclosures, discoveries and improvements, whether or
not patentable; (iii) writings and other works of authorship; (iv) trade
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secrets, business, technical and know-how information, and rights to limit the
use or disclosure thereof by any Person; (v) software, including data files,
source code, object code, application programming interfaces, databases and
other software-related specifications and documentation; and (vi) any
registrations of, applications to register, and renewals and extensions of, any
of the foregoing items set forth in clauses (i) through (v) above with or by any
Governmental Entity in any jurisdiction.
"INTERIM COMPANY FINANCIAL STATEMENTS" has the meaning set
forth in Section 3.5(a).
"INTERIM PERIOD" has the meaning set forth in Section 7.2(b).
"INTEREST RATE" has the meaning set forth in Section 2.6(g).
"KNOWLEDGE" means (i) with respect to an individual, a fact,
matter or circumstance of which such individual has actual awareness or of which
such individual should have become aware in the due performance of such
individual's duties as an employee, director and/or shareholder, and (ii) with
respect to any Person other than an individual, a fact, matter or circumstance
of which any individual who is, or at the time of such fact, matter or
circumstance was, serving as a director, officer, partner, executor, employee,
trustee, consultant or advisor of such Person (or in any similar capacity) has
actual awareness or of which such individual should have become aware in the due
performance of such individual's duties.
"LAW" means any statute, law, constitutional provision, code,
regulation, ordinance, rule, ruling, judgment, decision, order, writ, injunction
(whether preliminary or final), decree, permit, concession, grant, franchise,
license, agreement, directive, binding guideline or policy or rule of common
law, requirement of, or other governmental restriction of or determination by,
any Governmental Entity or any interpretation of any of the foregoing by any
Governmental Entity.
"LIABILITIES" means any liabilities, Debts, or obligations of
any nature, whether accrued, absolute, fixed, contingent, liquidated,
unliquidated or otherwise and whether due or to become due.
"LIEN" means any pre-emptive right, mortgage, charge, pledge,
security interest, encumbrance, lien (statutory or otherwise), hypothecation,
assignment for security, claim, preference, priority or other encumbrance of any
kind.
"LOSSES" shall mean any and all losses, costs, claims,
damages, Liabilities, obligations, judgments, settlements, awards, demands,
offsets, reasonable out-of-pocket costs, expenses and attorneys' fees (including
any such reasonable costs, expenses and attorneys' fees incurred in enforcing a
party's right to indemnification against any indemnifying party or with respect
to any appeal) and penalties and interest, if any.
"MATERIAL CONTRACTS" shall mean any Contract of the following
categories to which any of the Acquired Companies is a party or by which any of
the Acquired Companies or any of their respective assets or properties is bound:
(i) Contracts entered
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into out of the ordinary course of business of any of the Acquired Companies;
(ii) Contracts (either individually or together with other similar Contracts
with the same Person) involving expenditures, payments, Liabilities, goods or
services with a value in excess of U.S.$300,000 in the aggregate or in excess of
U.S.$100,000 in the aggregate in any twelve-month period, other than Contracts
that merely set forth the general terms on which goods or services may be sold
or purchased by any Acquired Company but do not impose any obligation on any
Acquired Company or any other party thereto to provide goods or services or pay
any specified amount; (iii) Contracts containing covenants limiting the freedom
to engage in any business activity or compete with any Person or operate at any
location; (iv) joint venture or partnership agreements or joint development or
similar agreements involving a sharing of profits, losses, costs or liabilities
by any Acquired Company with any other Person; (v) Contracts relating to the
capital stock or other ownership assets of any Acquired Company in any other
Person, including Contracts containing provisions relating to voting,
management, change of control, transfer or the right to acquire or the
obligation to sell any capital stock or other ownership interest in such Person;
(vi) Contracts providing for the acquisition, directly or indirectly (by merger
or otherwise), of substantially all of the assets or any part of the capital
stock (or other ownership interest) of another Person; and (vii) any amendment,
modification, supplement, side letter or consent affecting the obligations of
any party with respect to any of the Contracts referred to in clauses (i)
through (vi) above.
"PACK AFFILIATE" means Xx. Xxx X. Pack, the members of his
immediate family and any other Person (other than an individual) that is
exclusively owned and controlled by Xx. Xxx X. Pack and/or such members.
"PERMIT" means any approval, consent, license, permit, waiver,
or other authorization issued, granted, given, or otherwise made available by or
under the authority of any Governmental Entity or pursuant to any Law.
"PERMITTED LIENS" means (a) mechanics', materialmen's,
carriers', workers', repairers', landlords' and similar Liens arising or
incurred in the ordinary course of business consistent with past practice
securing a Debt not in excess of U.S.$25,000; (b) solely with respect to real
property, zoning, entitlement, building and other land use regulations that are
not violated by current occupancy or use; and (c) solely with respect to real
property, customary covenants, conditions, restrictions, easements and similar
restrictions of record affecting title that do not materially and adversely
affect the current use, occupancy, or value or the marketability of title.
"PERSON" means an individual, corporation, partnership, trust,
limited liability company, a branch of any legal entity, unincorporated
organization, joint stock company, joint venture, association, other entity or
Governmental Entity.
"PERSONAL PROPERTY LEASES" has the meaning set forth in
Section 3.20(a).
"PLAN" has the meaning set forth in Section 3.14(a).
"POST-CLOSING STATEMENT" has the meaning set forth in Section
2.6(a).
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"PROCEEDING" means any action, arbitration, audit, hearing,
investigation, litigation, eminent domain or condemnation proceeding or suit
(whether civil, criminal, administrative, investigative, or informal) commenced,
brought, conducted, or heard by or before, or otherwise involving, any
Governmental Entity or arbitrator.
"PURCHASE PRICE" has the meaning set forth in Section 2.2.
"PURCHASER" has the meaning set forth in the opening
paragraph.
"PURCHASER'S CLOSING CASH BALANCE" has the meaning set forth
in Section 2.6(a).
"PURCHASER'S CLOSING WORKING CAPITAL BALANCE" has the meaning
set forth in Section 2.6(a).
"REAL PROPERTY" has the meaning set forth in Section 3.19(a).
"REAL PROPERTY LEASE" has the meaning set forth in Section
3.19(a).
"RELEASE" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
disposing, or other release of any Hazardous Substance or noxious noise or odor,
at, in, on, into or onto the Environment, including, without limitation, the
migration of any Hazardous Substance through or in the Environment, the
abandonment or discard of barrels, containers, tanks or other receptacles
containing or previously containing any Hazardous Substance, or any release,
emission or discharge as those terms are defined in any applicable Environmental
Law.
"SALARY CONTINUATION LETTERS" refers to the letters so
entitled and executed between the Company, Xxx Pack and the individuals listed
in Sections 5.2(l) and 5.2(m) (other than Xxxxx Xxxxxxxxx and Xxxxxxx Xxxxxxx)
in the form approved by Purchaser.
"SAR PLAN" has the meaning set forth in Section 5.2(j).
"SELLERS" has the meaning set forth in the opening paragraph.
"SELLERS' CLOSING CASH BALANCE" has the meaning set forth in
Section 2.3(a).
"SELLERS' CLOSING WORKING CAPITAL BALANCE" has the meaning set
forth in Section 2.3(a).
"SHARES" has the meaning set forth in the recitals.
"SHORT PERIOD" has the meaning set forth in Section 7.2(a).
"SPECIFIED REPRESENTATIONS" has the meaning set forth in
Section 8.1.
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"SUBSIDIARY" means, with respect to any Person, any other
Person of which such Person (either alone or through or together with any other
Subsidiary) owns or has rights to acquire, directly or indirectly, more than 25%
of the capital stock or other ownership interests of such other Person.
"SURVIVAL DATE" shall be the date that is one year from the
date of the Closing.
"TANGIBLE PERSONAL PROPERTY" has the meaning set forth in
Section 3.20(a).
"TARGET WORKING CAPITAL" means U.S.$3,000,000 (three million
dollars).
"TAX CLAIM" has the meaning set forth in Section 7.6.
"TAX INDEMNITEE" has the meaning set forth in Section 7.1.
"TAX RETURN" means a report, return, declaration, claim for
refund or other information (including any amendments, schedules and attachments
thereto) required to be supplied to a Governmental Entity with respect to Taxes,
including, where permitted or required, combined or consolidated returns for any
group of entities that includes any of the Acquired Companies.
"TAXES" means all taxes, however denominated, including any
interest or penalties or additions thereto whether disputed or not, including
any obligation to indemnify or otherwise assume or succeed to the tax Liability
of any other Person that may become payable in respect thereof, imposed by any
federal, state, local or foreign government or any agency or political
subdivision of any such government, which taxes shall include, without limiting
the generality of the foregoing, all income taxes (including, but not limited
to, United States federal income taxes and state income Taxes), payroll and
employee withholding taxes, unemployment insurance, social security, sales and
use taxes, excise taxes, environmental taxes, franchise taxes, gross receipts
taxes, occupation taxes, real and personal property taxes, stamp taxes, transfer
taxes, withholding taxes, workers' compensation taxes, escheat, value-added
taxes, alternative or add-on minimum taxes and other obligations of the same or
of a similar nature, whether arising before, on or after the Closing.
Section 1.2. GENERAL INTERPRETIVE PRINCIPLES. Whenever used in
this Agreement, except as otherwise expressly provided or unless the context
otherwise requires, any noun or pronoun shall be deemed to include the plural as
well as the singular and to cover all genders. The name assigned this Agreement
and the section and article captions used herein are for convenience of
reference only and shall not be construed to affect the meaning, construction or
effect hereof. Unless otherwise specified, the terms "hereof," "herein,"
"hereunder" and similar terms refer to this Agreement as a whole (including the
Schedules and Exhibits hereto), and references herein to Sections and Articles
refer to sections and articles of this Agreement.
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ARTICLE II
PURCHASE AND SALE OF THE SHARES
Section 2.1. PURCHASE AND SALE OF THE SHARES. On the terms and
subject to the conditions of this Agreement, at the Closing, Purchaser shall
purchase from each of the Sellers, and each of the Sellers shall sell and
deliver to Purchaser, legal and beneficial ownership of the number of Shares set
forth next to such Seller's name on SCHEDULE 2.1, free and clear of all Liens.
Section 2.2. CONSIDERATION. At the Closing, the aggregate
consideration to be paid by Purchaser for the Shares shall be an amount equal to
U.S.$100,000,000 (one hundred million dollars) (the "BASE PRICE") as adjusted by
an amount determined pursuant to Section 2.3 (such amount, the "CLOSING
ADJUSTMENT" and such adjusted Base Price, the "PURCHASE PRICE"). In the event
that the Closing Adjustment is positive, the Base Price shall be increased by
the amount of the Closing Adjustment. In the event that the Closing Adjustment
is negative, the Base Price shall be decreased by the amount of the Closing
Adjustment. The Purchase Price will be paid in the manner and at the times as
set forth in Sections 2.4 and 2.5 and will be subject to further post-Closing
adjustment as set forth in Section 2.6.
Section 2.3. CLOSING ADJUSTMENT. (a) At the Closing, the
Sellers shall deliver to the Purchaser a statement (the "CLOSING STATEMENT") in
the form of SCHEDULE 2.3(A), which lists (i) the cash of the Company as of the
Balance Sheet Date (such amount, the "SELLERS' CLOSING CASH BALANCE"), (ii) the
amounts of the short-term asset and short-term liability accounts of the Company
listed thereon, and (iii) the amount calculated by subtracting the sum of such
short-term liability accounts from the sum of such short-term asset accounts set
forth therein (such amount, the "SELLERS' CLOSING WORKING CAPITAL BALANCE"),
together with the work papers and other supporting documents used by the Sellers
to prepare the Closing Statement. The Purchaser shall be entitled to participate
in the preparation of the Closing Statement. The Purchaser and the Sellers
acknowledge that, solely for purpose of the Closing Statement, accrued expenses
will not be actually calculated as of the Balance Sheet Date and such amount on
the Closing Statement shall be equal to an amount that is 110 % of the balance
of accrued expenses set forth in the Interim Company Financial Statements.
(b) The amounts set forth in the Closing Statement shall be
calculated in accordance with SCHEDULE 2.3(B) and to reflect the financial
position of the Company on a consolidated basis as of the Balance Sheet Date in
accordance with the accounting records of the Company and GAAP consistent, to
the extent such Audited Company Financial Statements are in accordance with
GAAP, with those used in the preparation of the Audited Company Financial
Statements as of December 31, 2001.
(c) At the Closing, the Closing Adjustment shall be determined
as follows:
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(i) In the event that the Sellers' Closing Working Capital
Balance is a positive number equal to or greater than the amount of the
Target Working Capital, then the Closing Adjustment shall be a positive
number equal to the Sellers' Closing Cash Balance. For the avoidance of
doubt and by way of example of the foregoing, in the event that the
Sellers' Closing Working Capital Balance is U.S.$4,000,000, and the
Sellers' Closing Cash Balance is U.S.$3,000,000, the Base Price would
be increased by U.S.$3,000,000, but the Base Price would not be further
adjusted at the Closing for the U.S.$1,000,000 excess working capital.
(ii) In the event that the Sellers' Closing Working Capital
Balance is a negative number, zero or a positive number less than the
Target Working Capital, then the Closing Adjustment shall be a positive
or negative number equal to the sum of the Sellers' Closing Cash
Balance and the Sellers' Closing Working Capital Balance, minus the
Target Working Capital, giving effect for purposes of such calculation
to whether each number is negative or positive. For the avoidance of
doubt and by way of example of the foregoing, in the event that the
Sellers' Working Capital Balance is U.S.$2,000,000, and the Sellers'
Closing Cash Balance is U.S.$4,000,000, then the Base Price would be
increased by U.S.$3,000,000.
Section 2.4. ESCROW AMOUNT; HOLDBACK AMOUNT. (a) At the
Closing, the Purchaser shall (i) retain a portion of the Purchase Price equal to
U.S.$2,500,000 (two million five hundred thousand dollars) (the "HOLDBACK
AMOUNT"), to secure the payment by the Sellers of any amounts that become due to
the Purchaser under this Agreement, and (ii) place in escrow a portion of the
Purchase Price equal to U.S.$7,500,000 (seven million five hundred thousand
dollars) (the "ESCROW AMOUNT"), to secure the payment by the Sellers of any
amounts that become due to the Purchaser under this Agreement to the extent that
the Holdback Amount is insufficient to pay such amounts.
(b) The Escrow Amount will be held in escrow pursuant to an
escrow agreement with JPMorgan Chase Bank (the "ESCROW AGENT") in the form of
EXHIBIT A (the "ESCROW AGREEMENT") to be executed by the parties and the Escrow
Agent as of the date hereof. All fees and expenses of the Escrow Agent under the
Escrow Agreement shall be the responsibility of the Sellers.
(c) Except as permitted by the Escrow Agreement or this
Agreement and subject to the following sentence, the balance of the Escrow
Amount shall be maintained in escrow and the balance of the Holdback Amount
shall be retained by the Purchaser, in each case until the later of (i) the date
that is three years from the date hereof, or (ii) the date on which any claim by
Purchaser under Article VII or VIII of which notice is given prior to the
Survival Date or any claim by Purchaser under Section 8.2(a)(iv) with respect to
an amount to be paid on or prior to the date that is three years from the date
hereof shall be finally resolved, on which date the balance of the Escrow Amount
and Holdback Amount, if any, shall be paid to the Sellers. Notwithstanding the
foregoing, (i) on the Survival Date, in the event that (x) all of the claims of
the Purchaser under Article VII or VIII of which notice is given prior to the
Survival Date are for a
10
specified U.S. Dollar amount of Losses and other amounts, and (y) the sum of (A)
the U.S. Dollar amount of Losses and other amounts sought by Purchaser with
respect to all claims under Article VII or VIII of which notice is given prior
to the Survival Date, (B) any other amount sought by the Purchaser under this
Agreement or the Escrow Agreement, and (C) the maximum amount of indemnification
that Purchaser would be entitled pursuant to Section 8.2(a)(iv) for payments on
or subsequent to the Survival Date, is less than the balance of the Holdback
Amount and the Escrow Amount as of the Survival Date, then on the Survival Date
any portion of the Escrow Amount and the Holdback Amount in excess of such
Losses and amounts shall be paid to the Sellers, with any such excess amount
coming first from the Escrow Amount; (ii) on the date that is one year from the
Survival Date, in the event that (x) all of the claims of the Purchaser under
Article VII or VIII of which notice is given prior to the Survival Date are for
a specified U.S. Dollar amount of Losses and other amounts, and (y) the sum of
(A) the U.S. Dollar amount of Losses and other amounts sought by Purchaser with
respect to all claims under Article VII or VIII of which notice is given prior
to the Survival Date, (B) any other amount sought by the Purchaser under this
Agreement or the Escrow Agreement, and (C) the maximum amount of indemnification
that Purchaser would be entitled pursuant to Section 8.2(a)(iv) for payments on
or subsequent to such date, is less than the balance of the Holdback Amount and
the Escrow Amount as of such date, then on the date that is one year from the
Survival Date any portion of the Escrow Amount and the Holdback Amount in excess
of such Losses and such amounts shall be paid to the Sellers, with any such
excess amount coming first from the Escrow Amount; and (iii) on any date that is
on or after the date that is two years and one day from the Survival Date, in
the event that (x) all of the claims of the Purchaser under Article VII or VIII
of which notice is given prior to the Survival Date are for a specified U.S.
Dollar amount of Losses and other amounts, and (y) the sum of the U.S. Dollar
amount of Losses and other amounts sought by Purchaser with respect to all
claims under Article VII or VIII of which notice is given prior to the Survival
Date and any other amount sought by the Purchaser under this Agreement or the
Escrow Agreement, is less than the balance of the Holdback Amount and the Escrow
Amount as of such date, then on such date any portion of the Escrow Amount and
the Holdback Amount in excess of such Losses and such amounts shall be paid to
the Sellers, with any such excess amount coming first from the Escrow Amount.
(d) The Escrow Agreement will provide that the Escrow Agent
will pay the Purchaser from the Escrow Amount for any amount under this
Agreement (i) agreed with the Sellers' Representative, (ii) determined by
Purchaser to be due upon delivery to the Sellers' Representative of a notice
complying with Section 10.1 (including with respect to delivery of all copies),
with an additional copy to the Escrow Agent, and to which the Sellers'
Representative (including through its counsel) fails to object in writing within
30 days of such notice, (iii) determined to be due to the Purchaser by the
Independent Accountant pursuant to Section 10.5(b), or (iv) determined to be due
by a court of competent jurisdiction pursuant to Section 10.5(c).
(e) The Purchaser shall be entitled to retain for itself from
the Holdback Amount for any amount under this Agreement (i) agreed with the
Sellers' Representative, (ii) determined by Purchaser to be due upon delivery of
a notice complying with Section 10.1 (including with respect to delivery of all
copies) to the
11
Sellers' Representative of the amount and the basis for such amount; (iii)
determined to be due to the Purchaser by the Independent Accountant pursuant to
Section 10.5(b), or (iv) determined to be due by a court of competent
jurisdiction pursuant to Section 10.5(c). To the extent that Purchaser is
ultimately determined not to be entitled to offset any such amount against the
Holdback Amount, such amount shall be deemed to form part of the Holdback
Amount.
(f) All payments by the Purchaser to the Sellers under this
Section 2.4 shall be by wire transfer in immediately available U.S. Dollar funds
to the Sellers in the same proportion as the Purchase Price.
Section 2.5. CLOSING. (a) The closing of the purchase and sale
of the Shares (the "CLOSING") shall take place at the offices of Xxxxxx, Lidji &
Werbner, 44th Floor, Renaissance Tower, 0000 Xxx Xxxxxx, Xxxxxx, Xxxxx on the
date of this Agreement. All proceedings to be taken and all documents to be
executed and delivered by all parties at the Closing shall be deemed to have
been taken and executed simultaneously, and no proceedings shall be deemed to
have been taken nor any documents executed or delivered until all have been
taken, executed and delivered.
(b) At the Closing, (i) each of the Sellers shall deliver to
Purchaser one or more certificates evidencing the number of Shares set forth
next to such Seller's name on SCHEDULE 2.1, in each case duly endorsed in blank
or accompanied by duly executed stock powers in blank, (ii) Purchaser shall wire
transfer an aggregate amount equal to the Purchase Price, less the Escrow Amount
and the Holdback Amount, in immediately available U.S. Dollar funds to the
Sellers in the amounts and to the accounts next to such Seller's name on
SCHEDULE 2.1, and (iii) Purchaser shall wire transfer an aggregate amount equal
to the Escrow Amount to the Escrow Agent pursuant to the Escrow Agreement.
Section 2.6. POST-CLOSING ADJUSTMENT. (a) On or before May 31,
2003, the Purchaser will cause to be prepared a statement (the "POST-CLOSING
STATEMENT") in the form of SCHEDULE 2.3(A), which lists (i) the cash of the
Company as of the Balance Sheet Date (the "PURCHASER'S CLOSING CASH BALANCE"),
(ii) the amounts of the short-term asset and short-term liability accounts of
the Company listed thereon, and (iii) the amount calculated by subtracting the
sum of such short-term liability accounts from the sum of such short-term asset
accounts (the "PURCHASER'S CLOSING WORKING CAPITAL BALANCE"), together with the
work papers and other supporting documents used by the Purchaser to prepare the
Post-Closing Statement.
(b) The amounts set forth in the Post-Closing Statement shall
be calculated in accordance with SCHEDULE 2.3(B) and to reflect the financial
position of the Company on a consolidated basis as of the Balance Sheet Date in
accordance with GAAP consistent, to the extent such Audited Company Financial
Statements are in accordance with GAAP, with those used in the preparation of
the Audited Company Financial Statements as of December 31, 2001.
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(c) Within 30 days after receipt of the Post-Closing
Statement, the Sellers' Representative shall notify the Purchaser whether the
Sellers accept or dispute the accuracy of the Post-Closing Statement. If the
Sellers' Representative has not given any such notice to the Purchaser within
the time period set forth in the preceding sentence or timely accepts the
Post-Closing Statement, the Post-Closing Statement shall be deemed to be final
for purposes of this Section 2.6 (the "FINAL POST-CLOSING STATEMENT"). If the
Sellers' Representative disputes the accuracy of any of such items, it shall in
the notice of such dispute set forth in reasonable detail those items that it
believes do not fairly present the financial position of the Company on a
consolidated basis as of the Balance Sheet Date in accordance with GAAP
consistent, to the extent such Audited Company Financial Statements are in
accordance with GAAP, with those used in the preparation of the Audited Company
Financial Statements as of December 31, 2001. The Purchaser and the Sellers'
Representative shall then meet and in good faith use their reasonable best
efforts to try to resolve their disagreements over the disputed items. If the
Purchaser and the Sellers' Representative resolve their disagreements in
accordance with the foregoing sentence, the Post-Closing Statement with those
modifications, if any, that shall have been agreed by the Purchaser and the
Sellers' Representative shall be deemed to be the Final Post-Closing Statement.
(d) In no event shall the Sellers' Representative be entitled
to dispute any item on the Post-Closing Statement to the extent that the amount
for such item is the same as the amount for the corresponding item on the
Closing Statement. Any such item shall not be submitted to the Independent
Accountant but shall be conclusively as set forth in the Post-Closing Statement
to the extent it is the same as the amount for the corresponding item on the
Closing Statement.
(e) If the Purchaser and the Sellers' Representative are
unable to resolve any disagreement (other than as set forth in Section 2.6(d))
within 30 days after the notification of disagreement by the Sellers'
Representative pursuant to Section 2.6(c), then Purchaser and the Sellers'
Representative shall submit the matter to the Independent Accountant pursuant to
Section 10.5(b) hereof. With respect to any dispute so submitted, the parties
shall instruct the Independent Accountant to consider only those items and
amounts set forth in the Post-Closing Statement as to which the Purchaser and
the Sellers' Representative have not resolved their disagreement. The resolution
of the disputed items by the Independent Accountant shall, along with any items
resolved between the Purchaser and the Sellers' Representative and the
undisputed items in the Post-Closing Statement, constitute the Final
Post-Closing Statement.
(f) Upon determination of the Final Post-Closing Statement,
the Purchase Price shall be adjusted by an amount (the "FINAL CLOSING
ADJUSTMENT") equal to
(i) the Final Closing Cash Balance, plus
(ii) the Final Closing Working Capital Balance, minus
(iii) the Target Working Capital, and minus
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(iv) the Closing Adjustment,
giving effect for purposes of such calculation to whether each number is
negative or positive. For purpose of this Section 2.6(f), the "FINAL CLOSING
CASH BALANCE" shall be the Closing Cash Balance set forth in the Final
Post-Closing Statement, and the "FINAL CLOSING WORKING CAPITAL BALANCE" shall be
the Closing Working Capital Balance set forth in the Final Post-Closing
Statement. For the avoidance of doubt and by way of example of the foregoing, in
the event that the Final Closing Cash Balance is U.S.$4,000,000, the Final
Closing Working Capital Balance is U.S.$5,000,000 and the Base Price was
increased by $4,000,000 at the Closing as the Closing Adjustment, then the
Purchase Price shall be increased post-Closing by U.S.$2,000,000, which is the
amount of the excess working capital that was not paid to the Sellers' at the
Closing.
(g) If the Final Closing Adjustment is negative, the Sellers
shall pay to Purchaser the amount of such reduction, and if the Final Closing
Adjustment is positive, Purchaser shall pay to the Sellers the amount of such
increase, in each case by wire transfer of immediately available U.S. Dollar
funds to an account or accounts designated by the Person or Persons receiving
payment within three business days after the final determination of the amount
of such reduction or increase in the Purchase Price, plus interest compounded
daily on the amount paid for the actual number of days elapsed from the Closing
to the date of such payment at a rate (the "INTEREST RATE") equal to the
annualized weekly average rate of a 90 day Treasury xxxx, as published in the
Wall Street Journal for the week ended prior to the date hereof. In the event
that either party fails to pay such amount within 30 days of the final
determination of such amount, the paying party shall be required to pay the
other party interest from the date of final determination at an interest rate of
2% over the Interest Rate, plus any reasonable and documented attorney's fees
incurred in connection with the collection of such amount. Any payment to the
Sellers shall be divided amongst the Sellers in the same proportion as the
Purchase Price.
(h) With respect to any decrease in the Purchase Price payable
to it under this Section 2.6, subject to Section 10.3, the Purchaser shall be
paid any Final Closing Adjustment directly by the Sellers regardless of the
balance of the Holdback Amount or the Escrow Amount. Notwithstanding the
foregoing, the Purchaser shall be entitled (but not required) to make a claim
under the Escrow Agreement or set-off any amount against the Holdback Amount for
any such amount payable to it.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
The Sellers, jointly and severally, represent and warrant to
the Purchaser as follows:
Section 3.1. AUTHORITY; EXECUTION. Each of the Sellers that is
a trust is properly formed and validly existing under the laws of the
jurisdiction of its organization and has all requisite power and authority to
execute and deliver this Agreement, to
14
perform its obligations hereunder and to consummate the transactions
contemplated hereby. Each of the Sellers that is an individual has the legal
capacity to execute, deliver and perform his or her obligations under this
Agreement and, solely with respect to Xx. Xxx X. Pack, the Escrow Agreement. The
Foundation is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization and has all requisite power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transaction hereby. This Agreement and the
Escrow Agreement have been duly and validly executed and delivered by each
Seller that is a party thereto and, assuming this Agreement and the Escrow
Agreement constitute the legal, valid and binding obligations of the Purchaser,
each of this Agreement and the Escrow Agreement constitutes a legal, valid and
binding obligation of such Seller, enforceable against such Seller in accordance
with its terms.
Section 3.2. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a)
Neither the execution and delivery of this Agreement and the Escrow Agreement
nor the consummation or performance of the transactions contemplated hereby and
thereby will, directly or indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of (A)
any provision of the certificates of incorporation or bylaws (or other
governing documents) of any of the Acquired Companies, or, to the
extent applicable, the Sellers, (B) any resolution adopted by the board
of directors or the stockholders (or other governing body) of any
Acquired Company, (C) any provision of the 1990 Xxxxxx Pack Trust, the
1990 Lucy Pack Trust, the 1997 Xxxxxx Pack Trust or the 1997 Lucy Pack
Trust or (D) any provision of the certificate of incorporation, bylaws
or similar governing instrument of the Foundation;
(ii) contravene, conflict with, or result in a violation of,
or give any Governmental Entity or other Person the right to challenge
any of the transactions contemplated hereby and thereby or to exercise
any remedy or obtain any relief under, any Law to which any Acquired
Company or Seller, or any of the assets owned or used by any Acquired
Company or Seller, may be subject;
(iii) upon obtaining the consents, approvals and waivers set
forth on SCHEDULE 3.2(A)(III), contravene, conflict with, or result in
a violation of any of the terms or requirements of, or give any
Governmental Entity the right to revoke, withdraw, suspend, cancel,
terminate, or modify, any Permit that is held by any Acquired Company
or that otherwise relates in any material respect to the business of,
or any of the assets owned or used by, any Acquired Company;
(iv) upon obtaining the consents, approvals and waivers set
forth on SCHEDULE 3.2(A)(IV), contravene, conflict with, or result in a
violation or breach of any provision of, or give any Person the right
to declare a default or exercise any right or remedy under, or to
accelerate the maturity or performance of, or to cancel, terminate, or
modify, any Material Contract by which any Acquired Company or Seller,
or any of their assets is or may become bound; or
15
(v) result in the imposition or creation of any Lien, other
than a Permitted Lien, upon or with respect to any of the assets owned
or used by any Acquired Company.
(b) Except for the pre-merger notification and waiting period
requirements of the HSR Act, no consent, approval or authorization of, permit
from, or declaration, filing or registration with, any Governmental Entity, or
any other Person or entity is required to be made or obtained by any of the
Acquired Companies or any of the Sellers in connection with the execution,
delivery and performance of this Agreement by any of the Sellers.
Section 3.3. ORGANIZATION, STANDING AND AUTHORITY. Each
Acquired Company is (i) a duly organized and validly existing corporation or
other juridical entity having the legal form set forth next to its name on
SCHEDULE 3.3, (ii) in good standing under the laws of the jurisdiction of
organization set forth next to its name on SCHEDULE 3.3, with all power and
authority to own or lease all of its properties and assets and conduct its
business as currently conducted, and (iii) duly qualified to do business in each
of the jurisdictions listed on SCHEDULE 3.3 in which the character of the
properties owned or held under lease by it or the nature of the business
transacted by it makes such qualification necessary, except where the failure to
so qualify would not have a material adverse effect on the business any Acquired
Company.
Section 3.4. CAPITAL STOCK; SUBSIDIARIES. (a) SCHEDULE 3.4(A)
sets forth (i) the authorized and issued capital stock of the Company, (ii) the
name of each Seller, and (iii) the number of Shares beneficially owned and held
of record by each Seller. The Sellers are the only shareholders of the Company
and each has good and marketable title to and is the beneficial and record owner
of the Shares listed opposite his, her or its name on SCHEDULE 3.4(A), free and
clear of all Liens. The Shares have been duly authorized and are validly issued
and outstanding, fully paid and nonassessable and not subject to any preemptive
or subscription rights (and were not issued in violation of any preemptive or
subscription rights).
(b) SCHEDULE 3.4(B) sets forth (i) the authorized and issued
capital stock of (or other ownership interest in) each of the Subsidiaries of
the Company, (ii) the name of each Person who is a holder of such capital stock
of (or ownership interest in) such Subsidiary, and (iii) the number of shares
(or other ownership interests) beneficially owned and held of record by each
such Person. Except as set forth on SCHEDULE 3.4(B), (i) all of the issued
capital stock of (or other ownership interest in) each of the Subsidiaries
listed as being owned by the Company or any Subsidiary of the Company is owned
by such Person, (ii) the Company or such Subsidiary of the Company has good and
marketable title to such capital stock (or other ownership interest), free and
clear of all Liens, and (iii) all such capital stock (or other ownership
interest) has been duly authorized and is validly issued and outstanding, fully
paid and nonassessable and not subject to any preemptive or subscription rights
(and was not issued in violation of any preemptive or subscription rights).
Except as set forth on SCHEDULE 3.4(B), none of the Company or any Subsidiary of
the Company owns, directly or indirectly, any capital stock (or other ownership
interests) or any voting, participating or other debt or equity
16
interest, or has any right or obligations to acquire any such capital stock of
or interest in, any Person.
(c) Except as set forth on SCHEDULE 3.4(C), there are no
options, rights, securities, instruments or agreements to which any of the
Sellers or the Company or any Subsidiary of the Company is a party or by which
any of them is bound obligating any of them (a) to issue, deliver or sell, or
refrain from issuing, delivering or selling, any shares of capital stock of (or
other ownership interest in) any of the Company or any Subsidiary of the
Company, or to grant, extend or enter into any such option, right, instrument or
agreement, (b) to repurchase, redeem or otherwise acquire, or to refrain from
repurchasing, redeeming or otherwise acquiring, any shares of capital stock of
(or other ownership interest in) any of the Company or any Subsidiary of the
Company, or to grant, extend or enter into any such option, right, instrument or
agreement or (c) to vote, or to refrain from voting, any shares of capital stock
of (or other ownership interest in) any of the Company or any Subsidiary of the
Company. Except as identified and described on SCHEDULE 3.4(C), there are no
outstanding stock appreciation rights or similar phantom equity securities
issued by the Sellers or Acquired Companies with respect to the capital stock of
the Acquired Companies.
Section 3.5. FINANCIAL STATEMENTS. (a) The Sellers have
delivered to the Purchaser complete and accurate copies of (i) the audited
consolidated financial statements of the Company as at and for each of the years
ended December 31, 2001, December 31, 2000, and December 31, 1999, together with
all related schedules and notes (collectively, the "AUDITED COMPANY FINANCIAL
STATEMENTS") and (ii) the unaudited consolidated financial statements of the
Company as at and for the eleventh-month period ended on November 30, 2002 (the
"INTERIM COMPANY FINANCIAL STATEMENTS," and, together with the Audited Company
Financial Statements, the "COMPANY FINANCIAL STATEMENTS").
(b) Except as set forth on SCHEDULE 3.5(B), each of the
consolidated balance sheets included in the Company Financial Statements fairly
presents the consolidated financial position of the Company as of the date
thereof and each of the consolidated statements of income (or statements of
results of operations) and cash flows included in the Company Financial
Statements fairly presents the results of operations and cash flows, as the case
may be, of the Company (on a consolidated basis) as of and for the periods then
ended, in each case in accordance with GAAP applied on a consistent basis
throughout the periods covered except that the Interim Company Financial
Statements omit the footnotes, disclosures and opinion contained in the Audited
Company Financial Statements.
(c) At November 30, 2002, none of the Acquired Companies had
any Liabilities that were not reflected or expressly reserved against on the
consolidated balance sheet as of November 30, 2002 included in the Interim
Company Financial Statements, except for Liabilities that would not be required
by GAAP to be reflected on or reserved against on such financial statements.
Since December 31, 2001, none of the Acquired Companies has incurred any
Liability other than Liabilities that (i) have been incurred in the ordinary
course of business consistent with past practice and (ii) have not had and could
17
not reasonably be expected to have, individually or in aggregate, a material
adverse effect on the Acquired Companies, taken as a whole.
Section 3.6. BOOKS AND RECORDS. The books of account, minute
books stock record books, and other records of the Acquired Companies, all of
which have been made available to Purchaser, are complete and correct in all
material respects and have been maintained in accordance with sound business
practices. The minute books of the Acquired Companies contain accurate and
complete records of all meetings held of, and corporate action taken by, the
stockholders, the Boards of Directors, committees of the Boards of Directors,
and other governing bodies of the Acquired Companies, and no meeting of any such
stockholders, Board of Directors, committee, or other governing body has been
held for which minutes have not been prepared and are not contained in such
minute books. As of the Closing, all of those books and records will be in the
possession of the Acquired Companies.
Section 3.7. ACCOUNTS RECEIVABLE. All accounts receivable of
the Acquired Companies that are reflected on the Company Financial Statements or
on the accounting records of the Acquired Companies as of the Closing
(collectively, the "ACCOUNTS RECEIVABLE") represent or will represent valid
obligations arising from sales actually made or services actually performed in
the ordinary course of business consistent with past practice unless paid prior
to the Closing, and the reserves shown on the Company Financial Statements or on
the accounting records of the Acquired Companies as of the Closing are
calculated in accordance with GAAP and consistent with past practice and, to the
Knowledge of the Sellers and the Acquired Companies, are adequate. To the
Knowledge of the Sellers and the Acquired Companies, there is no contest, claim,
or right of set-off to any of the Accounts Receivable, other than returns in the
ordinary course of business consistent with past practice. All of the Accounts
Receivable of the Company are recorded net of the value of any rebate, discount
or sale in connection with the sale of goods and services represented by such
Accounts Receivable.
Section 3.8. INVENTORY. All inventory of the Acquired
Companies, whether or not reflected in the Company Financial Statements,
consists of a quality and quantity usable and salable in the ordinary course of
business consistent with past practice, except for obsolete items and items of
below-standard quality, all of which have been written off or written down to
net realizable value in the Company Financial Statements or on the accounting
records of the Acquired Companies as of the Closing, as the case may be.
Section 3.9. NO MATERIAL ADVERSE CHANGE. Since December 31,
2001, there has not been any material adverse change (other than any change that
arises from changes in economic or financial market conditions generally or from
changes in the wholesale fresh produce industry generally) in the business,
operations, properties, prospects, assets, or condition of the Acquired Company
taken as a whole, and no event has occurred or circumstance exists that may
result in such a material adverse change.
Section 3.10. ABSENCE OF CERTAIN CHANGES AND EVENTS. Since
December 31, 2001 and except as set forth on SCHEDULE 3.10 or expressly
contemplated by Section
18
3.11, the Acquired Companies have conducted their businesses only in the
ordinary course of business consistent with past practice and there has not been
any:
(a) change in any Acquired Company's authorized or issued
capital stock (or other ownership interest); grant of any stock option or right
to purchase shares of capital stock (or other ownership interest) of any
Acquired Company; issuance of any security convertible or exchangeable into such
capital stock (or ownership interest); grant of any registration rights;
purchase, redemption, retirement, or other acquisition by any Acquired Company
of any shares of any such capital stock (or ownership interest); declaration or
payment of any dividend or other distribution or payment in respect of shares of
capital stock (or other ownership interest), or issuance by the Sellers or
Acquired Companies of any stock appreciation rights or similar phantom equity
securities with respect to the capital stock of the Acquired Companies;
(b) amendment to the certificates of incorporation or bylaws
(or other governing documents) of any Acquired Company;
(c) grant to any employee, director, officer, consultant or
stockholder of any Acquired Company of (i) any increase in compensation in any
form (including, without limitation, salary and bonuses) in excess of the amount
thereof in effect as of December 31, 2001, other than increases required by Law
or increased in the ordinary course of business consistent with past practice to
Persons who are not officers of any Acquired Company or Sellers or members of
the immediate family of any of them, or (ii) any severance or termination pay;
(d) the entry into any Contract for employment, consulting
services, or severance or termination pay with any Person or the extension of
credit or renewal of an extension of credit (either directly or indirectly) in
the form of a personal loan, to or for the benefit of any Person;
(e) establishment of, amendment or modification to, or
increase of the benefits under, any Plan maintained or contributed to by any of
the Acquired Companies with or for the benefit of any of their current or former
employees, directors, officers, consultants or stockholders or for which any of
the Acquired Companies may have any Liability, except as may be required by Law
or existing contractual arrangements disclosed on Schedule 3.14(a);
(f) damage to or destruction or loss of any asset or property
of any Acquired Company, whether or not covered by insurance, materially and
adversely affecting the properties, assets, business, financial condition, or
prospects of the Acquired Companies, taken as a whole;
(g) entry into, termination of, or receipt of notice of
termination of any Material Contract;
(h) sale (other than sales of inventory in the ordinary course
of business consistent with past practice), lease or other disposition of any
19
asset or property of any Acquired Company or mortgage, pledge, or imposition of
any Lien on any material asset or property of any Acquired Company;
(i) cancellation or waiver of any claims or rights or the
forgiveness of any Debt with a value to any Acquired Company in excess of
U.S.$10,000;
(j) material change in the accounting methods or policies used
by any Acquired Company; or
(k) agreement, whether oral or written, by any Acquired
Company to do any of the foregoing.
Section 3.11. PRE-CLOSING TRANSACTIONS. (a) Except as set
forth on SCHEDULE 3.11(A), as of the Closing, the Debts of the Acquired
Companies have been paid in full and otherwise satisfied and discharged at their
respective face amounts without the payment of any premium or penalty, and as of
the Closing, none of the Acquired Companies has any Debt.
(b) Prior to or as of the Closing, all of the right, title and
interest of the Company in respect of (i) SHSM Box LLC and (ii) Xxxx Sales and
Leasing, LLC has been assigned to and assumed by a Pack Affiliate, and none of
the Acquired Companies has any Liability in respect thereof or any of their
assets (including the Citation airplane). SCHEDULE 3.11(B) sets forth a true and
complete schedule of any Contract with respect to SHSM Box LLC or Xxxx Sales and
Leasing, LLC or any of their assets, to which any of the Acquired Companies is
or, prior the date hereof, was a party or by which any of the Acquired Companies
or any of their respective assets or properties is, or prior to the date hereof,
was bound. As of the Closing, each of the Contracts set forth on SCHEDULE
3.11(B) has been assigned to or assumed by a Pack Affiliate and each of the
parties thereto has released the Acquired Companies from any Liability under
such Contracts.
(c) Prior to or as of the Closing, the following assets will
be assigned to and assumed by a Pack Affiliate, or (at the option of Sellers)
purchased by a Pack Affiliate at the values indicated in the respective
parentheticals, which amount shall be applied in accordance with SCHEDULE
2.3(B)) and as of the Closing, the Acquired Companies shall have been released
from and shall not have any Liability in respect thereof:
(i) the Lakewood Country Club Membership ($20,000);
(ii) the following private investments: Mercury Investment
($64,698); Grocery Investment ($0); EFO Realty ($94,455); and Texas Growth Cap
($37,968).
(iii) the 2000 Mercedes ($68,938); the 1996 Lexus ($17,495);
the 2002 Mercedes ($78,042); the Xxxxxx Letter ($4,833); and the Cherry
Sculpture ($8,800).
20
(d) Prior to the Closing, Xx. Xxx X. Pack shall have paid to
Company all outstanding amounts due under his promissory notes to the Company
listed on SCHEDULE 3.14(K).
Section 3.12. COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS. (a) Except as set forth on SCHEDULE 3.12(A):
(i) Each Acquired Company is, and at all times since December
31, 1999 has been, in compliance in all material respects with each Law
that is or was applicable to it or to the conduct or operation of its
business or the ownership or use of any of its assets;
(ii) no event has occurred or circumstance exists that (with
or without notice or lapse of time) (A) may constitute or result in a
violation by any Acquired Company of, or a failure on the part of any
Acquired Company to comply in all material respects with, any Law, or
(B) may give rise to any obligation on the part of any Acquired Company
to undertake, or to bear all or any portion of the cost of, any
remedial action of any nature; and
(iii) no Acquired Company has received, at any time since
December 31, 1999, any notice or other communication (whether oral or
written) from any Governmental Entity or any other Person regarding (A)
any actual, alleged, possible, or potential violation of, or failure to
comply with, any Law, or (B) any actual, alleged, possible, or
potential obligation on the part of any Acquired Company to undertake,
or to bear all or any portion of the cost of, any remedial action of
any nature.
(b) SCHEDULE 3.12(B) contains a complete and accurate list of
each Permit that is held by any Acquired Company or that otherwise relates to
the business of, or to any of the assets owned or used by, any Acquired Company.
Each of the Permits listed or required to be listed on SCHEDULE 3.12(B) is valid
and in full force and effect.
(c) Except as set forth on SCHEDULE 3.12(C):
(i) each Acquired Company is, and at all times since December
31, 1999 has been, in compliance in all material respects with all of
the terms and requirements of each of the Permits identified or
required to be identified on SCHEDULE 3.12(B).
(ii) no event has occurred since December 31, 1999 or
circumstance exists that may (with or without notice or lapse of time)
(A) constitute or result directly or indirectly in a violation of or a
failure to comply in all material respects with any term or requirement
of any of the Permits listed or required to be listed on SCHEDULE
3.12(B), or (B) result directly or indirectly in the revocation,
withdrawal, suspension, cancellation, or termination of, or any
modification to, any of the Permits listed or required to be listed on
SCHEDULE 3.12(B);
21
(iii) no Acquired Company has received, at any time since
December 31, 1999, any notice or other communication (whether oral or
written) from any Governmental Entity or any other Person regarding (A)
any actual, alleged, possible, or potential violation of or failure to
comply with any term or requirement of any of the Permits listed or
required to be listed on SCHEDULE 3.12(B), or (B) any actual, proposed,
possible, or potential revocation, withdrawal, suspension,
cancellation, termination of, or modification to any of the Permits
listed or required to be listed on SCHEDULE 3.12(B); and
(iv) all applications required to have been filed for the
renewal of the Permits listed or required to be listed on SCHEDULE
3.12(B) have been duly filed on a timely basis with the appropriate
Governmental Entities, and all other filings required to have been made
with respect to such Permits have been duly made on a timely basis with
the appropriate Governmental Entities.
Section 3.13. ACTIONS AND PROCEEDINGS. Except as set forth in
SCHEDULE 3.13, there is no Proceeding pending or, to the Knowledge of the
Sellers or the Acquired Companies, threatened, (i) against or relating to any of
the Acquired Companies or their assets or (ii) that in any manner challenges or
seeks to prevent, enjoin, alter or materially delay any of the transactions
contemplated hereby. None of the Acquired Companies is subject to any
outstanding injunctions, judgments, orders or decrees.
Section 3.14. EMPLOYEE BENEFIT MATTERS. (a) Except as set
forth in SCHEDULE 3.14(A), none of the Acquired Companies or any other Person
that, together with the Company, is treated as a single employer under Section
414(b), (c), (m) or (o) of the Code (each, a "COMMONLY CONTROLLED ENTITY")
maintains or contributes to, has any obligation to contribute to, or has or may
have any Liability (including a Liability arising out of an indemnification,
guarantee, hold harmless or similar agreement) with respect to any plan,
program, arrangement, agreement or commitment which is an employment,
consulting, non-competition or deferred compensation agreement, or an executive
compensation, incentive bonus or other bonus, employee pension, profit-sharing,
savings, retirement, stock option, stock purchase, stock appreciation rights,
severance pay, life, health, disability or accident insurance plan,
corporate-owned or key-man life insurance, or other employee benefit plan,
program, arrangement, agreement or commitment, including any "employee benefit
plan" as defined in Section 3(3) of ERISA (individually a "PLAN," or
collectively, the "PLANS").
(b) None of the Acquired Companies or any Commonly Controlled
Entity has any Liability, whether contingent or absolute, under Title IV or
Section 302 of ERISA or Section 412 or 4971 of the Code in respect of any
employee benefit plan maintained by any of the Acquired Companies, any Commonly
Controlled Entity or any other Person or otherwise.
(c) No event has occurred, and no circumstance exists, in
connection with which any of the Acquired Companies or any Plan, directly or
indirectly, could be subject to any material Liability under ERISA, the Code or
any other Law applicable to any Plan, including Section 406, 409, 502(i) or
502(l) of ERISA, or Part 6 of Title I of
22
ERISA, or Section 4971, 4972, 4975, 4976, 4977 or 4980B of the Code, or under
any agreement, instrument, statute, rule of law or regulation pursuant to or
under which any Acquired Company has agreed to indemnify or is required to
indemnify any Person against Liability incurred under, or for a violation or
failure to satisfy the requirements of, any such agreement, instrument, statute,
rule of law or regulation.
(d) With respect to each Plan: (i) all payments, contributions
and expenses due from any Acquired Company to date have been timely made and all
amounts properly accrued to date or as of the Closing as Liabilities of such
Acquired Company (directly or indirectly) which have not been paid have been and
will be properly recorded on the Company Financial Statements or on the
accounting records of the Acquired Companies as of the Closing (including,
without limitation, any and all payments, contributions and expenses to any and
all employees, officers, directors and consultants of any Acquired Company for
any and all salaries, bonuses, employment taxes, stock appreciation rights,
stock options, warrants or other similar equity instruments and any and all
types of employee benefits or severance for all periods prior to and including
the Closing); (ii) each such Plan which is an "employee benefit pension plan"
(as defined in Section 3(2) of ERISA) and intended to qualify under Section 401
of the Code has received, or has timely requested or taken all action necessary
to receive, a favorable determination letter from the Internal Revenue Service
with respect to such qualification (including with respect to such Plan's
compliance with all applicable amendments to the U.S. federal tax laws) and no
event has occurred or circumstance exists that (without taking into account
possible administrative relief) has or is likely to adversely affect such
qualification; (iii) there are no actions, suits or claims pending (other than
routine claims for benefits) or threatened with respect to such Plan or against
the assets of such Plan and (iv) the Acquired Companies have complied with, and
such Plan conforms in form and operation to, its terms and all applicable Laws
and regulations, including ERISA and the Code, in all material respects.
(e) No Plan is under audit or is the subject of an
investigation by the Internal Revenue Service, the U.S. Department of Labor, the
Pension Benefit Guaranty Corporation or any other federal or state governmental
agency, nor is any such audit or investigation pending or threatened. Sellers
have or have caused the Acquired Companies to provide the Purchaser a copy of
all communications to or from the Internal Revenue Service, U.S. Department of
Labor, Pension Benefit Guaranty Corporation, and any other governmental agency
other than filings of routine forms.
(f) Except as set forth on SCHEDULE 3.14(F), neither the
execution and delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, either alone or in combination with another
event (whether contingent or otherwise) will (i) entitle any current or former
employee, officer, director or consultant of any Acquired Company to any
payment, except as explicitly provided for in this Agreement; (ii) increase the
amount of compensation or benefits due to any such employee, officer, director
or consultant; (iii) accelerate the vesting, funding or time of payment of any
compensation, equity award or other benefit; or (iv) result in any payment or
series of payments to any person of a "parachute payment" within the meaning of
Section 280G of the Code (whether or not such payment is considered to be
23
reasonable compensation for services rendered) or any other payment which is not
deductible for federal income tax purposes under the Code.
(g) The Sellers shall or shall cause the Acquired Companies to
deliver to the Purchaser with respect to each Plan for which the following
exists: (i) a copy of the Form 5500 with respect to each Plan for the two most
recent Plan years; (ii) a copy of the Summary Plan Description, together with
each Summary of Material Modifications, required under ERISA with respect to
such Plan in the past two years, all material employee communications relating
to such Plan, and a true and complete copy of such Plan; (iii) if the Plan is
funded through a trust or any third party funding vehicle (other than an
insurance policy), a copy of the trust or other funding agreement; and (iv) the
most recent determination letter received from the Internal Revenue Service with
respect to each Plan that is intended to be a "qualified plan" under Section 401
of the Code.
(h) With respect to each Plan that is a "welfare plan" (as
defined in Section 3(1) of ERISA), no Acquired Company has any obligations to
provide health, life insurance, or death benefits with respect to current or
former employees, officers, directors or consultants beyond their termination of
employment or service, other than as required under Section 4980B of the Code,
and each such Plan may be amended or terminated at any time without incurring
Liability thereunder. There has been no communication to any employee, officer,
director or consultant of any Acquired Company or any Commonly Controlled Entity
that would reasonably be expected to promise or guarantee any such retiree
health or life insurance or other retiree death benefits on a permanent basis.
(i) With respect to each Plan for which financial statements
are required by ERISA, there has been no material adverse change in the
financial status of such Plan since the date of the most recent such statements
provided to the Purchaser.
(j) None of the Acquired Companies has any announced plan or
legally binding commitments to create any additional Plans or to amend or modify
any existing Plan, other than amendments required by Law.
(k) SCHEDULE 3.14(K) sets forth any and all extensions of
credit, arrangements for the extension of credit or any renewals of extensions
of credit in excess of U.S.$10,000 made by any Acquired Company (either directly
or indirectly), in the form of a personal loan, to any current or former
employee, director, officer, consultant or shareholder of any Acquired Company.
(l) Except as set forth on SCHEDULE 3.14(L), no Acquired
Company maintains any plan, program or arrangement or is a party to any contract
that provides any benefits or provides for payments to any Person in, based on
or measured by the value of, any equity security of, or interest in, any
Acquired Company.
(m) Except as set forth on SCHEDULE 3.14(M), there are no
material liabilities, whether contingent or absolute, of any Acquired Company
relating to workers'
24
compensation benefits that are not fully insured against by a bona-fide
third-party insurance carrier.
(n) With respect to each Plan and with respect to each state
workers' compensation arrangement, that is funded wholly or partially through an
insurance policy or public or private fund, all premiums required to have been
paid to date under such insurance policy or fund have been paid, all premiums
required to be paid under the insurance policy or fund through the Closing will
have been paid on or prior to the Closing and, as of the Closing, there will be
no material Liability of any Acquired Company under any such insurance policy,
fund or ancillary agreement with respect to such insurance policy in the nature
of a retroactive rate adjustment, loss sharing arrangement or other actual or
contingent material Liability arising wholly or partially out of events
occurring prior to the Closing.
(o) With respect to the Company's Affirmative Action Plan
required by the Office of Federal Contract Compliance division of the U.S.
Department of Labor, such plan is, and has been operated, in substantial
compliance with applicable Law and no event has occurred and no circumstance
exists that could cause such plan to fail to be in compliance with such
applicable Law. Sellers have or have caused the Company to provide to Purchaser
a copy of all communications with the U.S. Department of Labor regarding such
plan.
(p) No Acquired Company has any material Liability, whether
absolute or contingent, including any obligation under any Plan or any other
employee benefit plans with respect to any misclassification of a person as an
independent contractor rather than as an employee and no individual has been
treated by any Acquired Company as a "leased employee" (within the meaning of
Section 414(n) of the Code).
Section 3.15. LABOR MATTERS. (a) No Acquired Company is a
party to any collective bargaining agreements, and there are no labor unions or
other organizations representing, purporting to represent or attempting to
represent, any employee of an Acquired Company. None of the Sellers or any
Acquired Company has any Knowledge of any strikes, slowdowns, work stoppages,
lockouts, or threats thereof, by or with respect to any employees of any
Acquired Company.
(b) Except as set forth on SCHEDULE 3.15(B), (i) no Acquired
Company has violated any Law regarding the terms and conditions of employment of
employees, former employees or prospective employees or other labor related
matters, including Laws relating to discrimination, fair labor standards and
occupational health and safety, wrongful discharge or violation of the personal
rights of employees, former employees or prospective employees and (ii) there
are no grievances, unfair labor practices or employment discrimination charges,
complaints or claims against any of the Acquired Companies pending before any
Governmental Entity or threatened.
Section 3.16. INTELLECTUAL PROPERTY. SCHEDULE 3.16 contains an
accurate and complete list of all Intellectual Property used by any Acquired
Company in its business as currently conducted. Except as disclosed in SCHEDULE
3.16, the Company
25
either owns free and clear of all Liens or holds legally enforceable rights to
use all Intellectual Property listed on SCHEDULE 3.16. The Intellectual Property
owned by any Acquired Company or held under license by any Acquired Company is
all the Intellectual Property used by any Acquired Company. All Acquired Company
Intellectual Property is and will remain in full force and effect for at least
two (2) years from the date of the Closing, and all Acquired Company
Intellectual Property used pursuant to a license from a third party (other than
commercially available software licenses having annual fee obligations of less
than U.S.$10,000) is identified on SCHEDULE 3.16. The conduct of any Acquired
Company's business as currently conducted, including the provision of goods and
services, does not, to the Knowledge of the Sellers or the Acquired Companies,
infringe, violate or conflict with any Intellectual Property of any other
Person, and the execution of this Agreement and consummation of the transaction
contemplated hereunder will not impair any Acquired Company's rights in any
Acquired Company Intellectual Property. No Acquired Company has received in the
last two (2) years any communication alleging that any Acquired Company has
infringed, misused, violated, or that by conducting such Acquired Company's
business would infringe, misuse, or violate any Intellectual Property of any
other Person, and to the Knowledge of the Sellers or the Acquired Companies,
there is no reasonable basis for any such claim. To the Knowledge of the Sellers
or the Acquired Companies, the Acquired Company Intellectual Property owned by
the Acquired Companies is not being infringed upon, misappropriated or breached
by any other Person.
Section 3.17. TAXES. (a) Except as set forth on SCHEDULE
3.17(A), each Acquired Company (i) has prepared in good faith and duly and
timely filed (taking into account any extension of time within which to file)
all Tax Returns required to be filed by any of them and all such filed Tax
Returns are complete and accurate in all material respects; (ii) has paid in
full all Taxes due, whether or not assessed, or set up reserves in accordance
with GAAP in respect of all Taxes for all periods through the Closing; (iii) has
paid all other charges, claims and assessments received to date in respect of
Taxes other than those being contested in good faith for which provision has
been made in accordance with GAAP on the most recent balance sheet included in
the Company Financial Statements; (iv) has withheld from amounts owing to any
employee, creditor or other Person all Taxes required by Law to be withheld and
has paid over to the proper governmental authority in a timely manner all such
withheld amounts to the extent due and payable; (v) has neither extended nor
waived any applicable statute of limitations with respect to Taxes and has not
otherwise agreed to any extension of time with respect to a Tax assessment or
deficiency; (vi) has never been a member of any consolidated group for income
tax purposes other than the consolidated group of which the Company is the
common parent; (vii) is not a party to any tax sharing agreement or arrangement
other than with another Acquired Company; (viii) has not constituted either a
"distributing corporation" or a "controlled corporation" in a distribution of
stock qualifying for tax-free treatment under Section 355 of the Code (A) in the
two years prior to the date of this Agreement or (B) in a distribution which
could otherwise constitute part of a "plan" or "series of related transactions"
(within the meaning of Section 355(e) of the Code) in conjunction with the
transactions contemplated by this Agreement; (ix) has never participated in a
"reportable transaction" within the meaning of U.S. Treasury Regulation Section
1.6011-4T(b), or any successor or predecessor thereto; and (x) is not a "United
26
States real property holding corporation" within the meaning of Section
897(c)(2) of the Code and was not such a corporation on any "determination date"
that occurred in the five-year period preceding the Closing.
(b) Except as set forth on SCHEDULE 3.17(B), there are no
pending or threatened audits, examinations, investigations, litigation, or other
proceedings in respect of Taxes of the Acquired Companies and during the past
three years the Acquired Companies have not received any notice of the
commencement of any audit, examination, deficiency or refund litigation, with
respect to any Taxes.
(c) Except as set forth on SCHEDULE 3.17(C), there are no
unresolved questions or claims concerning the Acquired Companies' Tax Liability.
(d) Except as set forth on SCHEDULE 3.17(D), no Liens for
Taxes exist with respect to any of the assets or properties of the Acquired
Companies, except for statutory Liens for Taxes not yet due or payable or that
are being contested in good faith.
(e) Except as set forth in SCHEDULE 3.17(E), the Acquired
Companies have not executed any closing agreement pursuant to Section 7121 of
the Code or any predecessor provision thereof, or any similar provision of state
or local law.
(f) Except as set forth in SCHEDULE 3.17(F), the Acquired
Companies have disclosed on their federal income Tax Returns all positions taken
therein that could give rise to a substantial understatement of federal income
tax within the meaning of Section 6662 of the Code.
(g) Except as set forth in SCHEDULE 3.17(G), the Acquired
Companies have not filed a consent pursuant to Section 341(f) of the Code or
agreed to have Section 341(f)(2) of the Code apply to any disposition of a
subsection (f) asset (as such term is defined in Section 341(f)(4) of the Code).
(h) Except as set forth in SCHEDULE 3.17(H), the Acquired
Companies have not agreed and are not required to make any adjustments pursuant
to Section 481(a) of the Code or any similar provision of state or local law by
reason of a change in accounting method initiated by it or any other relevant
party.
(i) The Acquired Companies have made available to Purchaser
true, complete and correct copies of income Tax Returns, examination reports,
and statements for deficiencies assessed against or agreed to by the Acquired
Companies filed or received since December 31, 1998.
Section 3.18. ENVIRONMENTAL MATTERS. (a) Except as set forth
on SCHEDULE 3.18(A), the facilities and operations of each of the Acquired
Companies are and have been in compliance with all applicable Environmental Laws
and Permits issued under such Environmental Laws, and to the Knowledge of the
Sellers and the Acquired Companies, there are no facts, circumstances, or
conditions which would prevent the operations and facilities of each of the
Acquired Companies from continued compliance
27
in the future with all applicable Environmental Laws and Permits issued under
such Environmental Laws.
(b) Except as set forth on SCHEDULE 3.18(B), each of the
Acquired Companies has obtained and is in compliance with the conditions of all
Permits required under any applicable Environmental Law for the current
operations of the Acquired Companies and has filed all applications and related
documents to obtain the issuance, extension, or renewal of all Permits required
under applicable Environmental Laws for the continued operations of their
respective businesses. SCHEDULE 3.18(B) sets out a complete list of all current
Permits issued to the Acquired Companies under any Environmental Law, including
identification of the location and the operations covered by each Permit and the
expiration date for each Permit. A true, complete and correct copy of each
Permit included or required to be included in SCHEDULE 3.18(B) has been provided
to the Purchaser prior to the date hereof.
(c) Except as set out on SCHEDULE 3.18(C), none of the
Acquired Companies has received any complaints or administrative or judicial
orders under any Environmental Law, and to the Knowledge of the Sellers or the
Acquired Companies, and there is no notice, investigation, action, suit, or
Proceeding pending, or threatened, (i) alleging or asserting any violation of
any Environmental Law or any Permit issued under any Environmental Law, or (ii)
seeking to impose, or alleging any potential responsibility for, any
Environmental Liabilities and Costs.
(d) Except as set forth on SCHEDULE 3.18(D), to the Knowledge
of the Sellers or the Acquired Companies, there are no circumstances and there
has been no Release, whether on-site or off-site, that (i) have subjected, or
are reasonably likely to subject, any of the Acquired Companies to a
notification or reporting requirement under any Environmental Law or (ii) have
resulted or are reasonably likely to result in the incurrence of any
Environmental Liabilities and Costs by the Sellers or by any Acquired Company.
(e) Except as set forth on SCHEDULE 3.18(E), there has been no
disposal of Hazardous Substances by any of the Acquired Companies, or to the
Knowledge of the Sellers or the Acquired Companies, by any other Person at, in,
on or under any of the properties currently or previously owned or operated by
any of the Acquired Companies, and there has been no storage or use of Hazardous
Substances by any of the Acquired Companies, or to the Knowledge of the Sellers
or the Acquired Companies, by any other Person, at these properties except for
such storage and use as is or was necessary for routine and ongoing operations
of the Acquired Companies.
(f) Except as set forth on SCHEDULE 3.18(F), none of the
operations of the Acquired Companies presently require or previously required
interim status or a Permit under any Environmental Law for the treatment,
storage or disposal of hazardous waste, as defined under the Federal Resource
Conservation and Recovery Act or any implementing state provisions.
28
(g) To the Knowledge of the Sellers or the Acquired Companies,
any off-site facilities currently or previously engaged in the storage,
treatment, recycling, or disposal of Hazardous Substances generated at or
transported from the operations of the Acquired Companies: (i) maintain all
Permits required under applicable Environmental Laws and operate in compliance
with all applicable Environmental Laws and with such Permits; (ii) have not been
the subject of any Proceeding under any Environmental Law; and (iii) have not
been placed or proposed to be placed on the National Priorities List, the
Comprehensive Environmental Response Compensation Liability Information System,
or their state equivalents. Except as set forth on SCHEDULE 3.18(G)(I), none of
the Acquired Companies has been notified that it has been identified as a
potentially responsible party under a federal or state superfund program
respecting any off-site storage, treatment, recycling, or disposal facilities.
SCHEDULE 3.18(G)(II) sets out a complete list of the facilities and locations to
which Hazardous Substances from operations of the Acquired Companies have been
sent since January 1, 2001.
(h) No asbestos, asbestos-containing materials, or
polychlorinated biphenyls are present at any of the assets or the properties
owned, operated, or managed by any of the Acquired Companies. Except as set out
on SCHEDULE 3.18(H), there are no underground storage tanks (USTs) present at
any of the assets or properties owned, operated or managed by any of Acquired
Companies. SCHEDULE 3.18(H) sets out a complete list of any USTs that are
present at any of the assets or properties owned, operated or managed by any of
the Acquired Companies and also, for each such UST, SCHEDULE 3.18(H) identifies
the location of the UST and, to the Knowledge of the Sellers and the Acquired
Companies, the size, contents and condition of the UST.
(i) Except as set forth on SCHEDULE 3.18(I), to the Knowledge
of the Sellers or the Acquired Companies, no Lien arising under or pursuant to
any applicable Environmental Law has been imposed on any of the assets or
properties owned, operated, or managed by any of the Acquired Companies, and to
the Knowledge of Sellers or the Acquired Companies, no action to impose such a
Lien is pending or, to the Knowledge of Sellers or the Acquired Companies,
threatened.
(j) The Purchaser has been provided with copies of all
assessments, audits, investigations, and sampling or similar reports known to
any of the Sellers or the Acquired Companies or in the files of Seller or the
Acquired Companies relating to the Environment, Hazardous Substances,
Environmental Laws or any Release, to the extent applicable to the current or
former operations of the Acquired Companies.
Section 3.19. REAL PROPERTY. (a) SCHEDULE 3.19(A) sets forth a
true and complete list of (i) all real property and interests in real property
which are owned, directly or indirectly, by each Acquired Company (together, the
"REAL PROPERTY"), identifying the address of each Real Property, (ii) all real
property and interests in real property which are leased, directly or
indirectly, by or to each Acquired Company or in respect of which each Acquired
Company has an option to enter a lease (individually, a "REAL PROPERTY LEASE"),
identifying, for each Real Property Lease, the parties thereto and the address
of the property subject thereto, and (iii) all Liens relating to or affecting
any parcel of Real Property referred to in clause (i). The Sellers have
29
delivered to the Purchaser a true, correct and complete copy of each Real
Property Lease, including all amendments, modifications, supplements, side
letters and consents affecting the obligations of any party thereunder.
(b) The Acquired Companies have good and marketable title to,
and actual and exclusive possession of, the Real Property and the leasehold
estates in all Real Property Leases (any real property of which each Acquired
Company is a fee owner or which each Acquired Company has a leasehold interest
in and is specified in a Real Property Lease, the "ACQUIRED COMPANY PROPERTY")
in each case free and clear of all Liens of any nature whatsoever except
Permitted Liens.
(c) Except as disclosed on SCHEDULE 3.19(C), no Acquired
Company Property is subject to any lease, sublease, license, concession or other
agreement (written or oral) granting to any other Person any right to the use,
occupancy or enjoyment of any Acquired Company Property or any part thereof.
(d) Each Real Property Lease is in full force and effect and
is valid and enforceable in accordance with its terms, and there is no default
under any Real Property Lease either by each Acquired Company or, to the
Knowledge of the Sellers or the Acquired Companies, by any other party thereto,
and no event has occurred that, with the lapse of time or the giving of notice
or both, would constitute a default thereunder. Each Real Property Lease covers
the entire estate it purports to cover and, upon the consummation of the
transactions contemplated hereby (including delivery of the landlord consents
listed in SCHEDULE 3.19(D)), will entitle the Company, or if the Company is the
lessor, its lessee, to the exclusive use, occupancy and possession of the real
property specified in such Real Property Lease and for the purposes such
property is now being used by each lessee. No previous or current party to any
such Real Property Lease has given notice of or made a claim with respect to any
breach or default thereunder.
(e) To the Knowledge of the Sellers or the Acquired Companies,
(i) there does not exist any pending imposition of any assessments for public
improvements with respect to any Acquired Company Property, and (ii) no such
improvements have been constructed or planned that would be paid for by means of
assessments upon any Acquired Company Property.
(f) To the Knowledge of the Sellers or the Acquired Companies,
the buildings and improvements are located within the boundary lines of the
described parcels of land, and no improvements constituting a part of any
Acquired Company Property encroach on real property not leased or owned by the
Acquired Companies, to the extent that removal of such encroachment would
materially impair the manner and extent of the current use, occupancy and
operation of such improvements or cost in excess of U.S.$5,000 in the aggregate.
(g) To the Knowledge of the Sellers or Acquired Companies, no
part of any Acquired Company Property is subject to any building or use
restriction that would restrict or prevent the present use and operation of such
Acquired Company
30
Property, and, to the Knowledge of the Sellers or the Acquired Companies, each
Acquired Company Property is properly and duly zoned for its current use by each
Acquired Company and the continuation of such use by the Purchaser following the
Closing, and such current use is in all respects a conforming use by each
Acquired Company. No Governmental Entity having jurisdiction over any Acquired
Company Property has issued or, to the Knowledge of the Sellers or the Acquired
Companies, threatened to issue any notice or order that may materially adversely
affects the use or operation of such Acquired Company Property, or require, as
of the Closing or a specified date in the future, any material repairs or
alterations or additions or improvements thereto, or the payment or deduction of
any money, fee, exaction or property.
(h) To the Knowledge of the Sellers or the Acquired Companies,
the buildings, plants, structures and equipment of the Acquired Companies are
structurally sound, are in good operating condition and repair, and are adequate
for the uses to which they are being put, and none of such buildings, plants,
structures or equipment is in need of maintenance or repairs except for
ordinary, routine maintenance and repairs that are not material in nature or
cost. To the Knowledge of the Sellers or the Acquired Companies, there are no
physical, mechanical or structural defects in or concerning the buildings and
other improvements constituting part of the Real Property that are occupied,
operated or owned by the Acquired Companies materially and adversely affecting
their current use, occupancy, or value, which defects would reasonably be
expected to adversely affect the current use, occupancy, or value of the Real
Property. The building, plans, structure, and equipment of the Acquired
Companies are sufficient for the continued conduct of the Acquired Companies'
businesses after the Closing in substantially the same manner as conducted prior
to the Closing.
(i) Neither any Acquired Company nor any of the Sellers has
received any written notice from any insurance company that has issued a policy
with respect to any Acquired Company Property requesting performance of any
structural or other repairs or alterations to such Acquired Company Property.
During the period that the Acquired Companies have owned any Real Property, the
Acquired Companies have not granted or suffered to exist any encroachment,
easement, encumbrance or other adverse interest in, to or upon the Real Property
except for matters identified in the title insurance policy issued to the
Company in connection with the Closing.
(j) There are no outstanding options or rights of first
refusal to purchase the Real Property, any portion thereof, or any interest
therein.
(k) Except for common areas of office buildings, no Acquired
Company Property is dependent for its access, operation or utility on any land,
building or other improvement not part of each Acquired Company Property or is
dependent for ingress or egress on third-party interests. All utility systems
required in connection with use, occupancy and operation of any Acquired Company
Property are supplied directly to such Acquired Company Property by facilities
of public utilities, are sufficient for their present purposes, are fully
operational and in working order, and are benefited by customary utility
easements providing for the continued use and maintenance of such
31
systems. The Acquired Companies have paid in full for all facilities in
connection with such utilities so that there are no outstanding assessments
therefor.
Section 3.20. TANGIBLE PERSONAL PROPERTY. (a) SCHEDULE 3.20(A)
hereto sets forth (i) all leases of personal property (the "PERSONAL PROPERTY
LEASES") relating to personal property used in or necessary to the operation of
the business of the Acquired Companies ("TANGIBLE PERSONAL PROPERTY") requiring
lease payments equal to or exceeding U.S.$20,000 per annum and (ii) any Liens
relating thereto. The Sellers have delivered to the Purchaser a true, correct
and complete copy of each Personal Property Lease, including all amendments,
modifications, supplements, side letters, or consents affecting the obligations
of any party thereunder.
(b) Except as set forth on SCHEDULE 3.20(B) hereto:
(i) Each Personal Property Lease is in full force and effect
and is valid and enforceable in accordance with its terms, and there is
no default under any Personal Property Lease either by any Acquired
Company or, to the Knowledge of the Sellers or the Acquired Companies,
by any other party thereto, and no event has occurred that, with the
lapse of time or the giving of notice or both, would constitute a
default thereunder.
(ii) No previous or current party to any Personal Property
Lease has given notice of or made a claim with respect to any breach or
default thereunder.
(c) Except as set forth on SCHEDULE 3.20(C) hereto, each
Acquired Company has good and marketable title to each item of owned Tangible
Personal Property, free and clear of any and all Liens, other than Permitted
Liens. Each such item that, individually or in the aggregate, is material to the
operation of the business of the Acquired Companies as it is currently conducted
is in good condition and in a state of good maintenance and repair, with the
exception of ordinary wear and tear, and is suitable for the purposes in the
operation of such business.
(d) Each material item of Tangible Personal Property used by
the Acquired Companies under any Personal Property Lease is in good condition
and in a state of good maintenance and repair, with the exception of ordinary
wear and tear, and is suitable for the purposes used, and upon the return of
each such item to its owner in its current condition at the end of the relevant
lease term or as otherwise contemplated by the applicable agreement with the
owner thereof and upon compliance by each Acquired Company with the other terms
of such Personal Property Lease, the obligations of each Acquired Company to
such owner will be discharged.
Section 3.21. MATERIAL CONTRACTS. Set forth in SCHEDULE 3.21
is a true, correct and complete list of all Material Contracts and there have
been made available to the Purchaser true, correct and complete copies of all
written Material Contracts, including all amendments, modifications,
supplements, side letters and consents affecting the obligations of any party
thereunder. Other than Material Contracts that have terminated or expired in
accordance with their terms, each of the Material Contracts
32
identified on SCHEDULE 3.21 is valid, binding, and enforceable in accordance
with its terms and is in full force and effect, and such Material Contracts will
continue to be valid, binding, and enforceable in accordance with their
respective terms and in full force and effect immediately following the
consummation of the transactions contemplated by this Agreement. Except as
described in SCHEDULE 3.21, none of the Acquired Companies is, and none of the
Sellers or the Acquired Companies has received any notice or has any Knowledge
that any other party is, in default in any material respect under any Material
Contract, and, to the Knowledge of the Sellers or the Acquired Companies, there
has not occurred any event that with the lapse of time or the giving of notice
or both would constitute such a default. No party to any of the Material
Contracts has made any claims against, or sought indemnification from, any of
the Acquired Companies as to any matter arising under or with respect to any
Material Contract, and none of the Acquired Companies nor any of their
respective directors or officers has been advised of any alleged basis for any
such claims.
Section 3.22. RELATED PARTY TRANSACTIONS. Except as set forth
on SCHEDULE 3.22, no shareholder, director, officer, partner, trustee, employee,
Affiliate or "associate" (as such term is used in the Securities Exchange Act of
1934) of any of the Sellers or the Acquired Companies (i) has outstanding, or
had outstanding as of December 31, 2001, any Debt or other similar obligations
to, any of the Acquired Companies; (ii) owns any direct or indirect interest of
any kind in, or is a director, officer, employee, partner, Affiliate or
associate of, or consultant or lender to, or borrower from, or has the right to
participate in the management, operations or profits of, any Person which is (x)
a competitor, supplier, customer, distributor, lessor, tenant, creditor or
debtor of any of the Acquired Companies, (y) engaged in a business related to
the business of Acquired Companies or (z) participating in any transaction to
which any of the Acquired Companies is a party; or (iii) otherwise is a party to
any Contract or transaction with any of the Acquired Companies.
Section 3.23. INSURANCE. SCHEDULE 3.23 lists each insurance
policy to which any of the Acquired Companies has been a party, a named insured,
or otherwise the beneficiary of coverage at any time with respect to claims that
have occurred within the past one year. All assets and risks of the Acquired
Companies are covered by valid and currently effective insurance policies in
such types and amounts as are consistent with customary practices and standards
of companies engaged in business and operations similar to those of the Acquired
Companies.
Section 3.24. BUSINESS RELATIONSHIPS. None of the Sellers or
any of the Acquired Companies has any Knowledge of, and none of the Sellers or
any of the Acquired Companies has received any notice of, pending or threatened
losses of any customers of any of the Acquired Companies or any termination or
non-renewal of any Material Contracts with such customers. SCHEDULE 3.24 lists
the 20 largest customers of the Acquired Companies ranked by gross sales for the
ten-month period ending October 31, 2002.
Section 3.25. BROKERS. Neither the Sellers nor any of the
Acquired Companies has employed any financial advisor or finder or incurred any
Liability for any
33
financial advisory or finders' fees in connection with this Agreement or the
Escrow Agreement or the transactions contemplated hereby or thereby, except for
Growth Capital Partners, L.P., whose fees will be the sole responsibility of
Sellers, except for any amount paid by the Company on or prior to the Closing of
which Purchaser is given prior notice and which is considered in the calculation
of the Sellers' Closing Cash Balance in accordance with SCHEDULE 2.3(B).
Section 3.26. BANK ACCOUNTS. SCHEDULE 3.26 is a complete list
of each bank in which any of the Acquired Companies has an account or safe
deposit box and the number of each such account or box.
Section 3.27. COMPENSATION. SCHEDULE 3.27 is a complete list
setting forth the names, current base salary and the maximum potential bonus
under any incentive plan of all individuals employed by the Acquired Companies
as of the Closing, whose aggregate base salary, bonus and other cash perquisites
is in excess of U.S.$50,000 per annum. All of the bonuses and other cash
perquisites payable or intended or agreed to be paid by any of the Acquired
Companies for periods prior to the date hereof or in connection with the
transactions contemplated by this Agreement and all of the payments in
connection with the SAR Plan pursuant to Section 5.2(j) have been appropriately
recorded on the Closing Statement.
Section 3.28. SELLERS' REPRESENTATIVE. The Sellers'
Representative is the duly appointed attorney-in-fact for each of the other
Sellers and has full power and authority to act for and bind such Seller in all
respects in connection with this Agreement and the Escrow Agreement.
Section 3.29. DISCLOSURE. No representation or warranty by the
Sellers in this Agreement, and no exhibit, document, statement, certificate, or
schedule furnished or to be furnished to the Purchaser pursuant hereto, or in
connection with the transactions contemplated hereby, contains or will contain
any untrue statement of a material fact, or omits or will omit to state a
material fact necessary to make the statements or facts contained herein or
therein not misleading or necessary to provide the Purchaser with adequate and
complete information as to the Acquired Companies or the businesses, assets and
Liabilities of the Acquired Companies.
Section 3.30. LICENTIA AGREEMENT. Schedule 3.30 is a true and
complete list of all property that is leased pursuant to any Contract subject to
the Equipment Licentia Agreement by and between Fresh America Corp. and Fresh
America Arizona, Inc. dated as of April 20, 2001.
Section 3.31. BALANCE SHEET DATE. Since the Balance Sheet
Date, and except as appropriated reflected in the Seller's Closing Statement,
none of the Acquired Companies has incurred any Liability, made any payment or
distribution, incurred any expense or entered into any Contract other than in
the ordinary course of business consistent with past practice for such period.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Purchaser hereby represents and warrants to the Sellers that:
Section 4.1. ORGANIZATION AND QUALIFICATION. The Purchaser is
a duly organized and validly existing corporation in good standing under the
laws of its jurisdiction of incorporation, with all corporate power and
authority to own its properties and conduct its business as currently conducted.
Section 4.2. AUTHORITY RELATIVE TO THIS AGREEMENT. The
Purchaser has all requisite corporate power and authority to execute and deliver
this Agreement and the Escrow Agreement and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Escrow Agreement and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary
corporate action on the part of the Purchaser. This Agreement and the Escrow
Agreement have been duly and validly executed and delivered by the Purchaser
and, assuming this Agreement and the Escrow Agreement constitute the legal,
valid and binding obligation of the Sellers, this Agreement and the Escrow
Agreement constitute a legal, valid and binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms.
Section 4.3. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a)
Neither the execution and delivery of this Agreement and the Escrow Agreement
nor the performance by the Purchaser of its obligations hereunder and
thereunder, nor the consummation of the transactions contemplated hereby and
thereby, will: (i) conflict with the certificate of incorporation or bylaws of
the Purchaser; (ii) violate any Law applicable to the Purchaser; or (iii)
violate, breach, be in conflict with or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, any
Contract or any Permit to which the Purchaser is a party, except in each case to
the extent such matter would not materially impair or delay, or reasonably could
be expected to materially impair or delay, the ability of the Purchaser to
consummate the transactions contemplated by this Agreement and the Escrow
Agreement or to perform its obligations hereunder or thereunder.
(b) Except for the pre-merger notification requirements of the
HSR Act, no consent, approval or authorization of, permit from, or declaration,
filing or registration with, any Governmental Entity, or any other Person or
entity is required to be made or obtained by the Purchaser in connection with
the execution, delivery and performance of this Agreement and the Escrow
Agreement and the consummation of the transactions contemplated hereby and
thereby.
Section 4.4. DISCLOSURE. No representation or warranty by the
Purchaser in this Agreement, and no exhibit, document, statement, certificate,
or schedule furnished or to be furnished to the Sellers pursuant hereto, or in
connection with the transactions contemplated hereby, contains or will contain
any untrue statement of a material fact, or
35
omits or will omit to state a material fact necessary to make the statements or
facts contained herein or therein not misleading or necessary to provide the
Sellers with adequate and complete information as to the Purchaser.
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
Section 5.1. CONDITIONS TO OBLIGATIONS OF THE SELLERS. The
obligations of the Sellers to consummate the sale of the Shares shall be subject
to the satisfaction at or prior to the Closing of each of the following
conditions (unless satisfaction of any such condition is expressly waived in a
writing delivered to Purchaser):
(a) The Purchaser shall have performed or complied with in all
material respects its agreements and covenants contained in this Agreement
required to be performed or complied with at or prior to the Closing;
(b) The representations and warranties of the Purchaser
contained in this Agreement qualified as to materiality shall be true and
correct in all respects, and those not so qualified shall be true and correct in
all material respects, as of the date of this Agreement (except in the case of
any representation or warranty that by its terms is made solely as of a specific
date, which need be accurate only as of such date);
(c) Any waiting period applicable to the sale and purchase of
the Shares under the HSR Act or any other applicable antitrust Law shall have
terminated or expired;
(d) No Law (whether temporary, preliminary or permanent) shall
have been enacted, entered, promulgated or enforced which prohibits, restrains,
enjoins or restricts the consummation of the sale and purchase of the Shares or
any of the other transactions contemplated by this Agreement;
(e) The Escrow Agent and the Purchaser shall have executed and
delivered to the Sellers the Escrow Agreement; and
(f) The Purchaser shall have tendered delivery to the Sellers
and the Escrow Agent the amounts called for by Section 2.5.
Section 5.2. CONDITIONS TO OBLIGATIONS OF THE PURCHASER. The
obligations of the Purchaser to consummate the sale of the Shares shall be
subject to the satisfaction at or prior to the Closing of each of the following
conditions (unless satisfaction of any such condition is expressly waived in a
writing delivered to the Sellers' Representative):
(a) The Sellers shall have performed or complied with in all
material respects their agreements and covenants contained in this Agreement
required to be performed or complied with at or prior to the Closing;
36
(b) The representations and warranties of the Sellers
contained in this Agreement qualified as to materiality shall be true and
correct in all respects, and those not so qualified shall be true and correct in
all material respects, in each case as of the date of this Agreement (except in
the case of any representation or warranty that by its terms is made solely as
of a specific date, which need be accurate only as of such date);
(c) Any waiting period applicable to the sale and purchase of
the Shares under the HSR Act or any other applicable antitrust Law shall have
terminated or expired;
(d) No Law (whether temporary, preliminary or permanent) shall
have been enacted, entered, promulgated or enforced which (i) prohibits,
restrains, enjoins or restricts the consummation of the sale and purchase of the
Shares or any of the other transactions contemplated by this Agreement, (ii)
compels Purchaser or any of its Affiliates or any of the Acquired Companies to
dispose of or hold separate all or a portion of its respective business or
assets, or (iii) imposes any financial burden on Purchaser or any of its
Affiliates or any of the Acquired Companies or any limitation on the ability of
Purchaser or its Affiliates to hold or operate the businesses of the Acquired
Companies;
(e) No Proceeding shall be threatened or pending which seeks
any of the results described in Section 5.2(d) above or to obtain damages
arising from, (A) the transactions contemplated by this Agreement or (B) the
ownership by Purchaser and its Affiliates of any of the Shares;
(f) Each consent, approval or waiver listed on SCHEDULE
3.2(A)(III), SCHEDULE 3.2(A)(IV) and SCHEDULE 3.19(d) shall have been obtained
on terms satisfactory to the Purchaser;
(g) Sellers will furnish customary affidavits and other
customary documentation requested by Purchaser's title insurance company in
connection with the Closing;
(h) The Purchaser shall have received the Closing Statement
prepared in accordance with Section 2.3(a);
(i) The Purchaser shall have received written evidence of the
performance of the transactions contemplated by Section 3.11 in accordance with
such Section and any amounts paid in connection therewith, in each case to the
satisfaction of the Purchaser;
(j) The Sellers shall have, or shall cause the Company to
have, terminated the Standard Fruit & Vegetable Co., Inc. 1998 Stock
Appreciation Rights Plan (the "SAR PLAN"), and the Purchaser shall have received
written evidence satisfactory to it of such termination, any amount paid in
connection therewith and that no rights or obligations remain outstanding
thereunder;
(k) The Escrow Agent and the Sellers shall have executed and
delivered to the Purchaser the Escrow Agreement;
37
(l) Each of Xxxxx Xxxxxxx, Xxxxxx Xxxxx, XX Xxxxxxx and Xxxxx
Xxxxxxxxx shall have executed an agreement substantially in the form of the
Nondisclosure and Nonsolicitation Agreement attached hereto as EXHIBIT B;
(m) Each of Xxxxxx Xxxxx, Xxxxx Xxxxxxx, Xxxxxxx Xxxxxxx, Xxxx
Xxxxxxx, Xxxxx Xxxxxxx, Xxxx Xxxxxxxx, Xxxx Xxxxxxx and Xxxxxx Xxxxxx-Xxxx shall
have executed an agreement substantially in the form of the Nondisclosure and
Nonsolicitation Agreement attached hereto as EXHIBIT C;
(n) Any and all extensions of credit, arrangements for the
extension of credit or renewals of extensions of credit made by the Company or
any Subsidiary (either directly or indirectly), in the form of a personal loan,
to any current or former employee, director, officer, consultant or shareholder
of the Company or any Subsidiary shall have been paid in full, satisfied or
otherwise terminated prior to or as of Closing;
(o) All members of the Board of Directors and all officers of
the Company shall resign from their respective positions as of the Closing;
(p) The directors, officers and managers of the Acquired
Companies set forth on SCHEDULE 5.2(O) shall resign from their respective
positions as of the Closing;
(q) The Purchaser shall have received a legal opinion of
Xxxxxx, Lidji and Werbner as counsel to the Sellers signed as of the Closing in
the form attached hereto as EXHIBIT D;
(r) The Purchaser shall have received a certificate for each
Acquired Company (other than MR Cuts, LP) executed by an officer of such
Acquired Company as of the date hereof in the form attached hereto as EXHIBIT E;
and
(s) The Sellers shall have delivered to the Purchaser the
certificates for the Shares as called for by Section 2.4.
ARTICLE VI
TERMINATION
Section 6.1. TERMINATION. Unless otherwise agreed by the
Parties, this Agreement shall terminate automatically if the Closing fails to
occur for any reason as of the date hereof.
Section 6.2. EFFECT OF TERMINATION. If this Agreement is
terminated in accordance with Section 6.1, all further obligations of the
parties will terminate, except that the obligations in Articles VIII and X shall
survive such termination, including but not limited to any rights or remedies of
the parties arising out of, relating to or based upon any failure to perform, or
other breach of, any of the covenants or agreements of any of the parties
contained in or incorporated into this Agreement or in the Schedules hereto. In
addition, the Confidentiality Agreement and all claims arising thereunder shall
survive any termination of this Agreement.
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ARTICLE VII
TAX MATTERS
Section 7.1. TAX INDEMNIFICATION. The Sellers shall jointly
and severally indemnify and hold the Purchaser, and each of the Acquired
Companies (each a "TAX INDEMNITEE") harmless from any and all Taxes imposed on
any of the Acquired Companies in respect of its income, business, property or
operations or for which the any of the Acquired Companies may otherwise be
liable to the extent not reserved for as of the Closing and disclosed in the
Company Financial Statements, (i) for any period ending prior to or on the
Closing, including any Short Period or Interim Period (each as defined below),
(ii) arising out of a breach of the representations contained in Section 3.14 or
Section 3.17 hereof, or (iii) for any costs or expenses with respect to Taxes
indemnified hereunder. All amounts paid pursuant to this Article VII shall be
treated as an adjustment to the purchase price of the Shares.
Section 7.2. APPORTIONMENT OF TAXES. (a) In order
appropriately to apportion any Taxes relating to a period that includes the
Closing, the parties hereto will, to the extent permitted by applicable Law and
unless otherwise agreed by all of the parties hereto, elect with the relevant
taxing authority to treat for all purposes the Closing as the last day of a
taxable period of each of the Acquired Companies (a "SHORT PERIOD"), and such
period shall be treated as a Short Period and a period ending prior to or on the
Closing Date for purposes of this Agreement.
(b) In any case where applicable Law does not permit an
Acquired Company to treat the Closing as the last day of a Short Period, then
for purposes of this Agreement, the portion of each Tax that is attributable to
the operations of whichever among the Acquired Companies cannot make the
election required in the preceding paragraph, for the period which would have
qualified as a Short Period if such election had been permitted by applicable
Law (an "INTERIM PERIOD") shall be (i) in the case of a Tax that is not based on
net income, the total amount of such Tax for the period in question multiplied
by a fraction, the numerator of which is the number of days in the Interim
Period, and the denominator of which is the total number of days in such period,
and (ii) in the case of a Tax that is based on net income, the Tax that would be
due with respect to the Interim Period if such Interim Period were a Short
Period determined based upon an interim closing of the books.
Section 7.3. CALCULATION OF INDEMNITY PAYMENTS. The Sellers
agree that, with respect to any payment or indemnity to or for the benefit of a
Tax Indemnitee under this Article VII, the Sellers' indemnity obligations shall
include the payment of such amount, if any, as shall be necessary to hold any
Tax Indemnitee harmless on an after-Tax basis from all Taxes required to be paid
by such Tax Indemnitee with respect to such payment or indemnity (including any
payments made pursuant to this Section 7.3) under any Law.
Section 7.4. TRANSFER TAX AND OTHER CLOSING EXPENSES. The
Sellers shall pay directly, or reimburse the Purchaser promptly upon demand and
delivery of
39
proof of payment, all excise, sales, transfer, documentary, filing, recordation
and other similar taxes, levies, fees and charges, if any (including all real
estate transfer taxes and conveyance and recording fees, if any), that may be
imposed upon, or payable or collectible or incurred in connection with, this
Agreement and the transactions contemplated hereby.
Section 7.5. TAX RETURNS. (a) (i) Sellers shall be responsible
for the timely filing (taking into account any extensions received from the
relevant tax authorities) of all Tax Returns required by Law to be filed by any
Acquired Company on or prior to the Closing, (ii) such Tax Returns shall be
true, correct and complete in all respects and accurately set forth all items to
the extent required to be reflected or included in such Tax Returns by Law, and
(iii) all Taxes indicated as due and payable on such Tax Returns shall be paid
or will be paid by Sellers as and when required by Law, except for such Taxes
that are the responsibility of the Purchaser pursuant to this Article VII which
Purchaser shall pay (as and when required by Law). Subject to clause (ii) above,
such Tax Returns shall be prepared on a basis consistent with those prepared for
prior taxable periods unless a different treatment of any item is required by an
intervening change in Law.
(b) Purchaser shall be responsible for the timely filing
(taking into account any extensions received from the relevant tax authorities)
of all Tax Returns required by Law to be filed by any Acquired Company after the
Closing. All Taxes indicated as due and payable on such Tax Returns shall be the
responsibility of Purchaser, except for such Taxes that are the responsibility
of the Sellers pursuant to this Article VII, which Sellers shall pay (as and
when required by Law).
Section 7.6. SURVIVAL. All obligations under this Article VII
shall survive the Closing hereunder and continue until 30 days following the
expiration of the statute of limitations on assessment of the relevant Tax.
Notwithstanding the foregoing, any claim for indemnification shall survive such
termination date if any party, prior to such termination date, shall have
advised the other party in writing of facts that constitute or may give rise to
an alleged claim for indemnification under this Article VII (such claim, a "TAX
CLAIM"), specifying in reasonable detail the basis under this Agreement for such
claim.
Section 7.7. EXCLUSIVE REMEDY. Notwithstanding anything to the
contrary in this Agreement, Tax Claims will be governed exclusively by this
Article VII.
Section 7.8. CONTESTS. (a) If any claim for Tax is asserted in
a Contest (as defined below) against any Tax Indemnitee that would result in the
indemnification of any such Tax Indemnitee by the Sellers pursuant to Section
7.1 of this Agreement, then the Tax Indemnitees and the Sellers agree that the
following provisions of this Section 7.8 will apply in handling any such claim.
For purposes of this Agreement, a "CONTEST" is any audit, court proceeding or
other dispute with respect to any Tax matter that affects an Acquired Company,
as the case may be.
40
(b) Unless the Purchaser has previously received written
notice from the Sellers of the existence of such Contest, the Purchaser shall
give written notice to the Sellers of the existence of any Contest relating to a
Tax matter that is or may be the Sellers' responsibility under Section 7.1 of
this Agreement within ten business days from the receipt by an Acquired Company
of any written notice of such Contest, but no failure to give such notice shall
relieve the Sellers of any Liability hereunder. Unless the Sellers have
previously received written notice from the Purchaser of the existence of such
Contest, the Sellers shall give written notice to the Purchaser of the existence
of any Contest within ten business days from the receipt by the Sellers of any
written notice of such Contest.
(c) The Purchaser, on the one hand, and the Sellers, on the
other, agree, in each case at no cost to the other party, to cooperate with the
other and the other's representatives in a prompt and timely manner in
connection with any Contest. Such cooperation shall include, but not be limited
to, making available to the other party, during normal business hours, all
books, records, returns, documents, files, other information (including, without
limitation, working papers and schedules), officers or employees (without
substantial interruption of employment) or other relevant information necessary
or useful in connection with any Contest requiring any such books, records and
files.
(d) The Sellers shall have the right to settle or dispose of
any Contest relating to a Tax matter arising in a period ending on or before the
Closing; PROVIDED that the Sellers shall consult with the Purchaser regarding
any such Contest and shall allow Purchaser to participate in any such
proceeding; and PROVIDED FURTHER that no settlement or other disposition of any
claim for Tax which would adversely affect any Tax Indemnitee in any taxable
period ending after the Closing in any manner or to any extent shall be agreed
to without Purchaser's prior written consent. The Purchaser shall have the right
to control the conduct of any Contest in its sole discretion with respect to any
other Tax matter.
Section 7.9. POST CLOSING. After the Closing, Sellers and each
of the Acquired Companies on the one hand, and Purchaser, on the other hand,
will make available to the other, as reasonably requested, and to any taxing
authority, all information, records or documents relating to the Liability for
Taxes or potential Liability any of the Acquired Companies for Taxes for all
periods prior to or including the Closing and will preserve such information,
records or documents until the expiration of any applicable statute of
limitations or extensions thereof.
ARTICLE VIII
INDEMNIFICATION
Section 8.1. SURVIVAL. Each covenant or agreement in this
Agreement shall survive the Closing without limitation as to time until fully
performed in accordance with its terms and each representation and warranty in
this Agreement or in the Schedules shall survive the Closing until the Survival
Date. Notwithstanding the foregoing, the
41
following representations and warranties (collectively, the "SPECIFIED
REPRESENTATIONS") shall survive the Closing as follows: (a) the representations
and warranties contained in Sections 3.1 (Authority; Execution), 3.2(a)(i) (No
Conflict), 3.3 (Organization; Standing and Authority), 3.4(a) (Capital Stock),
3.11 (Pre-Closing Transactions), 4.1 (Organization and Qualification), 4.2
(Authority Relative to this Agreement), and 4.3 (No Conflict; Required Filings
and Consents), shall survive the Closing without limitation as to time, and (b)
the representations and warranties contained in Sections 3.14 (Employee Benefit
Matters) and 3.18 (Environmental Matters), shall survive the Closing until
thirty days after the expiration of the statutes of limitations, if any,
applicable to the matters addressed therein. Any claim for indemnification under
Section 8.2(a)(i) or Section 8.3(a) with respect to any representation and
warranty must be notified prior to the termination of the relevant survival
period.
Section 8.2. INDEMNIFICATION BY THE SELLERS. (a) From and
after the date hereof, the Sellers agree, jointly and severally, to indemnify
fully, hold harmless, protect and defend the Purchaser and its Affiliates
(including, after the Closing, the Acquired Companies), and their respective
directors, officers, agents and employees, successors and assigns from and
against:
(i) any and all Losses incurred by any of them arising out of,
relating to or based upon any inaccuracy in, or breach of, any of the
representations or warranties of any of the Sellers contained in this
Agreement or in the Schedules or Exhibits hereto;
(ii) any and all Losses incurred by any of them arising out
of, relating to or based upon any failure to perform, or other breach
of, any of the covenants or agreements of any of the Sellers contained
in or incorporated into this Agreement or in the Schedules hereto;
(iii) any and all Losses incurred by any of them arising out
of, relating to or based upon any claims made for workers' compensation
benefits or under any Plan due with respect to any event occurring or
circumstance existing prior to the Closing;
(iv) 65% of any and all Salary Continuation Payments (as
defined therein) made by the Company pursuant to the Salary
Continuation Letters;
(v) any payment made by the Acquired Companies after the
Closing in connection with the removal of certain employees of HS
Produce Holdings, LLC from the Company's 401(k) plan; and
(vi) any and all Losses incurred by any of them arising out
of, relating to or based upon (A) any enforcement of the existing
judgment against the Company in the lawsuits filed in Nicaragua listed
on Schedule 3.13 on or prior to the date that is one year from the date
hereof; (B) the transactions described in Section 3.11; and (C) the
obtaining of a consent from Fresh Pack, LLC or its Affiliates in
connection with this Agreement.
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The right of the Purchaser and its Affiliates (and their respective directors,
officers, agents and employees, successors and assigns) to be indemnified
hereunder shall not be limited or affected by any investigation conducted or
notice or knowledge obtained by or on behalf of any such Persons.
(b) No indemnification under Section 8.2(a)(i) shall be due
unless the aggregate amount of Losses (aggregating all indemnifiable matters
under such Section) due exceeds U.S.$50,000, in which case indemnity shall
become due for any Losses in excess of such amount.
(c) The maximum amount of Losses against which the Purchaser
and its Affiliates (and their respective directors, officers, agents and
employees, successors and assigns) shall be entitled to be indemnified under
Section 8.2(a)(i) shall be U.S.$10,000,000. However, this Section 8.2(c) will
not apply to (i) any breach of any of the Specified Representations or (ii) any
breach of Sellers' representations and warranties that is attributable to fraud
or willful misconduct by the Sellers.
(d) Notwithstanding the foregoing the Sellers shall not be
required to indemnify the Purchaser pursuant to this Article VIII for any Losses
(i) to the extent the Purchaser actually receives proceeds from insurance to pay
such Losses, and (ii) to the extent the Purchaser actually receives payment from
a third party also required to indemnify the Purchaser, in each case net of
costs and expenses incurred in connection with the collection of such amounts.
The Purchaser shall refund any amount it actually receives (net of costs and
expenses incurred in connection with collection of such amount) pursuant to the
preceding sentence from insurance or a third party to the extent it actually
receives such amount after payment by the Sellers.
Section 8.3. INDEMNIFICATION BY THE PURCHASER. From and after
the date hereof, the Purchaser agrees to indemnify fully, hold harmless, protect
and defend the Sellers and their Affiliates (and their respective directors,
officers, agents and employees, successors and assigns) from and against any and
all Losses incurred by any of them arising out of, relating to or based upon (a)
any inaccuracy in, or breach of, any of the representations or warranties of the
Purchaser, (b) any failure to perform, or other breach of, any of the covenants
or agreements of the Purchaser, in either case contained in this Agreement or in
the Schedules or Exhibits hereto, and (c) 35% of any amount paid by Xx. Xxx X.
Pack, as guarantor, as a Salary Continuation Payment (as defined therein)
pursuant to the Salary Continuation Letters due to the failure of the Company to
make such Salary Continuation Payment. The right of the Sellers and their
Affiliates (and their respective directors, officers, agents and employees,
successors and assigns) to be indemnified hereunder shall not be limited or
affected by any investigation conducted or notice or knowledge obtained by or on
behalf of any such Persons.
Section 8.4. PROCEDURE FOR INDEMNIFICATION FOR THIRD PARTY
CLAIMS. (a) Promptly after receipt by an indemnified party under Sections 8.2 or
8.3 of notice of the commencement of any Proceeding against it, such indemnified
party will, if a claim is to be made against an indemnifying party under such
Section, give notice to the indemnifying party of the commencement of such
claim, but the failure to notify the
43
indemnifying party will not relieve the indemnifying party of any Liability that
it may have to any indemnified party, except to the extent that the indemnifying
party demonstrates that the defense of such action is prejudiced by the
indemnifying party's failure to give such notice.
(b) If any Proceeding referred to in Section 8.4(a) is brought
against an indemnified party and it gives notice to the indemnifying party of
the commencement of such Proceeding, the indemnifying party will be entitled to
participate in such Proceeding and, to the extent that it wishes (unless (i) the
indemnifying party is also a party to such Proceeding and the indemnified party
determines in good faith that joint representation would be inappropriate, or
(ii) the indemnifying party fails to provide reasonable assurance to the
indemnified party of its financial capacity to defend such Proceeding and
provide indemnification with respect to such Proceeding), to assume the defense
of such Proceeding with counsel satisfactory to the indemnified party and, after
notice from the indemnifying party to the indemnified party of its election to
assume the defense of such Proceeding, the indemnifying party will not, as long
as it diligently conducts such defense, be liable to the indemnified party under
this Article VIII for any fees of other counsel or any other expenses with
respect to the defense of such Proceeding, in each case subsequently incurred by
the indemnified party in connection with the defense of such Proceeding, other
than reasonable costs of investigation. If the indemnifying party assumes the
defense of a Proceeding, (i) it will be conclusively established for purposes of
this Agreement that the claims made in that Proceeding are within the scope of
and subject to indemnification; (ii) no compromise or settlement of such claims
may be effected by the indemnifying party without the indemnified party's
consent, which shall not be unreasonably withheld, unless (A) there is no
finding or admission of any violation of Law or any violation of the rights of
any Person and no effect on any other claims that may be made against the
indemnified party, and (B) the sole relief provided is monetary damages that are
paid in full by the indemnifying party; and (iii) the indemnified party will
have no Liability with respect to any compromise or settlement of such claims
effected without its consent. If notice is given to an indemnifying party of the
commencement of any Proceeding and the indemnifying party does not, within ten
days after the indemnified party's notice is given, give notice to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will be bound by any determination made in such Proceeding or
any compromise or settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its Affiliates other than as a result of
monetary damages for which it would be entitled to indemnification under this
Agreement, the indemnified party may, by notice to the indemnifying party,
assume the exclusive right to defend, compromise, or settle such Proceeding, but
the indemnifying party will not be bound by any determination of a Proceeding so
defended or any compromise or settlement effected without its consent (which may
not be unreasonably withheld).
(d) Sellers hereby consent to the non-exclusive jurisdiction
of any court in which a Proceeding is brought against any indemnified person for
purposes
44
of any claim that an indemnified person may have under this Agreement with
respect to such Proceeding or the matters alleged therein, and agree that
process may be served on Sellers with respect to such a claim anywhere in the
world.
Section 8.5. CHARACTER OF INDEMNITY PAYMENTS. All amounts paid
pursuant to Article VIII shall be treated by such parties as adjustments to the
Purchase Price. If, contrary to the intent of the parties, any payment made
pursuant to this Article VIII is treated as taxable income to the recipient,
then the payor shall indemnify and hold harmless the recipient from any
Liability for Taxes attributable to the receipt of such payment. For purposes of
this Section 8.5, the indemnified party will be considered to be liable for Tax
in respect of any payment treated as taxable income at the highest marginal tax
rate then in effect for corporations in the jurisdiction so characterizing the
payment for the year such payment is considered to be earned by the indemnified
party.
Section 8.6. EXCLUSION OF TAX CLAIMS. Nothing in this Article
VIII shall effect or be applicable to any Tax Claims, which shall be governed
exclusively by Article VII, together with the applicable provisions of Article
X.
ARTICLE IX
ADDITIONAL AGREEMENTS
Section 9.1. CONFIDENTIALITY. The Confidentiality Agreement
shall terminate as of the Closing, except that it shall survive the Closing to
the extent that it restricts the use and disclosure by Purchaser of confidential
information related to the Sellers (other than the Acquired Companies).
Section 9.2. PUBLIC ANNOUNCEMENTS. The Sellers shall not issue
any press release or otherwise make any public statements with respect to this
Agreement or the transactions contemplated hereby without the prior written
consent of the Purchaser.
Section 9.3. NONCOMPETITION. (a) Each Seller agrees that it
will not (and will cause each of its Affiliates not to), without the prior
written consent of Purchaser, directly or indirectly, prior to the fifth
anniversary of the Closing induce, encourage or solicit any employee of
Purchaser or any of the Acquired Companies to leave his or her employment with
Purchaser or the Acquired Companies or to accept any other position or
employment or enter into any independent contractor relationship or assist any
other Person in hiring such employee.
(b) Each Seller agrees that it will not (and will cause each
of its Affiliates not to), without prior written consent of Purchaser, directly
or indirectly, prior to the fifth anniversary of the Closing, induce, encourage
or solicit any Person who is an actual or potential client, customer or supplier
of any of the Acquired Companies as of the Closing or any date thereafter (i) to
terminate, reduce or decline to enter into any Contract or other arrangement
with any of the Acquired Companies or (ii) to enter into any Contract or other
arrangement to provide any products or services of a type substantially similar
to any of those provided by any of the Acquired Companies.
45
(c) Each Seller agrees that it will not (and will cause each
of its Affiliates not to), without prior written consent of Purchaser, directly
or indirectly, prior to the fifth anniversary of the Closing, engage in or carry
on (including, without limitation, in the capacity as an employee, director or
independent contractor) (x) any business substantially similar to any aspect of
the business of the Acquired Companies in the United States, or (y) any activity
which is competitive with the business of the Acquired Companies or any such
successor (including, without limitation, divulging to any third party any
confidential information regarding the business of the Acquired Companies or any
such successor).
(d) Each Seller agrees that, prior to the fifth anniversary of
the Closing, it will not (and will cause each of its Affiliates not to), without
the prior written consent of Purchaser, have any direct or indirect interest in
any Person (whether as employee, officer, director or agent, or as security
holder or investor owning either unlisted or untraded securities or more than
one percent (1%) of any class of the issued and outstanding securities of a
corporation that is traded on a national securities exchange or in the
over-the-counter market, or as a creditor, consultant or otherwise) that engages
in any material respect in any business, trade or venture competing with any
aspect of the business of the Acquired Companies or any successor thereto.
(e) The obligations of each Seller under this Section 9.3
shall be in addition to any obligations such Seller may have under any other
Contract. The Sellers and Purchaser agree that the remedy at law for any breach
of the foregoing will be inadequate and that Purchaser, in addition to any other
relief available to it, shall be entitled to temporary and permanent injunctive
relief without the necessity of proving actual damages.
(f) Each Seller agrees that this Section 9.3 shall be deemed
to be a series of separate covenants, one for each state, territory and
jurisdiction of the United States in which the Acquired Companies or any
successor thereto purports to conduct business. With respect to any judicial
proceeding, each Seller further agrees that (i) if a court or arbitrator shall
refuse to enforce any of these separate covenants, such unenforceable covenants
shall be deemed eliminated from the provisions hereof for the purposes of such
proceeding to the extent necessary for the remaining separate covenants to be
enforced in such proceeding and (ii) if a court or arbitrator shall refuse to
enforce one or more of the separate covenants because the total time thereof is
deemed to be excessive or unreasonable, then such covenants which would
otherwise be unenforceable due to such excessive or unreasonable period of time
shall be enforced for such lesser period of time as shall be deemed reasonable
and not excessive by such court or arbitrator.
(g) The Sellers acknowledge that without the covenants not to
compete contained in this Section 9.3, the Purchaser would not enter into this
Agreement or otherwise purchase the Shares and that such covenants are material
and necessary inducement to Purchaser entering into this transaction. The
Purchaser and Sellers agree that in connection with the reporting, filing and
payment of any federal or state taxes they
46
shall not allocate any portion of the Purchase Price to the non-compete
covenants contained in this Section 9.3.
Section 9.4. PACK EMPLOYMENT. Xx. Xxx X. Pack agrees not to
terminate his employment with the Company (or any successor thereto) prior to
the date that is six months from the date of the Closing. The terms of Xx. Xxx
X. Pack's employment (including his salary and position) shall be as separately
agreed with the Purchaser. Effective as of the date hereof, Xx. Xxx X. Pack
hereby waives any right to receive any severance or any other payment, benefit,
compensation or remuneration, whether in cash or in kind, from any of the
Acquired Companies except as may be so separately agreed with the Purchaser.
Section 9.5. SEVERANCE OBLIGATIONS. The Sellers agree that
they shall be solely responsible for 65% of any and all Salary Continuation
Payments (as defined therein) made by the Company pursuant to the Salary
Continuation Letters.
SECTION 9.6. NICARAGUAN LITIGATION. Purchaser and Acquired
Companies shall use commercially reasonable efforts to obtain the withdrawal,
dismissal or other vacating of the judgment entered against the Company in the
Nicaraguan litigation described on Schedule 3.13.
ARTICLE X
GENERAL PROVISIONS
Section 10.1. NOTICES. All notices, other communications or
documents provided for or permitted to be given hereunder, shall be made in
writing and shall be given either personally by hand-delivery, by facsimile
transmission, by mailing the same in a sealed envelope, registered first-class
mail, postage prepaid, return receipt requested, or by air courier guaranteeing
overnight delivery:
(a) if to Purchaser to:
Del Monte Fresh Produce Company
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxx Xxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Fax: (000) 000-0000
with a copy to:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
Fax: (000) 000-0000
(b) if to the Sellers:
47
Xx. Xxx X. Pack
0000 Xxxxxxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Fax: (000) 000-0000
with a copy to:
Xxxxxx, Lidji & Werbner
00xx Xxxxx, Xxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxx
Fax: (000) 000-0000
Each party, by written notice to the other party given in accordance with this
Section 10.1 may change the address to which notices, other communications or
documents are to be sent to such party. All notices, other communications or
documents shall be deemed to have been duly given: (i) at the time delivered by
hand, if personally delivered; (ii) when receipt is acknowledged in writing by
addressee, if by facsimile transmission; (iii) five business days after having
been deposited in the mail, postage prepaid, if mailed by first class mail and
(iv) on the first business day with respect to which a reputable air courier
guarantees delivery; PROVIDED that notices of a change of address shall be
effective only upon receipt.
Section 10.2. SELLERS' REPRESENTATIVE. (a) Each of the Sellers
hereby irrevocably appoints Xx. Xxx X. Pack (the "SELLERS' REPRESENTATIVE") as
such Seller's agent and attorney-in-fact to execute the Escrow Agreement and to
take any action required or permitted to be taken by such Seller under the terms
of this Agreement and the Escrow Agreement, including, without limiting the
generality of the foregoing, the giving and receipt of any notices or
instructions to be delivered or received by or on behalf of any or all of the
Sellers, the payment of expenses relating to the transactions contemplated by
this Agreement and the Escrow Agreement, the representation of the Sellers in
post-Closing adjustment and indemnification proceedings hereunder and
thereunder, the settlement of any claim or resolution of any dispute and the
right to waive, modify or amend any of the terms of this Agreement and the
Escrow Agreement, and agrees to be bound by any and all actions taken by such
agent on such Sellers' behalf.
(b) The Purchaser shall be entitled to rely exclusively upon
any communications or writings given or executed by the Sellers' Representative
and shall not be liable in any manner whatsoever for any action taken or not
taken in reliance upon the actions taken or not taken or communications or
writings given or executed by the Sellers' Representative. The Purchaser shall
be entitled to disregard any notices or communications given or made by any
Seller unless given or made through the Sellers' Representative.
Section 10.3. ESCROW AMOUNT; HOLDBACK AMOUNT; RIGHT OF
SET-OFF. Subject to the following sentence, Purchaser may set off any amount to
which it may be entitled under this Agreement against the Holdback Amount in
accordance with Section
48
2.4(e) and shall be paid by the Escrow Agent from the Escrow Amount in
accordance with the Escrow Agreement. The Purchaser shall be required (a) to
first seek payment of any Losses or other amount under Article VII or Article
VIII (other than any amount sought under Section 2.6 or pursuant to Section
10.5(b), which shall not be subject to this sentence) from the Escrow Amount and
the Holdback Amount prior to seeking payment of any such Losses and/or amount
from the Sellers to the extent that the U.S. Dollar amount of such Losses and/or
amount is less than the balance of the Escrow Amount and the Holdback Amount as
of such date, and (b) to first seek payment of any such Losses and/or amount due
to it under this Agreement from the Holdback Amount and shall only be entitled
to seek payment from the Escrow Amount to the extent that the U.S. Dollar amount
of such Losses and/or amount is less than the balance of the Holdback Amount as
of such date. Notwithstanding the foregoing, nothing in this Agreement and
neither any exercise of nor failure to give a notice of a claim under the Escrow
Agreement or any exercise of such right of set-off in respect of the Holdback
Amount shall constitute an election of remedies or limit Purchaser in any manner
the right to otherwise seek payment of any amount from the Sellers or in the
enforcement of any other remedies that may be available to it.
Section 10.4. SUCCESSORS, ASSIGNS AND TRANSFEREES. (a) The
rights and obligations under this Agreement may be transferred only with the
written consent of the other parties. Any transfer in violation of this Section
10.4(a) shall be null and void.
(b) This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto, and their respective successors and permitted
assigns, and there shall be no third-party beneficiaries other than indemnified
parties with respect to Article VIII.
Section 10.5. GOVERNING LAW; INDEPENDENT ACCOUNTANT;
JURISDICTION. (a) This Agreement shall be governed by and construed in
accordance with the laws of State of Florida.
(b) Any disputed items with respect to the Post-Closing
Statement shall be finally settled pursuant to this Section 10.5(b). Within
thirty days of notification of the disagreement, as applicable, the Purchaser
and the Sellers' Representative shall request the litigation services department
at PriceWaterhouse Coopers to provide it with a list of five partners, and the
Purchaser and the Sellers' Representative shall jointly select one partner to
finally decide such disagreement; PROVIDED that if such individual is not
available, then such litigation services department (or other similar
department) shall select one of such partners (or such similar professional) to
decide such claim or resolve such disagreement (the person so selected shall be
referred to herein as the "INDEPENDENT ACCOUNTANT"). The Purchaser and the
Sellers' Representative shall use reasonable efforts to cause the Independent
Accountant to deliver to the parties, as promptly as practicable and in no event
more than thirty days from the day such Independent Accountant is engaged, a
written report setting forth the resolution of any such disagreement in
accordance with the terms of this Agreement, which shall be final and binding
upon the parties. The rules and procedures for the resolution of any matter
submitted to the Independent Accountant shall be exclusively determined by the
Independent Accountant.
49
The fees, costs and expenses of the Independent Accountant shall be borne
one-half by Purchaser and one-half by the Sellers; PROVIDED that if the
Independent Accountant determines that one party's position is completely
correct, then such party shall pay none of the fees, costs and expenses of the
Independent Accountant and the other party shall pay all such fees, costs and
expenses.
(c) Except with respect to any disputed items submitted to the
Independent Accountant pursuant to Section 10.5(b) of this Agreement (which
shall be resolved exclusively by the Independent Accountant), to the fullest
extent permitted by applicable law, each party hereto (i) agrees that any claim,
action or proceeding by such party seeking any relief whatsoever arising out of,
or in connection with, this Agreement or the transactions contemplated hereby
shall be brought only in the United States District Court for the Southern
District of Florida or any Florida State court, in each case, located in Dade
County, Florida and not in any other State or Federal court in the United States
of America or any court in any other country; (ii) agrees to submit to the
exclusive jurisdiction of such courts located in Dade County, Florida for
purposes of all legal proceedings arising out of, or in connection with, this
Agreement or the transactions contemplated hereby; (iii) waives and agrees not
to assert any objection that it may now or hereafter have to the laying of the
venue of any such proceeding brought in such a court or any claim that any such
proceeding brought in such a court has been brought in an inconvenient forum;
and (iv) agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by applicable Law. Process in any action or
proceeding referred to in the preceding sentence may be served on an party
anywhere in the world. EACH OF THE PARTIES IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS TO
TRIAL BY JURY IN CONNECTION WITH ANY LITIGATION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 10.6. FEES AND EXPENSES. Except as otherwise set forth
in this Agreement, each party shall be solely responsible for its respective
costs and expenses, including but not limited to any fees and expenses of
counsel or any financial advisor, incurred in connection with this Agreement and
the transactions contemplated hereby.
Section 10.7. SEVERABILITY. In the event that any provision of
this Agreement shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby as long as the remaining provisions do not
fundamentally alter the relations among the parties.
Section 10.8. ENTIRE AGREEMENT; AMENDMENT. (a) This Agreement
sets forth the entire understanding and agreement between the parties with
respect to the transactions contemplated hereby and supersedes and replaces any
prior understanding, agreement or statement of intent, in each case written or
oral, of any kind and every nature with respect hereto. Any provision of this
Agreement may be amended, modified
50
or waived in whole or in part at any time by an agreement in writing between the
parties executed in the same manner as this Agreement.
(b) The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a further or
continuing waiver of such breach or as a waiver of any other or subsequent
breach. Except as otherwise expressly provided herein, no failure on the part of
any party to exercise, and no delay in exercising, any right, power or remedy
hereunder, or otherwise available in respect hereof at law or in equity, shall
operate as a waiver thereof, nor shall any single or partial exercise of such
right, power or remedy by such party preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.
Section 10.9. COUNTERPARTS. This Agreement may be executed in
any number of separate counterparts each of which when so executed shall be
deemed to be an original and all of which together shall constitute one and the
same agreement.
[Remainder of this page intentionally left blank. Signature pages follow.]
51
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed
on its behalf by its representatives thereunto duly authorized, all as of the
day and year first above written.
---------------------------
XXX X. PACK
---------------------------
XXXX X. PACK
THE XXXXXXX XXXXXX PACK 1997
IRREVOCABLE TRUST
By:________________________
Name: Xxxx X. Pack
Title: Trustee
THE XXXXXXX XXXXXX PACK 1990 TRUST
By:________________________
Name: Xxxx X. Pack
Title: Trustee
THE XXXXXX XXXXX PACK 1997
IRREVOCABLE TRUST
By:________________________
Name: Xxxx X. Pack
Title: Trustee
THE XXXXXX XXXXX PACK 1990 TRUST
By:________________________
Name: Xxxx X. Pack
Title: Trustee
THE XXX AND XXXX PACK FAMILY
FOUNDATION
By:________________________
Name: Xxx X. Pack
Title: President
DEL MONTE FRESH PRODUCE N.A., INC.
By:_________________________
Name:
Title:
52
