EXHIBIT 2.1
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AMENDED AND RESTATED
ASSET SALE AND PURCHASE AGREEMENT
AMONG
KC ACQUISITION, INC.,
as Buyer
AND
FARMLAND FOODS, INC.
and
FARMLAND INDUSTRIES, INC.,
Debtors-in-Possession,
as Sellers
Dated as of October 12, 2003
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS........................................................2
SECTION 2. PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES..................12
2.1 Transferred Assets...................................................12
2.2 Liabilities..........................................................13
2.3 Excluded Assets......................................................14
2.4 Pension Plan Assignment and Assumption...............................16
SECTION 3. DEPOSIT AND PURCHASE PRICE........................................16
3.1 Deposit..............................................................16
3.2 The Purchase Price and Allocation....................................17
3.3 Payment of the Closing Purchase Price................................17
3.4 Final Net Working Capital Calculation................................17
SECTION 4. CLOSING...........................................................19
4.1 Closing Date.........................................................19
4.2 Transfer of Assets...................................................20
4.3 Prorations as of the Closing Date....................................21
4.4 Capital Improvement and Expenditure Program..........................21
SECTION 5. REPRESENTATIONS AND WARRANTIES OF SELLERS.........................22
5.1 Authorization for Agreement and Consent..............................22
5.2 Organization.........................................................22
5.3 Real Estate..........................................................22
5.4 Litigation...........................................................24
5.5 No Finder's Fee......................................................25
5.6 Financial Statements.................................................25
5.7 Legal Compliance.....................................................25
5.8 Environmental Laws...................................................25
5.9 No Violations........................................................27
5.10 Tangible Property....................................................27
5.11 Taxes................................................................27
5.12 Employee Benefit Plans and Pension...................................28
5.13 Intellectual Property................................................29
5.14 Contracts and Cure Amounts...........................................30
5.15 Conduct of Business..................................................30
5.16 Insurance............................................................31
5.17 Orders, Commitments and Returns......................................31
5.18 Sufficiency of Assets................................................31
5.19 Industries SEC Reports...............................................31
SECTION 6. REPRESENTATIONS AND WARRANTIES OF BUYER AND GUARANTOR.............32
6.1 Authorization for Agreement and Consents.............................32
6.2 Organization.........................................................32
6.3 No Violation.........................................................32
6.4 Finder's Fees........................................................32
6.5 No Litigation........................................................32
6.6 No Financing Contingency.............................................33
6.7 No Rights or Options to Purchase.....................................33
6.8 Knowledge............................................................33
SECTION 7. COVENANTS.........................................................33
7.1 Sellers' Chapter 11 Bankruptcy Case..................................33
7.2 Sellers' Employees...................................................34
7.3 Access...............................................................36
7.4 HSR Act..............................................................37
7.5 Permits and Consents.................................................38
7.6 Title Commitments and Buyer's Surveys................................38
7.7 Sales and Transfer Taxes.............................................39
7.8 Affiliate Rights.....................................................39
7.9 Conduct of the Business Pending the Closing..........................39
7.10 Public Announcements.................................................40
7.11 Releases of Guarantees...............................................40
7.12 Audited Financial Statements.........................................40
7.13 Books and Records; Personnel.........................................40
SECTION 8. TAX MATTERS.......................................................41
8.1 Sales and Transfer Taxes.............................................41
8.2 Cooperation on Tax Matters...........................................41
8.3 Tax Clearance Certificates...........................................41
8.4 IRS Form 8594........................................................41
SECTION 9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS.......................41
9.1 Representations and Warranties True..................................42
9.2 Compliance with Agreement............................................42
9.3 Bankruptcy Court Approval............................................42
9.4 Status of Title and Survey...........................................42
9.5 Non-Competition Law..................................................42
9.6 No Order.............................................................43
9.7 No Material Adverse Effect...........................................43
SECTION 10. CONDITIONS PRECEDENT TO SELLERS' OBLIGATIONS......................43
10.1 Representations and Warranties True..................................43
10.2 Compliance with Agreement............................................43
10.3 Non-Competition Law..................................................44
10.4 Bankruptcy Court Approval............................................44
10.5 No Order.............................................................44
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SECTION 11. RELEASE AND INDEMNITY.............................................44
SECTION 12. SURVIVAL OF COVENANTS, AGREEMENTS, REPRESENTATIONS
AND WARRANTIES....................................................45
SECTION 13. TERMINATION, BREAK-UP FEE AND REMEDIES............................45
13.1 Termination and Abandonment..........................................45
13.2 Break-up Fee.........................................................46
13.3 BUYER'S REMEDIES.....................................................46
13.4 SELLERS' REMEDIES....................................................47
13.5 Release of HSR Deposit...............................................47
SECTION 14. MISCELLANEOUS.....................................................48
14.1 Expenses.............................................................48
14.2 Further Assurances...................................................48
14.3 Inform of Litigation.................................................48
14.4 Assignment...........................................................48
14.5 Governing Law........................................................48
14.6 Amendment and Modification...........................................49
14.7 Notices..............................................................49
14.8 Entire Agreement.....................................................50
14.9 Successors...........................................................50
14.10 Counterparts.........................................................50
14.11 Headings.............................................................50
14.12 Schedules............................................................50
14.13 Jurisdiction.........................................................51
14.14 Severability.........................................................51
14.15 Construction.........................................................51
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AMENDED AND RESTATED
ASSET SALE AND PURCHASE AGREEMENT
THIS AMENDED AND RESTATED ASSET SALE AND PURCHASE AGREEMENT (this
"Agreement") is made and entered into this 12/th/ day of October, 2003, by and
among FARMLAND FOODS, INC., Debtor-in-Possession, a Kansas corporation ("Foods")
and FARMLAND INDUSTRIES, INC., Debtor-in-Possession, a Kansas cooperative
corporation ("Industries"; and Industries together with Foods hereinafter
collectively referred to as the "Sellers"), and KC ACQUISITION, INC., a Delaware
corporation (hereinafter referred to as "Buyer") and wholly owned subsidiary of
SMITHFIELD FOODS, INC., a Virginia corporation ("Smithfield"); this Agreement
amends and restates in its entirety that certain Asset Sale and Purchase
Agreement, dated as of July 14, 2003, by and among the Sellers and Buyer (the
"Original Agreement").
WITNESSETH:
WHEREAS, Foods, a subsidiary of Industries, operating in conjunction
with the livestock production group of Industries, is an integrated
pork-processing company which sells fresh and processed pork into retail,
foodservice, industrial and international channels (the "Business");
WHEREAS, Sellers desire to sell, assign, transfer and convey to Buyer
substantially all of the properties and assets and certain liabilities
constituting the Business, and Buyer desires to acquire such properties, assets
and liabilities, all upon the terms and conditions set forth herein and in
accordance with Sections 105, 363 and 365 of the Bankruptcy Code;
WHEREAS, Sellers are currently in possession of their assets as
Debtors-in-Possession pursuant to Title 11, U.S. Code, in the Chapter 11
administratively consolidated cases of Industries and its filing subsidiaries,
Case No. 02-50557-JWV (hereinafter referred to as the "Bankruptcy Cases"),
presently pending in the United States Bankruptcy Court for the Western District
of Missouri (Kansas City) (hereinafter referred to as the "Bankruptcy Court"),
and Sellers, upon proper approval and authorization from the Bankruptcy Court,
may sell and assign assets outside of the ordinary course of business;
WHEREAS, the Auction (as defined in the Bidding Procedures Order) was
held on October 12, 2003, and, at the conclusion of the Auction, Sellers
notified Buyer that it was the Successful Offeror (as defined in the Bidding
Procedures Order), and that Buyer's final bid had been determined by the Sellers
to be the Final Accepted Offer (as defined in the Bidding Procedures Order);
WHEREAS, the parties hereto desire to amend and restate the Original
Agreement in its entirety as set forth herein, to reflect the terms of the Final
Accepted Offer;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, the parties hereto agree as follows:
SECTION 1. DEFINITIONS.
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The following terms used in this Agreement shall have the following
meanings:
"Adjustment Report" has the meaning assigned to such term in Section
3.4 of this Agreement.
"Affiliate", as applied to any Person, means any other Person directly
or indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through ownership of voting securities or by
contract or otherwise. For purposes of this definition, a Person shall be deemed
to be "controlled by" a Person if such Person possesses, directly or indirectly,
the power to vote 10% or more of the securities having ordinary voting power for
the election of directors of such Person.
"Agencies" and "Agency" have the meaning assigned to such terms in
Section 7.4(a) of this Agreement.
"Alternative Minimum Purchase Price" has the meaning assigned to such
term in Section 4.d) of the Bid Procedures Attachment attached as Exhibit K to
this Agreement.
"Alternative Transaction" means any direct or indirect sale, transfer
or other disposition of all or any portion of the Transferred Assets, in either
case in one or more transactions with one or more parties.
"Applicable Law" means, with respect to any Person, any Law applicable
to such Person or its business, properties or assets.
"Approval Order" means an Order or Orders of the Bankruptcy Court
that, among other things, (a) approves, pursuant to Section 363(b) of the
Bankruptcy Code, (i) the execution, delivery and performance by Sellers of this
Agreement, and the other instruments and agreements contemplated hereby, (ii)
the sale of the Transferred Assets to Buyer on the terms set forth herein and
(iii) the performance by Sellers of their obligations under this Agreement; (b)
finds that (i) due and proper notice has been afforded in accordance with the
Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, the Local Rules of
the Bankruptcy Court and the orders of the Bankruptcy Court, including without
limitation to all parties to any Executory Contracts to be assumed and assigned
to Buyer under the terms of this Agreement; (ii) Buyer is a good faith purchaser
as that term is used in 11 U.S.C. Section363(m); (iii) Buyer has not engaged in
collusive bidding or otherwise violated the provisions of 11 U.S.C.
Section363(n); (iv) title to the Transferred Assets shall vest in Buyer free and
clear of all liens, security interests and other Encumbrances, except for the
Permitted Encumbrances; and (v) Buyer does not constitute a successor to either
Seller and is not subject to successor liability under applicable non-bankruptcy
Law; (c) authorizes and directs Sellers, pursuant to Section 365 of the
Bankruptcy Code, (i) to assume and assign any Executory Contracts that Buyer
agrees to have assigned to it under the terms of this Agreement prior to the
Closing Date; and (ii) to pay any and all Cure Amounts arising from or relating
to the assumption and assignment of such Executory Contracts;
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(d) provides that pursuant to Section 1146(c) of the Bankruptcy Code, the
transfer of the Transferred Assets pursuant to the Agreement shall not be taxed
under any law imposing a stamp tax or any other similar tax, and further that
the recordation of any instruments (including bills of sale, leases, assignments
and amendments thereto) to evidence the sale shall not be subject to any
transfer, recordation, stamp or similar tax in accordance with Section 1146(c)
of the Bankruptcy Code; and (e) is in all other respects reasonably satisfactory
to Buyer.
"Assumed Liabilities" has the meaning assigned to such term in Section
2.2 of this Agreement.
"Bank Group" means the DIP Lenders as defined in that certain First
Amended and Restated Debtor-in-Possession Credit Agreement and Adequate
Protection Stipulation dated as of June 5, 2002 by and among Industries and
Foods, as borrowers, the material subsidiaries of the borrowers, the financial
institutions party thereto, and Deutsche Bank Trust Company Americas, as agent,
as amended by that certain First Amendment to First Amended and Restated
Debtor-in-Possession Credit Agreement and Adequate Protection Stipulation dated
as of January 8, 2003 and the financial institutions party to Sellers' Credit
Agreement dated as of February 7, 2002, as amended.
"Bankruptcy Cases" has the meaning assigned to such term in the third
recital of this Agreement.
"Bankruptcy Code" means the United States Bankruptcy Code, as amended.
"Bankruptcy Court" has the meaning assigned to such term in the third
recital of this Agreement.
"Bid Procedures Attachment" means the Auction and Bid Procedures
attached as Exhibit K to this Agreement.
"Bidding Procedures Motion" means the motion filed by Sellers with the
Bankruptcy Court seeking, among other things, the entry of the Bidding
Procedures Order.
"Bidding Procedures Order" means the Order of the Bankruptcy Court
attached as Exhibit L to this Agreement.
"Bondholders Committee" means the official committee of bondholders
established in the Bankruptcy Cases.
"Break-up Fee" means an amount equal to $10,000,000 to be paid by
Sellers to Buyer under the circumstances set forth in and in accordance with
Section 13.2 of this Agreement.
"Business" has the meaning assigned to such term in the first recital
of this Agreement.
"Business Day" means any day of the year, excluding Saturday, Sunday
and any other day on which national banks are required or authorized to close in
New York, New York.
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"Buyer" has the meaning assigned to such term in the preamble to this
Agreement.
"Buyer Released Parties" has the meaning assigned to such term in
Section 11 of this Agreement.
"Buyer's Surveys" has the meaning assigned to such term in Section 7.6
of this Agreement.
"Capital Improvements Agreement" has the meaning assigned to such term
in Section 4.4 of this Agreement.
"Closing" means the closing of the transactions contemplated by this
Agreement.
"Closing Date" has the meaning assigned to such term in Section 4.1 of
this Agreement.
"Closing Payment" has the meaning assigned to such term in Section 3.3
of this Agreement.
"Closing Purchase Price" has the meaning assigned to such term in
Section 3.3 of this Agreement.
"COBRA" has the meaning assigned to such term in Section 7.2(d) of
this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contracts" has the meaning assigned to such term in Section 5.14 of
this Agreement.
"Creditors Committee" means the official unsecured creditors committee
established in the Bankruptcy Cases.
"Cure Amounts" means all payments required to be made in order to
effectuate, pursuant to the Bankruptcy Code, the assumption by Sellers and
assignment to Buyer of the Executory Contracts constituting Assumed Liabilities
under Section 2.2 of this Agreement.
"Deposit" has the meaning assigned to such term in Section 3.1 of this
Agreement.
"Deposit Escrow Agreement" has the meaning assigned to such term in
Section 3.1 of this Agreement.
"Destruction Notice" has the meaning assigned to such term in Section
7.13 of this Agreement.
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"Disclosure Schedule" means the exhibit attached hereto and made a
part hereof containing the various exceptions to the representations, warranties
and covenants of Sellers contemplated by the provisions of this Agreement.
"Effective Time" has the meaning assigned to such term in Section 4.2
of this Agreement.
"Encumbrance" means (a) any lien, mortgage, deed of trust, deed to
secure debt, pledge, restriction on transfer, proxy and voting or other
agreement, claim, charge, security interest, easement, right of way,
encroachment, servitude, right of first option, right of first refusal,
preemptive right or similar restriction, or other encumbrance of any type or
nature, option or defect in title of every type and description, whether imposed
by law, agreement, understanding or otherwise, including, without limitation,
(i) all liens, encumbrances, and interests in property as set forth in Section
363 of the Bankruptcy Code, (ii) any and all liens of the PBGC, the EPA or any
other Governmental Authority with respect to the Transferred Assets, and (iii)
any and all liens arising under any federal or state employment or labor law, or
under ERISA or under any successor liability law; (b) violations of set-back
requirements or similar violations; or (c) any other issues related to title,
survey or zoning with respect to the Real Estate included as part of the
Transferred Assets.
"Environmental Condition" means any condition existing on, at or
originating from, real property which constitutes (a) a release on, at or from
such property of any Hazardous Substances which could reasonably be expected to
result in an Environmental Liability or (b) a violation of any Environmental
Laws or any Environmental Permits.
"Environmental Laws" means all present and future Laws, requirements
under permits issued with respect thereto, and other requirements of any
appropriate Governmental Authorities relating to the environment, or to any
Hazardous Substance or to any activity involving Hazardous Substances, including
without limitation the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. 9601 et seq. (CERCLA), the Resource Conservation and
Recovery Act, 42 U.S.C. 6901 et seq., the Clean Water Act, 33 U.S.C. 1251 et
seq., the Clean Air Act, 42 U.S.C. 7401 et seq., the Toxic Substance Control
Act, 15 U.S.C. 2601 et seq., and the Safe Drinking Water Act, 42 U.S.C. 300f
through 300j, as all of the foregoing may be amended from time to time.
"Environmental Liabilities" means those liabilities, actions, rights
of action, contracts, indebtedness, obligations, claims, causes of action,
suits, damages, demands, costs, expenses and attorneys' and experts' fees
whatsoever, known or unknown, disclosed or undisclosed, accrued or unaccrued,
existing at any time, of every kind and nature arising directly or indirectly
out of or as a consequence of the actual or suspected use, storage, handling,
generation, transportation, manufacture, production, release, discharge,
emission, disposal or presence of Hazardous Substances on, in, under or about
the Real Estate included as part of the Transferred Assets, or the air, soil or
groundwater thereof by the Seller Released Parties or any other Person,
including, without limitation, any and all costs incurred due to any
investigation of such Real Estate or any cleanup, remediation, removal or
restoration mandated by or pursuant to any Environmental Laws, and arising from
or related to, or in any way connected with, the Transferred Assets.
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"Environmental Permits" has the meaning assigned to that term in
Section 5.8(a) of this Agreement.
"Environmental Reports" has the meaning assigned to such term in
Section 5.8(a) of this Agreement.
"EPA" means the United States Environmental Protection Agency.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" has the meaning assigned to such term in Section 3.1 of
this Agreement.
"Estimated Net Working Capital Calculation" has the meaning assigned
to such term in Section 3.3 of this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Assets" has the meaning assigned to such term in Section 2.3
of this Agreement.
"Executory Contracts" has the meaning assigned to such term in Section
2.2 of this Agreement.
"Final Net Working Capital Calculation" has the meaning assigned to
such term in Section 3.4 of this Agreement.
"Financial Statements" has the meaning assigned to such term in
Section 5.6 of this Agreement.
"Foods" has the meaning assigned to such term in the preamble to this
Agreement.
"Foods Employees" has the meaning assigned to such term in Section 7.2
of this Agreement.
"Form" has the meaning assigned to such term in Section 7.4(a) of this
Agreement.
"GAAP" has the meaning assigned to such term in Section 5.6 of this
Agreement.
"Governmental Authority" means any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to any United States or foreign federal, state or local government, including
any governmental authority, agency, department, board, commission or
instrumentality of such government or any political subdivision thereof, and any
tribunal, court or arbitrator(s) of competent jurisdiction, and shall include
the Bankruptcy Court.
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"Guaranteed Indebtedness" has the meaning assigned to such term in
Section 7.11 of this Agreement.
"Hazardous Substances" means any chemical, compound, material,
mixture, living organism or substance that is now or hereafter defined or listed
in, or otherwise classified pursuant to, any "Environmental Laws" as a
"hazardous substance," "hazardous material," "hazardous waste," "extremely
hazardous waste," "infectious waste," "toxic substance," "toxic pollutant" or
any other formulation intended to define, list or classify substances by reason
of deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity or toxicity, including any petroleum, petroleum products,
polychlorinated biphenyls ("PCBs"), asbestos, radon, natural gas, natural gas
liquids, liquefied natural gas or synthetic gas usable for fuel (or mixtures of
natural gas and such synthetic gas).
"Hired Employees" has the meaning assigned to such term in Section
7.2(a) of this Agreement.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"HSR Deposit" has the meaning assigned to such term in Section 3.1 of
this Agreement.
"Identified Site" has the meaning assigned to such term in Section 5.8
of this Agreement.
"Independent Auditors" has the meaning assigned to such term in
Section 3.4(c) of this Agreement.
"Industries" has the meaning assigned to such term in the preamble to
this Agreement.
"Industries SEC Reports" means (a) Industries' Annual Report on Form
10-K for the fiscal year ended August 31, 2002, filed by Industries with the
SEC, and (b) Industries' Quarterly Reports on Form 10-Q for the fiscal quarters
ended November 30, 2002, February 28, 2003 and May 31, 2003, filed by Industries
with the SEC, in which, as a result of Industries' changing management
structure, and effective from and after September 1, 2002, pork marketing and
beef marketing are presented as separate segments rather than as components of
the refrigerated foods segment.
"Intellectual Property" means all intellectual property and
proprietary rights in the U.S. and any other country, including, without
limitation, the following: (a) all inventions, patents and patent applications,
and any reissues, extensions, divisions, continuations and
continuations-in-part; (b) all registered and unregistered trademarks, service
marks, trade dress, logos, trade names and brand names, and any combination of
such names, including all goodwill associated therewith and all applications,
registrations and renewals in connection therewith; (c) all copyrightable works,
all copyrights and all applications, registrations and renewals in connection
therewith, and all works of authorship, including all content, text, marketing
and sales materials, brochures and collateral; (d) all trade secrets and
confidential business
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information (including ideas, concepts, research and development, know-how,
formulae, compositions, designs, drawings, specifications, customer and supplier
lists, financial information and models, pricing and cost information and
business and market plans and proposals); (e) all data, databases, Software, and
related manuals and documentation; and (f) all websites and related content
(including, without limitation, underlying Software, URLs, IP addresses and
domain names, domain name registrations and renewals).
"Inventory" means all livestock (including unborn, suckling, nursery
and finishing pigs and all breeding stock), genetic lines and any associated
biological materials, all inventories of feeds (including pre-purchased grain
and feed ingredients), injectable and other treatments and similar materials,
and any other raw materials, work-in-progress and finished goods, wherever
located (including items in transit) owned by either Seller and used in the
operation of the Business as presently conducted.
"IRS" means the Internal Revenue Service of the United States of
America.
"Knowledge" means (a) with respect to Buyer, the actual knowledge
after due inquiry of the executive officers of Buyer and Smithfield, and (b)
with respect to Sellers, the actual knowledge after due inquiry of the following
individuals: Xxxxx Xxxxxxxx, Xxxx Xxxxxxxxxxx, Xxxxxx Xxxxxx, Xxxxxx Xxxxxxx,
Xxxxxx Xxxxxxxx, and Xxxxxx Xxxxx and, except with respect to the provisions of
Section 7.4 of this Agreement, those persons who, at any time after May 31,
2002, were managers of plants identified on Exhibit A constituting Transferred
Assets (which persons are identified as such plant managers on Exhibit A) and
who remain employees of either of the Sellers as of the date hereof.
"Law" means any federal, state or local law (including common law),
statute, code, ordinance, rule, regulation or other requirement enacted,
promulgated, issued or entered by a Governmental Authority.
"Leases" has the meaning assigned to such term in Section 5.3(a) of
this Agreement.
"Liability" means any liability, obligation, debt or commitment of any
kind (whether known or unknown, whether asserted or unasserted, whether absolute
or contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due), including any liability for Taxes.
"Licenses" means all licenses, permits, consents, registrations,
certificates and other material governmental or regulatory permits,
authorizations, approvals or agreements issued by or with any Governmental
Authority that regulates, licenses or otherwise has or asserts jurisdiction over
the Business, the Real Estate included as part of the Transferred Assets, or
Sellers and used in the operation of the Business as presently conducted and
identified on Exhibit A.
"Material Adverse Effect" means (a) any event, change, or matter in
respect of the Business that, individually or in the aggregate, results in or
would be reasonably expected to result in a material adverse effect on the
results of operations, assets or condition (financial or otherwise) of the
Business, taken as a whole, excluding any such event, change or matter to the
8
extent resulting from or arising in connection with (i) the filing of the
Bankruptcy Cases, (ii) macro-economic changes or general market-related,
political or regulatory changes, unless the Business is impacted by such changes
in a manner that is substantially disproportionate when compared with
competitive or peer businesses, (iii) outbreak of terrorist activities,
hostilities or war, (iv) this Agreement or the transactions contemplated hereby
or the announcement thereof, or (v) the promulgation, enactment, enforcement,
administration or other event, change or matter with respect to any
Non-Competition Law; or (b) any event, condition or matter, that would have a
material adverse effect on the legality, validity or enforceability of this
Agreement and the agreements and instruments to be entered into in connection
herewith, the consummation of the transactions contemplated hereby, or the
realization of the rights and remedies hereunder. For purposes of determining
whether any event, change or matter constitutes a "Material Adverse Effect"
under this definition, the parties agree that (x) the analysis of materiality
shall not be limited to a long term perspective, and (y) any event, condition or
matter arising out of or relating to the satisfaction, waiver or failure of the
conditions set forth in Section 9.5 of this Agreement shall not constitute or be
the basis for any determination or assertion of the occurrence of a Material
Adverse Effect.
"Net Working Capital" means the difference between the current assets
and current liabilities constituting a portion of the Transferred Assets, as
more fully defined and calculated in accordance with Exhibit F to this
Agreement.
"Non-Competition Law" means the Xxxxxxx Act, as amended, the Xxxxxxx
Act, as amended, the HSR Act, the Federal Trade Commission Act, as amended, and
all other federal, state and foreign, if any, statutes, rules, regulations,
orders, decrees, administrative and judicial doctrines and other laws that are
designed or intended to prohibit, restrict or regulate actions having the
purpose or effect of monopolization or restraint of trade or lessening of
competition.
"Order" means any order, injunction, judgment, decree, ruling, writ,
assessment or arbitration award.
"Ordinary Course of Business" shall refer to the manner in which the
Business has been conducted by Sellers from and after May 31, 2002.
"Outside Date" means December 15, 2003, unless the number of days from
the date of the "Competing Bid Deadline" (as established in the Bidding
Procedures Order, as entered by the Bankruptcy Court) to the date of the Auction
is less than thirty (30) days and/or the number of days from the date of the
Auction to the date of the "Sale Hearing" (as defined in the Bid Procedures
Attachment) is less than fifteen (15) days, in which case for each day such
period(s) is (are) less than the indicated number of days, the Outside Date
shall be one day earlier; provided, however, that the Outside Date shall not be
earlier than December 1, 2003, and if the Outside Date as so determined above
would not be a Business Day, the Outside Date shall be the next Business Day
after such date.
"Payment Date" has the meaning assigned to such term in Section 3.4(d)
of this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation.
9
"Pension Plan" has the meaning assigned to such term in Section
5.12(b) of this Agreement.
"Permits" has the meaning assigned to such term in Section 7.5 of this
Agreement.
"Permitted Encumbrances" means (a) all Encumbrances related to the
Real Estate owned or leased by either or both of Sellers and used in the
operation of the Business that are disclosed or otherwise reflected in the Title
Information and the Surveys, except that any mortgages, liens and security
interests of any creditors of either Seller that encumber any such Real Estate
shall (i) be deemed released from such Real Estate as of the Closing Date, and
(ii) not in any circumstances be or become a liability of Buyer or Smithfield,
(b) liens for property Taxes and assessments that are not yet due and payable as
of the Closing (or if delinquent, that are being contested in good faith by
Sellers by appropriate proceedings), (c) any obligations or duties affecting the
Business or any of the Transferred Assets to the extent created by any
Governmental Authority under any Permit, other than Taxes (except to the extent
such Taxes are not payable pursuant to the exemption set forth in 11 U.S.C.
Section 1146(c)), (d) the Assumed Liabilities, (e) mechanic's, materialmen's,
repairmen's and other statutory liens arising in the ordinary course of business
and securing obligations incurred prior to Closing, for which Sellers are and
will remain responsible for payment and removal of such liens at or after
Closing, (f) the terms, conditions, restrictions, obligations, exceptions,
reservations, limitations and other matters contained in any rights of way or
documents under which either Seller obtained any rights of way or other property
rights, in each case that do not, and will not, interfere materially with the
ownership, use, operation or value of the Business or any of the Transferred
Assets, (g) easements, restrictive covenants, defects in title and
irregularities and other matters that (i) are of record and (ii) do not
interfere materially with the ownership, use, operation or value of the Business
or any of the Transferred Assets, and (h) all Encumbrances which secure
obligations in respect of or otherwise pertain to any Assumed Liabilities.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations and Governmental Authorities, whether or not legal entities.
"Property Permit" means any permit, license, consent, approval,
franchise, certificate of inspection or authority, variance, authorization or
order, registration, or any waiver of the foregoing, issued by a Governmental
Authority and required, used or held for use in relation to the Transferred
Assets, excluding Environmental Permits.
"Purchase Price" has the meaning assigned to such term in Section 3.2
of this Agreement.
"Real Estate" means real property, and improvements located on and
fixtures incorporated into real property.
10
"Rejected Contracts" has the meaning assigned to such term in Section
2.2 of this Agreement.
"Representatives" has the meaning assigned to such term in Section 7.3
of this Agreement.
"Required Consents" has the meaning assigned to such term in Section
7.5 of this Agreement.
"Sale Motion" means the motion to be filed with the Bankruptcy Court
by Sellers seeking entry of the Approval Order.
"SEC" means the United States Securities and Exchange Commission.
"Seller Released Parties" has the meaning assigned to such term in
Section 11 of this Agreement.
"Settlement Date" has the meaning assigned to such term in Section
3.4(b) of this Agreement.
"Smithfield" has the meaning assigned to such term in the preamble to
this Agreement.
"Software" means individually each, and collectively all, of the
computer programs, including interfaces and embedded software programs and
applications, owned or licensed by either of the Sellers, including as to each
program, the processes and routines used in the processing of data, the object
code, source code (as to third party source code, when rights to the source code
may be obtained), tapes, disks, and all improvements, modifications,
enhancements, versions and releases relating thereto, and used in the Ordinary
Course of Business and identified on Exhibit A.
"Surveys" has the meaning assigned to such term in Section 5.3(a) of
this Agreement.
"Tangible Property" has the meaning assigned to such term in Section
5.10 of this Agreement.
"Tax" and "Taxes" mean, with respect to any Person, any federal,
state, local, or foreign income, gross receipts, license, payroll, employment,
excise, severance, stamp, occupation, premium, windfall profits, environmental
(including taxes under Code Sec. 59A), customs duties, capital stock, franchise,
profits, withholding, social security (or similar), unemployment, disability,
real property, personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not for which such Person may be liable (including any such Tax
related to any other Person for which such Person is liable, by contract, as
transferee or successor, by Law or otherwise).
11
"Tax Returns" means all returns, declarations, reports, claims for
refund and information returns and statements of any Person required to be filed
with respect to, or in respect of, any Taxes, including any schedule or
attachment thereto and any amendment thereof.
"Title Commitments" has the meaning assigned to such term in Section
7.6 of this Agreement.
"Title Company" has the meaning assigned to such term in Section 7.6
of this Agreement.
"Title Information" has the meaning assigned to such term in Section
5.3(a) of this Agreement.
"Transfer Taxes" has the meaning assigned to such term in Section 8.1
of this Agreement.
"Transferred Assets" has the meaning assigned to such term in Section
2.1 of this Agreement.
"Transferred Intellectual Property" has the meaning assigned to such
term in Section 5.13(a) of this Agreement.
"Transition Services Agreement" has the meaning assigned to such term
in Section 4.2(a)(iv) of this Agreement.
"WARN Act" means the Workers Adjustment and Retaining Notification
Act, as amended.
"Warranties" means all rights under any warranties (express or
implied), representations and guarantees made by suppliers, manufacturers, and
contractors to Sellers in connection with the Transferred Assets or the
Business.
"Working Capital Escrow Account" has the meaning assigned to such term
in Section 3.4(d) of this Agreement.
"Working Capital Escrow Agent" has the meaning assigned to such term
in Section 3.4(d) of this Agreement.
"Working Capital Escrow Agreement" has the meaning assigned to such
term in Section 3.4(d) of this Agreement.
SECTION 2. PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES.
-------------------------------------------------
2.1 Transferred Assets. Subject to the terms and conditions hereof,
and subject to the representations and warranties made herein, on the Closing
Date Sellers will sell, assign, transfer and convey to Buyer and Buyer shall
purchase and accept from Sellers, all of Sellers' right, title and interest in
and to the assets set forth on Exhibit A hereto, wherever
12
located, whether tangible or intangible, as the same shall exist on the Closing
Date (the "Transferred Assets"), but not including any Excluded Assets.
"AS IS" TRANSACTION. BUYER HEREBY ACKNOWLEDGES AND AGREES THAT, EXCEPT
AS OTHERWISE EXPRESSLY PROVIDED HEREIN, SELLERS MAKE NO (AND SELLERS EXPRESSLY
DISCLAIM AND NEGATE ANY) REPRESENTATIONS OR WARRANTIES OF ANY KIND, WRITTEN OR
ORAL, STATUTORY, EXPRESS OR IMPLIED, WITH RESPECT TO THE TRANSFERRED ASSETS OR
ANY OTHER MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION, INCOME TO BE DERIVED
OR EXPENSES TO BE INCURRED IN CONNECTION WITH THE TRANSFERRED ASSETS, THE
PHYSICAL CONDITION OF ANY PART OF THE TRANSFERRED ASSETS OR ANY OTHER ASSET
WHICH IS THE SUBJECT OF ANY LEASE OR CONTRACT TO BE ASSUMED BY BUYER AT THE
CLOSING, THE ENVIRONMENTAL CONDITION OR OTHER MATTER RELATING TO THE PHYSICAL
CONDITION OF ANY REAL ESTATE OWNED BY SELLERS OR WHICH ARE THE SUBJECT OF ANY
REAL PROPERTY LEASE TO BE ASSUMED BY BUYER AT THE CLOSING, THE ZONING OF ANY
SUCH REAL ESTATE, THE VALUE OF THE TRANSFERRED ASSETS (OR ANY PORTION THEREOF),
THE TRANSFERABILITY OF THE TRANSFERRED ASSETS, THE TERMS, AMOUNT, VALIDITY OR
ENFORCEABILITY OF ANY ASSUMED LIABILITIES, THE TITLE OF THE TRANSFERRED ASSETS
(OR ANY PORTION THEREOF), THE MERCHANTABILITY OR FITNESS OF THE PERSONAL
PROPERTY OR ANY OTHER PORTION OF THE TRANSFERRED ASSETS FOR ANY PARTICULAR
PURPOSE, OR ANY OTHER MATTER OR THING RELATING TO THE TRANSFERRED ASSETS OR ANY
PORTION THEREOF. WITHOUT IN ANY WAY LIMITING THE FOREGOING, SELLERS HEREBY
DISCLAIM ANY WARRANTY, EXPRESS OR IMPLIED, OF MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE AS TO ANY PORTION OF THE TRANSFERRED ASSETS. BUYER FURTHER
ACKNOWLEDGES THAT BUYER HAS CONDUCTED AN INDEPENDENT INSPECTION AND
INVESTIGATION OF THE PHYSICAL CONDITION OF THE TRANSFERRED ASSETS AND ALL SUCH
OTHER MATTERS RELATING TO OR AFFECTING THE TRANSFERRED ASSETS AS BUYER DEEMED
NECESSARY OR APPROPRIATE AND THAT IN PROCEEDING WITH ITS ACQUISITION OF THE
TRANSFERRED ASSETS, EXCEPT FOR ANY REPRESENTATIONS AND WARRANTIES EXPRESSLY SET
FORTH HEREIN, BUYER IS DOING SO BASED SOLELY UPON SUCH INDEPENDENT INSPECTIONS
AND INVESTIGATIONS. ACCORDINGLY, SUBJECT TO THE TERMS AND CONDITIONS OF THIS
AGREEMENT, BUYER WILL ACCEPT THE TRANSFERRED ASSETS AT THE CLOSING "AS IS,"
"WHERE IS," AND "WITH ALL FAULTS."
2.2 Liabilities. Subject to the terms and conditions of this
Agreement, Buyer hereby agrees that, on and as of the Closing Date, Buyer shall
assume from Sellers and thereafter pay, perform or discharge in accordance with
their terms the following obligations and liabilities of Sellers (collectively
called the "Assumed Liabilities"): (a) the obligations of Sellers under the
executory contracts and unexpired leases specifically described on Exhibit B
hereto (the "Executory Contracts") that, by the terms of such Executory
Contracts, arise after the Effective Time, relate to periods following the
Effective Time and are to be observed, paid, discharged, or
13
performed, as the case may be, in each case at any time after the Effective
Time, which obligations shall not include such amounts for which either Seller
is responsible as provided in this Agreement, and (b) the other obligations and
liabilities of Sellers specifically described on Exhibit B hereto which are to
be observed, paid, discharged or performed, as the case may be, at any time
after the Effective Time.
Sellers shall, however, be solely and exclusively responsible for the
payment of any Cure Amounts due with respect to any Executory Contracts listed
on Exhibit B, and shall (i) pay all undisputed Cure Amounts with respect to such
Executory Contracts on the Closing Date, (ii) contest by appropriate proceedings
(as determined by Sellers) all disputed Cure Amounts with respect to such
Executory Contracts, and (iii) after resolution of any related dispute, pay the
disputed Cure Amounts in accordance with the Bankruptcy Court's order with
respect thereto. Buyer shall pay on the Closing Date and shall be solely and
exclusively responsible for the payment of all costs and penalties attributable
or associated with rejection of any executory contracts and unexpired leases to
which either of Sellers is a party specifically designated as such on Exhibit C
hereto (the "Rejected Contracts"); provided, however, that Buyer's liability
shall in no event exceed the amount payable to counterparties to Rejected
Contracts under the Bankruptcy Code or the terms of any plan of reorganization
or liquidating plan in the Sellers' Bankruptcy Cases, plus any costs and
expenses of Sellers relating to the rejection of such Rejected Contracts. For
example, in the event a counterparty to a Rejected Contract has an allowed claim
for rejection damages in the Sellers' Bankruptcy Cases for $1 million, but the
Sellers' plan of reorganization provides for a dividend payment of 10% for
unsecured claims (including rejection damage claims), then Buyer shall be
required to pay only $100,000 to such counterparty (and not $1 million), plus
any costs and expenses of Sellers in resolving such counterparty's claim. Buyer
shall indemnify, hold harmless and defend Sellers from and against all loss,
liability, damages, costs and expense (including attorney's fees) arising out
of, in connection with or related to (i) rejection of the Rejected Contracts
(pursuant to the terms of the Indemnity Agreement attached as Exhibit I), (ii)
the Assumed Liabilities, (iii) the ownership or operation of the Transferred
Assets after the Closing Date, (iv) any breach of any representations,
warranties, covenants or agreements of Buyer hereunder, and (v) any actions,
causes of action or proceedings related to clauses (i) - (iv) of this
grammatical paragraph of Section 2.2.
Buyer shall not assume, or in any way be liable or responsible for,
any other Liabilities of Sellers which are not specifically assumed herein, and
such Liabilities shall be and remain the Liabilities of Sellers to pay and/or
discharge.
2.3 Excluded Assets. The Transferred Assets only include those
assets specifically listed on Exhibit A and shall not include any other assets
of Sellers, including without limitation, the following (hereinafter
collectively called the "Excluded Assets"):
(a) any cash on hand, in banks, and any cash equivalents;
(b) any right, title or interest in or to any licenses,
trademarks (other than the "Farmland" trademark, the "Carando" trademark,
and the "Proud to be Xxxxxx Owned" trademark), patents, patent rights,
copyrights, or trade names (other than the trade name "Farmland" and the
trade name "Carando") owned or licensed by Sellers, to
14
the extent such assets relate primarily to any businesses or operations
affiliated with Industries other than the Business;
(c) all claims, rights and causes of action of the Sellers
arising under or relating to Chapter 5 of the Bankruptcy Code (whether or
not asserted as of the Closing Date), including, without limitation, any
such claims and actions arising under Sections 544, 545, 547, 548, 549 or
551 of the Bankruptcy Code;
(d) Sellers' rights under this Agreement and all cash and
non-cash consideration payable or deliverable to Sellers pursuant to the
terms and provisions hereof;
(e) all insurance proceeds, claims and causes of action of any
kind (including, without limitation, proceeds paid or payable in connection
with the fire at the Albert Lea, Minnesota facility), all unearned
insurance premiums, and all accrued insurance refunds or rebates, but
excepting casualty insurance proceeds or claims with respect to the
Transferred Assets relating to casualty losses occurring on or after the
date of the Original Agreement;
(f) any contract (including all insurance policies of Sellers
other than the insurance contracts assigned to Buyer pursuant to Section
7.2(e) of this Agreement, and including any post-petition contracts) to
which either Seller is a party that is not listed or described on Exhibit B
as an Executory Contract;
(g) all securities, whether capital stock or debt, of any
entity;
(h) all rights and claims in or to any refunds or credits of
or with respect to any Taxes, assessments or similar charges paid by or on
behalf of Sellers, in each case to the extent applicable to any period
prior to the Closing (but not any of the foregoing paid by any entity
comprising Buyer); provided, however, Sellers shall not take any action to
seek any refund of any tax or other payment described in this clause (h)
that would impair or impede Buyer's ability to operate the Business
post-Closing in the manner in which Sellers operate the Business as of the
date hereof or would give rise to any Encumbrance on the Transferred Assets
following the Closing;
(i) tax records, minute books, stock transfer books and
corporate seal of Sellers, and any other books and records relating to the
Excluded Assets;
(j) all claims arising on or prior to the Closing Date under
any directors and officers liability insurance policies owned by Sellers;
(k) all claims and causes of action arising on or before the
Closing Date that Sellers have against any Affiliate, insider of either
Seller or any third party (and any recovery on account thereof), except to
the extent that such claims or causes of action (i) may constitute a
counterclaim, defense, offset, or recoupment right with respect to
affirmative claims (if any) that such third party may assert against Buyer,
(ii) arise under the Warranties, the Executory Contracts assumed and
assigned to Buyer, or the Licenses assigned to Buyer, or (iii) expressly
relate to the Transferred Assets reflected in the Final
15
Net Working Capital Calculation; provided, however, nothing in this clause
(k) shall in any event be deemed to eliminate from the Excluded Assets any
asset expressly designated as such pursuant to this Section 2.3;
(l) professional retainers paid by Sellers;
(m) any letters of credit or similar financial accommodations
issued to any third party(ies) for the account of Sellers;
(n) all deposits held by third parties;
(o) those assets in the Pension Plan which are not assumed by
Buyer in accordance with Section 2.4 of this Agreement; and
(p) those assets, if any, listed on Exhibit C.
Buyer expressly agrees and understands that Sellers shall not sell,
assign, transfer, convey or deliver to Buyer any of the Excluded Assets.
2.4 Pension Plan Assignment and Assumption. On the Closing Date,
Sellers shall cause to be transferred and assigned to Buyer, and Buyer shall
accept, adopt and assume, sponsorship of the Pension Plan and all of the
liabilities and obligations of Sellers thereunder, including but not limited to
the funding of accrued benefits (whether or not vested) for all individuals
entitled to such benefits. Pursuant to the foregoing, Sellers and Buyer shall
take such action as shall be necessary to amend the Pension Plan, and the trust
that is a part thereof, to substitute Smithfield or an Affiliate thereof, as the
sponsor and employer maintaining the Pension Plan and such trust, with all the
rights and authority of Sellers thereunder. Sellers shall cause to be delivered
to Buyer such information or data as Buyer shall reasonably require in
connection with Buyer's assumption of the Pension Plan and the administration
thereof. Buyer shall be responsible for preparing and filing all reports,
notices and related documents for the Pension Plan due after the Closing Date.
SECTION 3. DEPOSIT AND PURCHASE PRICE.
---------------------------
3.1 Deposit. On the first (1st) day after the date of the Original
Agreement (and as an express condition to the effectiveness of this Agreement,
time being of the essence), Buyer shall establish with JPMorgan Chase Bank (the
"Escrow Agent"), a joint order escrow account (the "Deposit Escrow Account") in
an amount equal to $35,000,000 (the "Deposit"), which Deposit shall be xxxxxxx
money and which Deposit shall be held pursuant to an escrow agreement in
substantially the form attached hereto as Exhibit D (the "Deposit Escrow
Agreement"). An amount equal to $15,000,000 of the Deposit shall be designated
the "HSR Deposit." Interest accruing on the Deposit shall become part of the
Deposit for all purposes under this Agreement. If Closing occurs, then Buyer and
Sellers shall cause the Escrow Agent to release the Deposit to Sellers as part
of the Purchase Price by wire transfer of immediately available funds to such
account as Sellers shall designate in accordance with Section 3.3 of this
Agreement. If this Agreement is terminated, the Deposit shall be released in
accordance with Section 13 of this Agreement.
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3.2 The Purchase Price and Allocation. The Purchase Price for the
Transferred Assets shall be an amount equal to $457,400,000, minus the amount of
$90,000,000 in respect of Buyer's acceptance, adoption, assumption and
sponsorship of the Pension Plan pursuant to Section 2.4 hereof, plus the amount,
if any, by which the Final Net Working Capital Calculation exceeds $161,370,000
or minus the amount, if any, by which the Final Net Working Capital Calculation
is less than $161,370,000, minus (but without duplication with respect to any
amounts included in the Final Net Working Capital Calculation) (a) the
outstanding balance of principal and accrued interest as of the Closing Date
under any industrial development bond indebtedness, if any, included among the
Assumed Liabilities and (b) the amount of the obligations of Sellers under any
capitalized leases included among the Assumed Liabilities (as capitalized on
Sellers' balance sheet in accordance with GAAP) (collectively, the "Purchase
Price"). The Purchase Price shall be allocated to the various Transferred Assets
as set forth on Exhibit A for tax purposes and neither party shall take any
contrary position regarding such allocation in any tax filing or contest.
3.3 Payment of the Closing Purchase Price. At least three (3)
Business Days prior to the Closing, Sellers shall deliver to Buyer a statement
setting forth Sellers' good faith estimate of the Final Net Working Capital
Calculation (which shall include Sellers' prorated charges and other items
described in Section 4.3 hereof as of the Closing Date) prepared in accordance
with the provisions of Exhibit F (the "Estimated Net Working Capital
Calculation"), and an estimate of the Purchase Price based thereon (the "Closing
Purchase Price"). At the Closing, Buyer shall make a cash payment (the "Closing
Payment") to the Sellers in the amount equal to the Closing Purchase Price minus
an amount equal to the Deposit, such cash payment to be made by wire transfer of
immediately available funds to such account as Sellers shall designate. At the
Closing, the Escrow Agent shall transfer an amount equal to the amount held in
the Deposit Escrow Account to the Sellers by wire transfer of immediately
available funds to such account as Sellers shall designate.
3.4 Final Net Working Capital Calculation. A post-closing
adjustment to the Closing Purchase Price shall be made as follows:
(a) Within forty-five (45) days following the Closing, Buyer
shall deliver to Sellers a statement setting forth in detail Buyer's
calculation of the Net Working Capital (as finally determined pursuant to
this Section 3.4 and Exhibit F, the "Final Net Working Capital
Calculation").
(b) From and after the Closing Date, Buyer shall provide
Sellers with access to the books and records and knowledgeable personnel of
the Business during normal business hours in connection with the
preparation and review of the Final Net Working Capital Calculation.
Sellers shall have the right to examine and make copies of the work papers
and such other documents that are generated or reviewed by Buyer in
connection with the preparation of the Final Net Working Capital
Calculation and to observe the work performed by Buyer or its
representatives in connection with a physical inventory to be conducted at
all plant locations related to the Business following the Closing. The
Final Net Working Capital Calculation delivered by Buyer to Sellers shall
become final for all purposes of this Agreement unless, within thirty (30)
days after the receipt of such calculation by Sellers (the "Settlement
Date"), Buyer receives written
17
notice of Sellers' disapproval of the Final Net Working Capital Calculation
delivered by Buyer along with Sellers' determination of the Final Net
Working Capital Calculation, consistent with the terms of this Section 3.4,
and a detailed description as to the reasons for such disapproval (the
"Adjustment Report").
(c) In the event Sellers and Buyer fail to agree on one or
more of Sellers' proposed adjustments contained in the Adjustment Report
within fifteen (15) days after Buyer's receipt of the Adjustment Report,
then Sellers and Buyer will select, within five (5) days of the expiration
of the foregoing fifteen (15) day period, a mutually acceptable,
independent accounting firm of nationally recognized standing (the
"Independent Auditors"), to make the final determination with respect to
the correctness of the proposed adjustments in the Adjustment Report.
Within three (3) Business Days of the selection of the Independent
Auditors, Sellers and Buyer will each submit to the Independent Auditors a
written statement setting forth such party's proposed aggregate resolution
of the proposed adjustments and any supporting data and analysis. Within
thirty (30) days of the later submittal to the Independent Auditors, the
Independent Auditors will select either Sellers' or Buyer's proposed
aggregate resolution of the proposed adjustments. If any unresolved
objections are submitted to the Independent Auditors for resolution as
provided above, the party whose proposed resolution is not selected by the
Independent Auditors shall pay the fees and expenses of the Independent
Auditors. The decision of the Independent Auditors shall be final and
binding on Sellers and Buyer.
(d) On the Closing Date, Buyer and Sellers shall establish
with JPMorgan Chase Bank (the "Working Capital Escrow Agent") at the
Closing interest-bearing joint order escrow accounts (the "Working Capital
Escrow Accounts"), in an aggregate amount equal to $15,000,000 (the
"Working Capital Escrow"). The Working Capital Escrow shall be held
pursuant to escrow agreements, both in the form attached hereto as Exhibit
E (collectively, the "Working Capital Escrow Agreement"). Buyer shall
jointly execute with Sellers the Buyer's Working Capital Escrow Agreement
and Buyer shall deposit, in good and current funds on the Closing Date, the
sum of $7,500,000 in the Buyer's Working Capital Escrow Account as its
share of the Working Capital Escrow. Sellers shall jointly execute with
Buyer the Sellers' Working Capital Escrow Agreement and Sellers shall
deposit, in good and current funds on the Closing Date, the sum of
$7,500,000 in the Sellers' Working Capital Escrow Account as their share of
the Working Capital Escrow. Interest on the Working Capital Escrow shall
become part of the Working Capital Escrow for all purposes under this
Agreement. Interest allocable to the portion of the Working Capital Escrow
in Buyer's Working Capital Escrow Account shall accrue and shall be held in
Buyer's Working Capital Escrow Account, and interest allocable to the
portion of the Working Capital Escrow in Sellers' Working Capital Escrow
Account shall accrue and shall be held in Sellers' Working Capital Escrow
Account. To the extent that the Final Net Working Capital Calculation is
greater than the Estimated Net Working Capital Calculation, Buyer shall owe
such difference to Sellers, which difference shall first be paid in
immediately available funds on the Payment Date by the Working Capital
Escrow Agent out of the funds in Buyer's Working Capital Escrow Account,
and if such difference shall exceed the balance of funds (including
interest) in Buyer's Working Capital Escrow Account,
18
then Buyer shall pay the remainder of such difference owing to Sellers in
immediately available funds on the Payment Date. To the extent that the
Final Net Working Capital Calculation is less than the Estimated Net
Working Capital Calculation, Sellers shall owe such difference to Buyer,
which difference shall first be paid in immediately available funds on the
Payment Date by the Working Capital Escrow Agent out of funds in Sellers'
Working Capital Escrow Account, and if such difference shall exceed the
balance of funds (including interest) in Sellers' Working Capital Escrow
Account, then Sellers shall pay the remainder of such difference to Buyer
in immediately available funds on the Payment Date. All payments made by or
for the account of Buyer to Sellers or by or for the account of Sellers to
Buyer pursuant to this Section 3.4(d) shall be accompanied by accrued
interest thereon from the Closing Date at the rate of 6% per annum.
Immediately following the foregoing payments on the Payment Date, the
Working Capital Escrow Agent shall release and pay over to Sellers the
remaining balance, if any, then held in Sellers' Working Capital Escrow
Account, and the Working Capital Escrow Agent shall release and pay over to
Buyer the remaining balance, if any, then held in Buyer's Working Capital
Escrow Account, all in accordance with the Working Capital Escrow
Agreement. For purposes of this Section 3.4(d), "Payment Date" means the
third Business Day following (i) the Settlement Date, in the event that
Sellers do not provide notice of disapproval to Buyer pursuant to Section
3.4(b) of this Agreement, (ii) the date that the Independent Auditors
provide notice to Buyer and Sellers of their determination in accordance
with Section 3.4(c) of this Agreement, in the event that Sellers provide
notice of disapproval to Buyer pursuant to Section 3.4(b) of this
Agreement, or (iii) the date Sellers and Buyer agree in writing on the
resolution of Sellers' proposed adjustments, in the event that Sellers
provide notice of disapproval to Buyer pursuant to Section 3.4(b) of this
Agreement.
SECTION 4. CLOSING.
--------
4.1 Closing Date. The Closing shall take place at the office of
Xxxxx Xxxx LLP, 1200 Main, Suite 3500, Kansas City, Missouri, at 10:00 a.m.
(Missouri time) on the date of entry of the Approval Order, or if not reasonably
practicable on such date then within two (2) Business Days thereafter, or, if
later, on that date which is two (2) Business Days after the satisfaction of
those conditions to the obligations of the parties set forth in Sections 9.5 and
10.3 of this Agreement (but not, in any event, beyond the Outside Date) (the
"Closing Date"); provided, however, that if, on the Closing Date, there is then
in effect any suspension or material limitation on trading generally on the
American Stock Exchange or the New York Stock Exchange or in the Nasdaq National
Market, a material disruption in commercial banking or securities settlement or
clearance services in the United States, or a general moratorium on commercial
banking activities declared by either Federal, state or other relevant
authorities, then Buyer shall have the option to extend the Closing Date by up
to seven (7) days until the first Business Day upon which such condition no
longer exists (but not, in any event, beyond the Outside Date) by giving written
notice to Sellers, it being understood that if, at the end of such period such
condition is still in effect and the conditions to Closing set forth in Sections
9 and 10 hereof are otherwise satisfied or waived, then Buyer shall be obligated
to close notwithstanding the pendency of such condition and Buyer's failure to
so close shall result in Buyer's forfeiture of the Deposit under Section 13.4 of
this Agreement. Subject to the provisions of Section 13 of this Agreement,
failure to consummate the purchase and sale provided for in this Agreement on
19
the Closing Date will not result in the termination of this Agreement and will
not relieve any party of any obligation under this Agreement.
4.2 Transfer of Assets. At the Closing, effective as of 10:00 a.m.
(Missouri Time) on the Closing Date (the "Effective Time"):
(a) Sellers shall sell, assign, transfer and convey to Buyer
(or its designee) all of their right, title and interest in and to the
Transferred Assets. Such sale, assignment, transfer and conveyance shall be
effected or evidenced by delivery by Sellers to Buyer of such quit claim
deeds, bills of sale, assignments and other documents, reasonably
acceptable in form and substance to Buyer and Sellers, as shall be required
or appropriate for the closing of the transactions under this Agreement,
including the following:
(i) certificates dated the Closing Date and validly
executed by an officer of each Seller to the effect that the
conditions set forth in Sections 9.1, 9.2 and 9.7 have been satisfied
;
(ii) an assignment and assumption agreement, dated as of
the Closing Date, assigning to Buyer all of Sellers' rights and
obligations arising under the Executory Contracts, including Real
Estate leases included as part of the Transferred Assets, in
substantially the form attached hereto as Exhibit G;
(iii) a certified copy of the Approval Order;
(iv) counterpart originals of a transition services
agreement, dated as of the Closing Date, in substantially the form
attached hereto as Exhibit H (the "Transition Services Agreement");
and
(v) such other assumptions, certificates, affidavits,
indemnities, and other instruments and documents, reasonably
acceptable in form and substance to Buyer and Sellers, as shall be
required or appropriate for the Closing of the transactions under this
Agreement.
(b) Buyer shall deliver the following items, each (where
appropriate) properly executed and dated as of the Closing Date:
(i) the Closing Payment;
(ii) certificates dated the Closing Date and validly
executed by an officer of Buyer to the effect that the conditions set
forth in Sections 10.1 and 10.2 have been satisfied;
(iii) counterpart originals of the assignment and
assumption agreement described in Section 4.2(a)(ii);
(iv) an indemnity with respect to the Rejected Contracts,
in substantially the form attached hereto as Exhibit I;
20
(v) counterpart originals of the Transition Services
Agreement described in Section 4.2(a)(iv); and
(vi) such other assumptions, certificates, affidavits,
indemnities, and other instruments and documents, reasonably
acceptable in form and substance to Buyer and Sellers, as shall be
required or appropriate for the closing of the transactions under this
Agreement.
(c) Sellers shall pay any Cure Amounts associated with the
assumption of the Executory Contracts.
4.3 Prorations as of the Closing Date. To the extent not taken into
account in the Final Net Working Capital Calculation, Buyer and Sellers agree
that the following items attributable to the Transferred Assets and the
operation associated with the Transferred Assets shall be prorated as of the
Closing Date pursuant to the best information available to Sellers and Buyer,
with Sellers to be responsible for and to receive the benefit of the same for
the period through the end of the day before the Closing Date, and Buyer to be
responsible for and to receive the benefit of the same on and after the day
constituting the Closing Date:
(a) real and personal property Taxes and assessments;
(b) water, sewer and other similar types of Taxes and
installments or special benefit assessments;
(c) electric, gas, telephone and other utility charges;
(d) rentals under leases transferred to or assumed by Buyer;
(e) charges under maintenance, service and other contracts and
fees under licenses transferred to or assumed by Buyer;
(f) prepaid expenses; and
(g) Taxes such as sales, franchise, gross receipts and other
similar Taxes based upon revenues.
The parties will utilize the services of one or more title companies
reasonably acceptable to Buyer and Sellers to facilitate the calculation of any
of such prorations with respect to any Real Estate which constitutes a
Transferred Asset, in which event Buyer and Sellers shall each pay one-half of
the charges of such title companies in connection therewith.
4.4 Capital Improvement and Expenditure Program. At Closing,
Sellers, Buyer and Smithfield (the ultimate parent entity of Buyer) shall enter
into arrangements for Sellers' acquisition of qualifying replacement assets in
respect of the Albert Lea, Minnesota facility, all pursuant to the Capital
Improvements Agreement in substantially the form attached hereto as Exhibit J
(the "Capital Improvements Agreement"), which Capital Improvements Agreement
shall be duly executed and delivered by Buyer and Smithfield to Sellers, and
duly executed and accepted by Sellers, on the Closing Date.
21
SECTION 5. REPRESENTATIONS AND WARRANTIES OF SELLERS.
------------------------------------------
Each of Sellers hereby represents and warrants to Buyer as follows
(except as set forth on Schedule 5 hereto, the "Disclosure Schedules"):
5.1 Authorization for Agreement and Consent. Subject to the entry
of the Approval Order, the execution, delivery and performance of this Agreement
and the documents and instruments required hereunder by Sellers and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate actions of Sellers, and this Agreement is,
and any documents or instruments to be executed and delivered by Sellers
pursuant hereto will be, legal, valid and binding obligations of Sellers,
enforceable in accordance with their terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, moratorium, or similar Laws from
time to time in effect which affect creditors' rights generally and by legal and
equitable limitations on the availability of equitable remedies.
5.2 Organization. Foods is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Kansas. Industries
is a cooperative corporation duly organized, validly existing and in good
standing under the Laws of the State of Kansas. Each of Sellers has the
corporate power and authority to own, use and operate their respective
properties and to carry on their respective businesses, except as a result of
limitations by reason of the Bankruptcy Cases. Each of Sellers is duly qualified
as a foreign corporation to do business, and is in good standing in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities make such qualification necessary, except where the
failure to be so qualified would not be expected to have a Material Adverse
Effect. Subject to Bankruptcy Court approval, each of Sellers has all requisite
corporate power and authority to enter into this Agreement and to perform its
obligations hereunder. Subject to Bankruptcy Court approval, except as set forth
on Disclosure Schedule, Section 5.2 neither the execution, delivery or
performance of this Agreement nor the consummation of the transactions
contemplated hereby by Sellers requires the consent or approval of, the giving
of notice to, registration, filing or recording with, or the taking of any other
action by Sellers in respect of any Governmental Authority, subject to Section
7.4.
5.3 Real Estate.
(a) Sellers have made available to Buyer for review (and Buyer
hereby acknowledges access to) true and correct copies of those title
insurance policies and commitments (collectively, the "Title Information")
and surveys (collectively, the "Surveys") described on Disclosure Schedule,
Section 5.3 with respect to the Real Estate owned or leased by Sellers and
used in the operation of the Business. The Title Information and Surveys
cover portions of such Real Estate reflected therein and, to the Knowledge
of Sellers, reflect the status of Sellers' title to such portions of such
Real Estate as of the date of each individual document comprising the Title
Information and Surveys. The Real Estate owned or leased by Sellers and
used in the operation of the Business as presently conducted is, in all
material respects, included among the Transferred Assets and identified on
Exhibit A, except to the extent described among the Excluded Assets or as
otherwise noted on Exhibit A or Disclosure Schedule, Section 5.3. Sellers
have made available to Buyer for review (and Buyer hereby acknowledges
22
access to) true and correct copies of each lease of such Real Estate
occupied by Sellers and used in the operation of the Business
(collectively, the "Leases") which copies of the Leases include all
amendments and modifications to the same, and which Leases are identified
in Exhibit A.
(b) To the Knowledge of Sellers, Exhibit A truly and correctly
identifies, in all material respects, the Real Estate leased by Sellers and
used in the operation of the Business. Except as set forth on Exhibit A or
Disclosure Schedule, Section 5.3 and except as a result of the Bankruptcy
Cases, (i) to Sellers' Knowledge, Sellers and each other Person obligated
as a party to any of the Leases have been in compliance with all applicable
terms and requirements of the Leases, (ii) to Sellers' Knowledge, no event
has occurred or circumstance exists that (with or without notice or lapse
of time) may contravene, conflict with, or result in a material breach of
or default under, or give Sellers or any such other Person the right to
declare a material breach or default under, or to accelerate the maturity
or performance of, or to cancel, terminate or modify, any such Lease, and
(iii) Sellers' interests in the Leases have not been assigned, transferred,
or conveyed, other than by Encumbrances that will be released and
discharged by the effect of the Approval Order at Closing. Except as set
forth on Exhibit A or Disclosure Schedule, Section 5.3, Sellers have not
given or, to the Knowledge of Sellers, received from any other Person, at
any time since May 31, 2002, any written notification regarding a material
breach of or default under any Lease. Except as set forth on Exhibit A or
Disclosure Schedule, Section 5.3, to the Knowledge of Sellers, each Lease
is in full force and effect, is valid and enforceable in accordance with
its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, or similar Laws from time to time in
effect which affect creditors' rights generally and by legal and equitable
limitations on the availability of equitable remedies (provided, however,
that Sellers do hereby represent to Buyer that there are no orders that
have been entered in Sellers' Bankruptcy Cases that in any way limit,
modify, or diminish the enforceability of any material Lease). Except as
set forth on Exhibit A or Disclosure Schedule, Section 5.3, each material
Lease has not been rejected, whether by operation of law or otherwise, in
Sellers' Bankruptcy Cases, and may, upon (and subject to) entry of and
pursuant to the Approval Order, be assigned by Sellers. Except for the
Leases, there are no material leases with respect to such Real Estate
occupied by Sellers and used in the operation of the Business to which
Sellers are a party and which are necessary for the operation of the
Business as currently conducted. To the Knowledge of Sellers, all
facilities leased or subleased pursuant to any Lease have received all
approvals of Governmental Authorities (including Property Permits) required
in connection with the operation of the Business and have been operated and
maintained in accordance with Applicable Laws, except where the failure to
obtain such approval or to so operate or maintain such facilities would not
be expected to have a Material Adverse Effect.
(c) Except as set forth on Exhibit A or Disclosure Schedule,
Section 5.3, to the Knowledge of Sellers, (i) Exhibit A contains, in all
material respects, accurate and complete legal descriptions for all land
included within the Real Estate owned by Sellers and used in the operation
of the Business, and (ii) the Title Information contains,
23
in all material respects, descriptions of land relating to any appurtenant
right-of-way, easement or other property right.
(d) Except as set forth on Exhibit A or Disclosure Schedule,
Section 5.3, there is no pending eminent domain proceeding that would
result in the taking of all or any material part of any of the Real Estate
owned by Sellers and used in the operation of the Business or, to the
Knowledge of Sellers, leased by Sellers and used in the operation of the
Business or that would prevent or hinder, in material respects, the
continued use of any of such Real Estate as currently being used by Sellers
in the conduct of the Business. Except as disclosed on Exhibit A or
Disclosure Schedule, Section 5.3 and except as would not be expected to
have a Material Adverse Effect, to the Knowledge of Sellers there are no
structural defects relating to any of the improvements comprising part of
such Real Estate, subject to normal wear and tear, obsolescence, and
casualty, if any. Except as set forth on Exhibit A or Disclosure Schedule,
Section 5.3, to the Knowledge of Sellers, no default or breach exists (or
would result from the consummation of the transactions contemplated
hereunder) under any material easements, licenses, rights-of-way, or other
real property rights and privileges included as part of the Real Estate
owned by Sellers and used in the operation of the Business, except as would
not be expected to have a Material Adverse Effect. To the Knowledge of
Sellers, all facilities located on such Real Estate have received all
approvals of Governmental Authorities (including Property Permits) required
in connection with the operation of the Business and have been operated and
maintained in accordance with Applicable Laws, except where the failure to
receive such approval or to so operate or maintain such facilities would
not be expected to have a Material Adverse Effect. Except as set forth on
Exhibit A or Disclosure Schedule, Section 5.3, to the Knowledge of Sellers
there are no outstanding options or rights of first refusal to purchase any
such Real Estate or any portion thereof or interest therein. To the
Knowledge of Sellers, all facilities located on the Real Estate owned by
Sellers and used in the operation of the Business or leased by Sellers and
used in the operation of the Business are supplied with utilities necessary
for the operation of such facilities, including, where appropriate, gas,
electricity, water, telephone, sanitary sewer and storm sewer, which
utilities are provided via public roads or via appurtenant easements
benefiting such Real Estate, except where the failure to have such
utilities or such access to such utilities would not be expected to have a
Material Adverse Effect. To the Knowledge of Sellers, the Real Estate owned
by Sellers and used in the operation of the Business or leased by Sellers
and used in the operation of the Business abuts on and has direct vehicular
access to a public road, or has access to a public road via an appurtenant
easement benefiting such Real Estate where appropriate, except where the
failure to have such access would not be expected to have a Material
Adverse Effect.
(e) Except as set forth on Exhibit A or Disclosure Schedule,
Section 5.3, from and after May 31, 2002, to and including the date of this
Agreement, there have been no casualty losses exceeding $1,000,000, in the
aggregate, affecting the Real Estate included as part of the Transferred
Assets and the Tangible Property.
5.4 Litigation. Except as set forth on Disclosure Schedule, Section
5.4 and except as would not be expected to have a Material Adverse Effect,
neither Industries, in
24
connection with the Business or the Transferred Assets, nor Foods (a) is subject
to any outstanding injunction, judgment, order, decree, ruling, or charge or (b)
is a party or, to Sellers' Knowledge, is threatened to be made a party to any
action, suit, proceeding, hearing, or investigation of, in, or before any court
or Governmental Authority or before any arbitrator.
5.5 No Finder's Fee. Except as set forth in Disclosure Schedule,
Section 5.5, Sellers have not employed or retained any broker, agent, finder or
other party, or incurred any obligation for brokerage fees, finder's fees or
commissions with respect to the transactions contemplated by this Agreement, or
otherwise dealt with anyone purporting to act in the capacity of a finder or
broker with respect thereto whereby Buyer or Smithfield may be obligated to pay
such a fee or commission.
5.6 Financial Statements. Industries has made available to Buyer
(and Buyer hereby acknowledges access to) Industries' audited Consolidated
Balance Sheets as of August 31, 2001 and 2002, Industries' unaudited Condensed
Consolidated Balance Sheet as of February 28, 2003, and the related audited
Statements of Operations and Cash Flows for the years ended August 31, 2001 and
2002 and the unaudited Condensed Statements of Operations and Cash Flows for the
nine months ended May 31, 2003 (collectively, the "Financial Statements"). The
Financial Statements include, among other things, the financial results of the
Business and are attached hereto as Disclosure Schedule, Section 5.6. The
Financial Statements have been prepared in accordance with United States
generally accepted accounting principles ("GAAP"), including the implementation
of new accounting standards as required by GAAP, applied on a consistent basis
if so required by GAAP (except any inconsistencies specifically disclosed in the
Financial Statements and except that the interim period Financial Statements
omit certain footnotes and are subject to year-end adjustments), and fairly
present in all material respects the financial position and results of
operations of the Business at the dates and for the periods covered thereby.
5.7 Legal Compliance. Except as set forth in Disclosure Schedule,
Section 5.7 and except with respect to Environmental Laws (which are addressed
exclusively in Section 5.8), to Sellers' Knowledge, Sellers are in compliance
with all Applicable Laws pertaining to the ownership or operation of the
Transferred Assets, the violation of or noncompliance with which would be
expected to have a Material Adverse Effect. Except as set forth in Disclosure
Schedule, Section 5.7, no action, suit, proceeding, hearing, investigation,
charge, complaint or claim has been commenced against Sellers alleging any
failure so to comply which, if determined adversely to Sellers or the
Transferred Assets, would be expected to have a Material Adverse Effect.
5.8 Environmental Laws.
(a) Except as set forth in Disclosure Schedule, Section 5.8,
and except as would not be expected to have a Material Adverse Effect, with
respect to the operation of the Transferred Assets, to Sellers' Knowledge,
(i) Sellers are in compliance with applicable Environmental Laws, as in
effect as of the date of this Agreement, (ii) Sellers have not received any
written notice of any action, suit, proceeding, hearing, investigation,
charge, complaint or claim against Sellers for failure to comply with such
applicable Environmental Laws, (iii) Sellers possess all environmental
permits,
25
certificates, consents or other settlement agreements, licenses, approvals,
registrations and authorizations required for the operation of the Business
under such applicable Environmental Laws (the "Environmental Permits"),
(iv) Sellers are in compliance with the Environmental Permits and there are
no violations of the Environmental Permits, (v) there are no Environmental
Conditions on or affecting the Transferred Assets, (vi) there are no
Hazardous Substances on the Real Estate owned by Sellers and used in the
operation of the Business or, to the Knowledge of Sellers, leased by
Sellers and used in the operation of the Business, which, if safely and
properly used, would be expected to result in any Environmental
Liabilities, (vii) Sellers have filed all notices required by Governmental
Authorities under such applicable Environmental Laws and such Environmental
Permits, (viii) the information identified in Disclosure Schedule, Section
5.8 identifies all material data, studies, analyses and test results since
January 1, 1999, in Sellers' possession, custody or control, relating to
environmental matters associated with the Transferred Assets or the
operation of the Business (the "Environmental Reports"), including but not
limited to Environmental Conditions and Hazardous Substances, and all such
Environmental Reports have been made available to Buyer, (ix) the Real
Estate owned by Sellers and used in the operation of the Business or, to
the Knowledge of Sellers, leased by Sellers and used in the operation of
the Business, is not listed under the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, or under any similar state
list, or the subject of any federal, state or local enforcement action or
investigation, or citizen's suit, under any Environmental Law ("Identified
Site"), (x) the Real Estate owned by Sellers and used in the operation of
the Business, has not been operated by Sellers subject to "interim status"
or other permit requirements imposed by the Resource Conservation and
Recovery Act, as amended, or similar state statute, regardless of whether
such interim status or other permit was ever lawfully obtained, (xi)
Sellers have not transported or arranged for transportation of (directly or
indirectly) to any Identified Site any Hazardous Substances generated or
created by the use, ownership or operation of the Transferred Assets or by
the operation of the Business, and (xii) there is not at, on or in any of
the Real Estate owned by Sellers and used in the operation of the Business
or, to the Knowledge of Sellers, leased by Sellers and used in the
operation of the Business, any (A) treatment, recycling, storage or
disposal or any Hazardous Substances, or (B) surface impoundment, landfill
lagoon or other containment facility for the temporary or permanent
storage, treatment, or disposal of Hazardous Substances.
(b) Except as set forth on Disclosure Schedule, Section 5.8,
and except as would not be expected to have a Material Adverse Effect, (i)
Sellers have provided Buyer with true and correct copies of all
Environmental Permits and (ii) no proceeding is pending to revoke or limit
any such Environmental Permit.
(c) Except as set forth on Disclosure Schedule, Section 5.8,
and except as would not be expected to have a Material Adverse Effect,
there are no underground storage tanks currently located on the Real Estate
owned by Sellers and used in the operation of the Business or, to the
Knowledge of Sellers, on the Real Estate leased by Sellers and used in the
operation of the Business, and any underground
26
storage tanks previously located on such Real Estate and removed by
Sellers, or any underground storage tanks closed in place by Sellers, were
closed in accordance with applicable Environmental Laws.
5.9 No Violations. Neither the execution, delivery, or performance
of this Agreement by Sellers, nor the consummation by Sellers of the
transactions contemplated hereby, nor compliance by Sellers with any of the
provisions hereof, will (a) conflict with or violate or result in any breach of
any provisions of the certificate of incorporation or bylaws of Sellers, (b) to
the Knowledge of Sellers, result in a violation or breach of or default under
any provision of any mortgage, trust indenture, lien, lease, agreement,
instrument or court order, judgment or decree (other than the Rejected
Contracts) to which either Seller is a party or to which either Seller's
properties or assets are subject, (c) violate any order, writ, injunction,
decree, statute, rule, or regulation applicable to either Seller or to either
Seller's properties, or (d) to the Knowledge of Sellers, cause the suspension or
revocation of any Property Permit or Environmental Permit necessary for Sellers
to conduct the Business as currently conducted, except in the case of clauses
(b), (c), and (d) for violations, breaches, defaults, terminations,
cancellations, accelerations, creations, impositions, suspensions, or
revocations that (i) are excused by the Bankruptcy Court or the applicability of
any provision of the Bankruptcy Code, (ii) are set forth on Disclosure Schedule,
Section 5.9, or (iii) would not be expected to have a Material Adverse Effect.
5.10 Tangible Property. Except as set forth on Disclosure Schedule,
Section 5.10, all tangible personal property (including machinery, equipment,
computers, supplies, materials, furniture, furnishings, tools, dies and
vehicles) included among the Transferred Assets owned and used or held for use
by Sellers in relation to the Business (the "Tangible Property") is in
serviceable operating condition and repair, normal wear and tear, obsolescence
and casualty excepted, subject to continued repair and replacement in accordance
with past practice, and is reasonably suitable for the purposes for which it is
currently being used. All items of Tangible Property used or held by Sellers for
use in relation to the Business as presently conducted are included in all
material respects among the Transferred Assets and set forth on Exhibit A.
Except as set forth on Disclosure Schedule, Section 5.10, from and after May 31,
2002, to and including the date of this Agreement, there have been no casualty
losses exceeding $1,000,000, in the aggregate, affecting the Tangible Property
and the Real Estate included as part of the Transferred Assets.
5.11 Taxes.
(a) Except as set forth on Disclosure Schedule, Section 5.11,
Sellers have timely filed with the appropriate taxing authorities all Tax
Returns required to be filed by them and have paid all Taxes owed by them,
and all Tax Returns filed by Sellers are correct and complete in all
material respects.
(b) There are no liens for Taxes (other than for Taxes not yet
due and payable) on the Transferred Assets, and none of the Transferred
Assets is property that is required to be treated for Tax purposes as being
owned by any other Person.
27
(c) All Taxes that Sellers are required by law to withhold or
collect for all periods ending on or prior to the date of this Agreement
have been withheld or collected, and Sellers have paid all such Taxes due
any Governmental Authority.
(d) Except as set forth on Disclosure Schedule, Section 5.11,
Sellers have not received any written notice from a taxing authority in a
jurisdiction where it does not file Tax Returns that Sellers may be subject
to taxation by that jurisdiction in a manner that would be expected to have
a Material Adverse Effect.
(e) Except as set forth on Disclosure Schedule, Section 5.11,
there is no proceeding pending with respect to the Business relating to
Taxes of Sellers that would be expected to have a Material Adverse Effect
(f) The transactions contemplated herein are not subject to
the Tax withholding provisions of the Code or of any other tax withholding
provisions under any Applicable Law.
5.12 Employee Benefit Plans and Pension.
(a) Disclosure Schedule, Section 5.12 identifies each
"employee benefit plan" (as defined in Section 3(3) of ERISA) and each
other plan, program or arrangement that provides severance, sick leave,
vacation pay, salary or wage continuation for disability, bonus, incentive,
retirement, medical, hospitalization, vision, dental, prescription drug,
education, life insurance or similar benefits for Foods Employees. Sellers
have made available to Buyer true and correct copies of each such plan (or
a written summary of any such plan that is not evidenced by a plan
document).
(b) The Farmland Industries, Inc. Employee Retirement Plan
(the "Pension Plan") has been determined by the Internal Revenue Service to
be "qualified" under Section 401(a) and related sections of the Internal
Revenue Code and Sellers are not aware of any facts or circumstances which
would indicate that the qualified status of the Pension Plan or the tax
exempt status of the Pension Plan's trust has been or may be adversely
affected. The Pension Plan has in all material respects been maintained and
administered in accordance with its terms and all applicable Law.
(c) Sellers are not responsible for and have not promised
their retirees, employees who are Hired Employees or Transferred
Participants, and/or their beneficiaries any Seller/employer cost, co-pay
or premium supplemented retiree health coverage via contract, summary plan
description or any other promissory vehicle.
(d) Aside from those liabilities relating to Sellers'
participation as a participating employer in certain multi-employer and
nonmulti-employer pension plans, as provided for in Section 2.4, which have
been expressly disclosed by Sellers to Buyer, Sellers are not a
participating or sponsoring employer in any other nonmulti-employer or
multi-employer pension plan, which is being transferred to Buyer herein, or
subject to any under-funded liability obligation under the Multi-Employer
Pension Plan Amendments Act of 1980, the Employee Retirement Income
Security Act of 1974, as amended, or GAAP accounting rules.
28
(e) Sellers have delivered or, within two (2) Business Days
after the date of this Agreement will deliver, to Buyer true and complete
copies of the most recent actuarial report and the three most recent annual
reports (Form 5500 series) for the Pension Plan, including all schedules
pertaining to such annual reports. The most recent actuarial report for the
Pension Plan fairly presents the assets and liabilities and projected
liabilities of the Pension Plan as of April 1, 2003.
5.13 Intellectual Property.
(a) The Intellectual Property owned by or licensed to Sellers
and described in Exhibit A (the "Transferred Intellectual Property")
constitutes, in all material respects, the rights in the Intellectual
Property used primarily in the operation of the Business as currently
conducted by Sellers, and to the Knowledge of Sellers constitutes all of
the Intellectual Property necessary to conduct the Business after the
Closing in substantially the same manner as currently conducted by Sellers.
Except as set forth on the Disclosure Schedule, Section 5.13, and except as
would not be expected to have a Material Adverse Effect, the products used,
manufactured, marketed, sold or licensed by either Seller in connection
with the Business and the Transferred Intellectual Property used in the
conduct of the Business as currently conducted, do not, to the Knowledge of
Sellers, infringe upon, violate, or constitute the unauthorized use of any
material rights owned or controlled by any third party, including any
Intellectual Property of any third party. Except as set forth on Disclosure
Schedule, Section 5.13, and except as would not be likely to have a
Material Adverse Effect, at least one of the Sellers is the sole owner of
all right, title and interest in the Transferred Intellectual Property and
has all necessary licenses, rights, permissions and authorizations to use
the Transferred Intellectual Property licensed to either of the Sellers,
including, without limitation, all required Software licenses.
(b) Except as set forth on Disclosure Schedule, Section 5.13,
and except as would not be expected to have a Material Adverse Effect, to
the Knowledge of Sellers (i) no third party has interfered with, infringed
upon, misappropriated or otherwise come into conflict with any Transferred
Intellectual Property, and (ii) there are no pending claims, including, but
not limited to, litigation, arbitration, opposition proceedings, petitions
to cancel, administrative proceedings, demand letters, cease and desist
letters, or disputes of any nature impacting the Transferred Intellectual
Property or either of Sellers' rights therein.
(c) Except to the extent identified among the Excluded Assets,
each patent, trademark, copyright, domain name or other registration that
has been issued to either of Sellers with respect to any of the Transferred
Intellectual Property is listed on Exhibit A, which, to the Knowledge of
Sellers, includes in all material respects an identification of (i) each
pending application or application for registration that either Seller has
made with respect to the Transferred Intellectual Property and (ii) each
license, agreement or other permission that has been granted to either
Seller or any third party with respect to any of the Transferred
Intellectual Property (together with any exceptions thereto). To the
Knowledge of Sellers, Exhibit A also identifies in all material respects
each trade name or registered trademark included in the Transferred
Intellectual Property
29
that is used in the operation of the Business. Except as set forth in
Disclosure Schedule, Section 5.13 and except as would not be expected to
have a Material Adverse Effect, with respect to each item of Transferred
Intellectual Property required to be identified therein: (i) to the
Knowledge of Sellers, the item is not subject to any outstanding
injunction, judgment, order, decree, ruling or charge, (ii) no action,
suit, proceeding, hearing, charge, complaint, claim or demand is pending
which challenges the legality, validity, enforceability, use or ownership
of the item, and (iii) neither of Sellers has licensed or permitted any
third party to use any such item.
(d) Except as set forth in Disclosure Schedule, Section 5.13,
all Software included among the Transferred Intellectual Property described
on Exhibit A is either owned by a Seller or is validly held and used by the
applicable Seller and will be fully and freely utilizable by Buyer
following the Closing in substantially the same manner as currently used by
the applicable Seller, subject to any requirement of the consent of or
notice to any third party.
5.14 Contracts and Cure Amounts. Disclosure Schedule 5.14 sets
forth a complete and accurate list of those contracts of Sellers, with all
amendments or modifications to the same, among the Transferred Assets or which
constitute Assumed Liabilities hereunder (the "Contracts"). Except as set forth
on Disclosure Schedule, Section 5.14, and except as would not be expected to
have a Material Adverse Effect, (a) Sellers and, to Sellers' Knowledge, each
other Person that has any obligation or liability under any Contract is in
compliance with all terms and requirements of such Contract, (b) no event has
occurred or circumstance exists that (with or without notice or lapse of time)
may contravene, conflict with, or result in a breach of or default under, or
give either Seller or any other Person the right to declare a breach of or
default under, or to accelerate the maturity or performance of, or to cancel,
terminate or modify, any Contract, (c) the Contracts have not been assigned in
any manner other than by Encumbrances that will be released and discharged by
the effect of the Approval Order and Closing, and (d) no orders have been
entered in Sellers' Bankruptcy Cases that in any way limit, modify, or diminish
the enforceability of such Contracts. Except as set forth on Disclosure
Schedule, Section 5.14, each Contract is in full force and effect, has not been
rejected, whether by operation of law or otherwise, in Sellers' Bankruptcy
Cases, and is valid and enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
or similar Laws from time to time in effect which affect creditors' rights
generally and by legal and equitable limitations on the availability of
equitable remedies. Except as set forth on the Disclosure Schedule, Section
5.14, the Contracts may be assigned by Sellers pursuant to the Approval Order
without the consent of any Person. Except for the Contracts and those other
agreements, if any, set forth on Disclosure Schedule, Section 5.14, there are no
other contracts to which either Seller is a party necessary for the operation of
the Business as presently operated in the Ordinary Course of Business. Sellers'
bona fide calculation of the aggregate amount of all Cure Amounts as of the date
hereof is, to the Knowledge of Sellers, set forth in Disclosure Schedule,
Section 5.14.
5.15 Conduct of Business. Except as set forth in Disclosure
Schedule, Section 5.15, since May 31, 2002, (a) the operations and affairs of
the Business have been conducted in the Ordinary Course of Business, and (b) no
Material Adverse Effect has occurred and is continuing as of the date of this
Agreement.
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5.16 Insurance. Except as set forth on Disclosure Schedule, Section
5.16, and except as would not be expected to have a Material Adverse Effect,
with respect to each insurance policy relating to the Business (including
policies providing property, casualty, liability and workers' compensation
coverage and bond and surety arrangements) to which either Seller is a party, a
named insured or otherwise the beneficiary which is still in effect, to the
Knowledge of Sellers: (a) the policy is legal, valid, binding, enforceable and
in full force and effect, (b) neither Sellers nor any other party to the policy
is in default thereunder (including with respect to the payment of premiums or
the giving of notices), and no event has occurred that, with notice or the lapse
of time, would constitute such a default or permit termination, modification or
acceleration under the policy, and (c) no party to the policy has repudiated any
provision thereof.
5.17 Orders, Commitments and Returns. Except as set forth on
Disclosure Schedule, Section 5.17, and except as would not be expected to have a
Material Adverse Effect, all accepted and unfulfilled orders for the sale of
products and the performance of services entered into by Sellers and relating to
the Business, and all outstanding contracts or commitments for the purchase of
supplies, materials and services used or to be used in the Business, are, to the
Knowledge of Sellers, pursuant to bona fide transactions in the Ordinary Course
of Business. Except as set forth on Disclosure Schedule, Section 5.17, and
except as would not be expected to have a Material Adverse Effect, there are, to
the Knowledge of Sellers, no claims against the Business to return products by
reason of alleged overshipments, defects or otherwise, or by reason of products
in the hands of customers under an understanding that such products would be
returnable, which are outside of the Ordinary Course of Business.
5.18 Sufficiency of Assets.
(a) None of the Transferred Assets are owned or leased by any
party other than Sellers, except as set forth on Disclosure Schedule,
Section 5.18.
(b) Except for the Excluded Assets, the Transferred Assets
include, in all material respects, the assets, tangible and intangible, of
any nature whatsoever, used by Sellers in or necessary to operate the
Business in the manner presently operated.
(c) Except as set forth on Disclosure Schedule, Section 5.18,
the Transferred Assets do not include any capital stock or other equity
interest in, or debt securities of, any entity.
5.19 Industries SEC Reports. The Industries SEC Reports, insofar as
the same relate to the Business, complied, as of their respective dates of
filing, in all material respects with (a) all applicable requirements of the
Securities Act, the Exchange Act and the rules and regulations of the SEC, and
(b) all applicable requirements of Statement of Financial Accounting Standards
(SFAS) No. 131, "Disclosure about Segments of an Enterprise and Related
Information."
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SECTION 6. REPRESENTATIONS AND WARRANTIES OF BUYER AND GUARANTOR.
------------------------------------------------------
Each of Buyer and Smithfield hereby represents and warrants to Sellers
as follows:
6.1 Authorization for Agreement and Consents. The execution,
delivery and performance of this Agreement and the documents and instruments
required hereunder by each of Buyer and Smithfield and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate actions of each of Buyer and Smithfield, and this Agreement
is, and any documents or instruments to be executed and delivered by each of
Buyer and Smithfield pursuant hereto will be, legal, valid and binding
obligations of Buyer and Smithfield enforceable in accordance with their terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, or similar Laws from time to time in effect which affect creditors'
rights generally and by legal and equitable limitations on the availability of
equitable remedies.
6.2 Organization. Each of Buyer and Smithfield is a corporation
duly organized, validly existing and in good standing under the Laws of its
state of incorporation. Each of Buyer and Smithfield has all requisite corporate
power and authority to enter into this Agreement and to perform its obligations
hereunder. Neither the execution, delivery or performance of this Agreement nor
the consummation of the transactions contemplated hereby by Buyer or Smithfield
requires the consent or approval of, the giving of notice to, registration,
filing or recording with or the taking of any other action by Buyer or
Smithfield in respect of any Governmental Authority, subject to Section 7.4.
6.3 No Violation. The execution and delivery of this Agreement and
all other agreements, instruments and documents contemplated hereby by Buyer and
Smithfield and the consummation of the transactions contemplated hereby and
thereby (a) will not conflict with or violate or result in any breach of any
provisions of the organizational documents of either Buyer or Smithfield, (b) to
the Knowledge of Buyer, will not result in a violation or breach of or default
under any provision of any material mortgage, trust indenture, lien, lease,
agreement, instrument, or court order, judgment, decree to which Buyer or
Smithfield is a party or to which either Buyer's or Smithfield's properties or
assets are subject, or (c) violate any order, writ, injunction, decree, statute,
rule, or regulation applicable to either Buyer or Smithfield or the properties
of either Buyer or Smithfield.
6.4 Finder's Fees. Neither Buyer nor Smithfield has employed or
retained any broker, agent, finder or other party, or incurred any obligation
for brokerage fees, finder's fees or commissions with respect to the
transactions contemplated by this Agreement, or otherwise dealt with anyone
purporting to act in the capacity of a finder or broker with respect thereto
whereby Sellers may be obligated to pay such a fee or a commission.
6.5 No Litigation. No suit, action or legal, administrative,
arbitration or other proceeding or, to Buyer's Knowledge, investigation by any
Governmental Authority, is pending or, to Buyer's Knowledge, has been threatened
by or against Buyer which would materially and
32
adversely affect the ability of Buyer to consummate the transaction provided for
in this Agreement.
6.6 No Financing Contingency. Buyer has, and on the Closing Date
will have, sufficient cash on hand and reserves or availability under existing
credit facilities to pay the Purchase Price in cash to Sellers on the Closing
Date (or on such other date as any payment by Buyer shall be due under the
express terms of this Agreement) without new debt or equity financing. Buyer's
obligations hereunder are not contingent upon procuring financing for the
transaction contemplated hereunder.
6.7 No Rights or Options to Purchase. Buyer does not have, nor does
any Affiliate of Buyer or Smithfield have, any interest in, right or option to
purchase any of the Transferred Assets which arises or exists outside of the
terms of this Agreement, other than for purchases of Inventory in the ordinary
course of business.
6.8 Knowledge. Buyer has no Knowledge of any inaccuracy in the
representations and warranties of Sellers.
SECTION 7. COVENANTS.
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7.1 Sellers' Chapter 11 Bankruptcy Case. This Agreement and the
transactions contemplated hereby are contingent upon the approval and
authorization of the Bankruptcy Court, and Sellers shall have no liability under
this Agreement unless and until such approval and authorization shall be given
by the Bankruptcy Court. Sellers have previously filed with the Bankruptcy Court
the Sale Motion seeking entry of the Approval Order. Each of Sellers and Buyer
agree that they will cooperate in promptly taking such actions as may be
reasonably necessary to obtain the Approval Order, including providing notice of
the sale to such additional parties as may be reasonably necessary, as well as
furnishing affidavits or other documents or information for filing with the
Bankruptcy Court for the purposes, among others, of (a) providing necessary
assurances of performance by Buyer under this Agreement, including for the
assumption of any Contracts or Leases, (b) demonstrating that adequate notice
has been given to all necessary parties for the assumption and assignment to
Buyer of any Contracts or Leases under this Agreement, (c) demonstrating that
the Purchase Price under the Agreement constitutes reasonably equivalent value
and fair consideration under the Bankruptcy Code for the Transferred Assets, and
(d) demonstrating that Buyer (i) is a "good faith" purchaser under Section
363(m) of the Bankruptcy Code, (ii) has not engaged in any conduct that would
cause or permit the Agreement to be avoided under Section 363(n) of the
Bankruptcy Code, and (iii) is not a "successor" to any of the Sellers for
purposes of any successor liability laws. Unless and until this Agreement is
terminated in accordance with its terms, Buyer shall not, without the prior
written consent of Sellers, file, join in, or otherwise support in any manner
whatsoever any motion or other pleading relating to the sale of the Transferred
Assets hereunder. In the event the Approval Order is appealed, Sellers and Buyer
shall each use their respective commercially reasonable efforts to defend such
appeal, provided that Buyer and Sellers shall proceed with the Closing despite
the pendency of an appeal if no stay of the Approval Order is in effect.
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7.2 Sellers' Employees.
(a) Subject to Smithfield's standard drug/alcohol employment
screening, physical examination, and background inquiry practices, as of
the Closing Date Buyer will offer to employ (for positions substantially
similar to their current employment positions), all employees employed by
Sellers specifically in connection with the Transferred Assets, including
all employees of Farmland Foods, Inc. (the "Foods Employees"). No less than
thirty (30) days prior to Closing, Sellers shall identify to Buyer the
Foods Employees and shall use their commercially reasonable efforts to
assure that Buyer may offer employment to any or all Foods Employees.
Except as provided in Section 2.4 or in this Section 7.2, Buyer shall not
be obligated to adopt or maintain any particular employee benefit plan or
plans for any Foods Employees actually hired by Buyer. Buyer shall defend,
indemnify and hold Sellers harmless from any liability under the WARN Act
or any similar state law to the extent such liability arises out of or
relates to a reduction in force in which a majority of the employee
terminations occur prior to or on the Closing Date as a result of Buyer's
decision not to offer employment based on Smithfield's standard
drug/alcohol employment screening, physical examination, and background
inquiry practices or subsequent to the Closing Date. Sellers shall defend,
indemnify and hold Buyer harmless from any liability under the WARN Act or
any similar state law to the extent such liability arises out of or relates
to a reduction in force in which a majority of the employee terminations
occur on or prior to the Closing Date unless as a result of Buyer's
decision not to offer employment based on Smithfield's standard
drug/alcohol employment screening, physical examination, and background
inquiry practices. Buyer shall provide Sellers a list of those Foods
Employees who accept such employment offer ("Hired Employees"). Such offers
of employment will be conditioned upon Closing and upon the termination of
such Foods Employees' employment with Sellers immediately prior to the
Effective Time.
(b) The Hired Employees will become Buyer's employees
immediately following the Effective Time, and at the Closing Date Buyer
will become responsible for wages, salary, benefits and other compensation
with respect to the Hired Employees arising out of employment with Buyer.
(c) Sellers shall cause the termination of employment of the
Foods Employees as of the Closing, shall provide such notice of termination
if and as required by the WARN Act or any similar state Law, and shall
comply with all other Applicable Laws related to such termination of
employment.
(d) Except as specifically provided in this Section 7.2,
Sellers shall retain responsibility for, and shall indemnify Buyer from and
against, all damage or liabilities arising in connection with Sellers'
employment of its employees (including all Foods Employees and Hired
Employees) and the termination of their employment, including without
limitation any penalties or damages under the WARN Act or any similar state
Law. Sellers shall be responsible for providing continuation coverage under
ERISA Sections 601 et seq. ("COBRA") with respect to their employees (other
than Foods Employees, Hired Employees, or any individual formerly employed
by Sellers in connection with the Transferred Assets, collectively referred
to as "COBRA
34
Transferees") and their qualified beneficiaries with respect to qualifying
events occurring on or before the Closing Date. On and after the Closing
Date, Buyer shall be responsible for providing COBRA coverage with respect
to the COBRA Transferees and their qualified beneficiaries with respect to
all qualifying events including those occurring on or before the Closing
Date.
(e) Sellers and Sellers' 401(k) savings plan or plans shall
retain responsibility for all assets and liabilities under such plan(s) as
held in trust on behalf of plan participants and their beneficiaries. Buyer
shall assume sponsorship of all medical, dental, life, vision, AD&D,
cafeteria, short-term disability, and long-term disability plans listed in
Disclosure Schedule, Section 7.2, in connection with which Sellers shall
assign and Buyer shall assume all insurance contracts, administrative
service agreements and other contracts related to such plans, including
those listed in Disclosure Schedule, Section 7.2. It is understood that
Buyer may terminate said plans consistent with such insurance contracts and
administrative service agreements. To the extent Sellers are transferring
any long-term disability plans to Buyer, Sellers represent and warrant that
all Hired Employees, or any other employees of Sellers who are in pay
status under said long-term disability plan(s), or who have otherwise
incurred a disability to be covered under the long-term disability
plans(s), as of or prior to the Closing Date, are either insured through a
third party insurance company or will be accrued for in full in the Final
Net Working Capital Calculation.
(f) Except as set forth in Section 2.4 and this Section 7.2,
Sellers shall retain sponsorship of all of Sellers' employee benefit plans
and shall retain all responsibility for administration and funding of the
those plans, including, but not limited to, all reporting and disclosure
requirements.
(g) All of the Hired Employees will be permitted to enroll in
all of Buyer's and Smithfield's plans applicable to the Hired Employees in
accordance with the terms and conditions of such plans as in effect from
time to time.
(h) At the Closing, Buyer and Smithfield shall waive or cause
the waiver of waiting periods, pre-existing condition exclusions, and other
limitations on participation otherwise applicable to any Hired Employee and
their qualified dependents (who were covered by an employee benefit plan of
Sellers and immediately elects to be covered by a similar employee benefit
plan of Buyer or Smithfield) under or with respect to all employee benefit
plans maintained by Buyer or Smithfield which cover the Hired Employee,
provided the Hired Employee and qualified dependents were covered by
Sellers' employee benefit plan as of the Closing and the Hired Employee
immediately elects coverage, including coverage for qualified dependents,
under a similar employee benefit plan of Buyer or Smithfield.
(i) With respect to the Hired Employees, prior employment with
Sellers shall be recognized by Buyer or Smithfield for the purpose of
determining vacation eligibility. All Hired Employees shall be subject to
Buyer's and Smithfield's vacation policies, provided all such Hired
Employees shall be given full credit for pre-Closing years of service
recognized by Sellers for vacation purposes under Buyer's and
35
Smithfield's policies, and all Hired Employees shall retain and be accorded
by Buyer any vacation time which may have accrued on or prior to the
Closing Date (to the extent accrued on the Final Net Working Capital
Calculation).
(j) Upon the request of Buyer, Sellers will provide such
payroll and other information as may be reasonably requested by Buyer to
minimize employment Taxes payable by Buyer with respect to any Hired
Employees.
(k) The parties expressly acknowledge that this Agreement is
not intended to create a contract between Buyer or Sellers and any Hired
Employee, and no Foods Employee or Hired Employee may rely on this
Agreement as the basis for any breach of contract claim against Buyer or
Sellers. Sellers shall not, in any manner, be responsible or liable for
administration or the payment of any benefit due under any plans maintained
by Buyer and Buyer shall not, in any manner, be responsible or liable for
administration or the payment of any benefit due under the Plans or any
other employment benefit plans maintained by Sellers.
(l) Nothing in this Agreement shall be deemed or construed to
require Buyer to continue to employ any Hired Employees for any period
after Closing.
(m) Without limiting the generality of Sellers' rights to
continue to operate consistent with the Ordinary Course of Business, the
parties expressly acknowledge that after the date of this Agreement Sellers
may, in the Ordinary Course of Business (on terms and conditions equivalent
in all material respects to the current terms and conditions, or otherwise
on terms and conditions reasonably acceptable to Buyer), extend any labor
contracts which might have lapsed or which would otherwise lapse or
terminate prior to the Outside Date.
7.3 Access. From and after the date of this Agreement until the
Closing Date, Sellers shall, upon reasonable advance notice, afford to Buyer and
its officers, directors, employees, independent public accountants, counsel,
investment bankers, lenders, consultants and other agents and representatives
(collectively, "Representatives"), reasonable access during normal business
hours to Sellers' employees, the Transferred Assets and all records pertaining
to the Business, as are necessary to allow Buyer and its Representatives to make
such inspections and to interview or confer with officers, employees, agents and
representatives of Sellers, as Buyer believes are necessary and appropriate with
respect to the Transferred Assets or the Business. This access shall be subject
to any existing confidentiality agreements and to the execution of additional
confidentiality agreements reasonably required by Sellers, as well as subject to
restrictions imposed upon advice of counsel respecting the provision of
competitively sensitive information. Buyer shall not be entitled to (a) access
to any materials containing privileged communications, (b) information about
employees, disclosure of which might violate an employee's reasonable
expectation of privacy, (c) bids, letters of intent, expressions of interest or
other proposals received from others in connection with the Business or the
Transferred Assets, or (d) information in violation of Applicable Law or that
would cause a breach of any obligation by which it is bound. Buyer shall
indemnify, defend and hold harmless Sellers from and against any and all losses,
costs or other damages caused by the willful misconduct or negligent acts of
Buyer or its Representatives in the course of such examinations
36
and inspections (it being understood that the discovery by Buyer or its
Representatives of any existing Liability shall not be covered by this
indemnity).
7.4 HSR Act.
(a) Buyer and Sellers each acknowledge that the applicable
waiting periods under the HSR Act have expired. The parties, through their
counsel, shall reasonably cooperate with each other throughout any other
antitrust investigation and shall use commercially reasonable efforts to
facilitate the lifting or termination of any restraining orders,
injunctions or other similar actions under any Non-Competition Law. During
any litigation regarding the transactions contemplated by this Agreement
under Non-Competition Law, the parties, in consultation with each other,
shall determine as promptly as practicable, the appropriate nature and
scope of the parties' response to any inquiries or requests for information
and documentary materials that may be made by the Federal Trade Commission
and the U.S. Department of Justice Antitrust Division (collectively the
"Agencies," and individually the "Agency") or other Governmental Authority
pursuant to the HSR Act or any other Non-Competition Law and, if
applicable, the parties shall submit their response in a reasonably timely
manner.
The parties acknowledge that for purposes of this Section 7.4,
"reasonably cooperate" shall mean (i) as promptly as practicable, informing
the other party of all written communications received from or submitted to
any Agency or other Governmental Authority of which such party has
Knowledge, (ii) consulting with the other party regarding and providing for
the other party's review all written communications to any Agency or other
Governmental Authority, (iii) notifying the other party of any scheduled
meeting or conference with any Agency or other Governmental Authority of
which such party has sufficient advance notice and consulting with the
other party prior to such scheduled meeting or conference and (iv)
informing the other party of all unscheduled meetings or conferences with
any Agency or other Governmental Authority as promptly as practicable
following such meeting or conference. The parties acknowledge and agree
that for the purposes of this Section 7.4, the term "Knowledge" as it
applies to Sellers, shall not include the knowledge of Sellers' plant
managers, but only the Knowledge of the individuals expressly named in the
definition of "Knowledge" in this Agreement.
The parties further acknowledge that the parties' covenant to
reasonably cooperate with each other shall not require Sellers to take any
action which would have the effect of impeding in any manner the actions of
other Persons submitting or contemplating the submittal of a competing bid
for all or any part of the Transferred Assets or the formulation or
consummation of a possible Alternative Transaction. Accordingly, neither
Buyer nor its counsel shall have the right to receive notice with respect
to or participate in any meetings with any Agency or other Governmental
Authority which pertains to such competing bids or Alternative
Transactions, or to review any communications received from or to be
submitted to any Agency or other Governmental Authority regarding such bids
or transactions. Similarly, Sellers shall not be obligated to inform Buyer
of communications from any Agency or other Governmental Authority regarding
competing bids or Alternative Transactions or notify
37
Buyer of any scheduled or unscheduled meetings or conferences with any
Agency or other Governmental Authority pertaining to same.
(b) Subject to the terms and conditions of this Agreement, if
any administrative or judicial action or proceeding, including any
proceeding by a private party, is instituted (or threatened to be
instituted) challenging any transaction contemplated by this Agreement as
violative of any Non-Competition Law, Buyer and Sellers shall reasonably
cooperate with each other to contest and resist any such action or
proceeding and to seek to have vacated, lifted, reversed or overturned any
decree, judgment, injunction or other order, whether temporary, preliminary
or permanent, that is in effect and that prohibits, prevents or restricts
consummation of the transactions contemplated by this Agreement. Nothing in
this Section 7.4, however, shall limit a party's rights to terminate this
Agreement pursuant to Sections 13.1(g) or 13.1(h) of this Agreement.
(c) If any objections are asserted with respect to the
transactions contemplated hereby under any Non-Competition Law or if any
suit is instituted by any Governmental Authority or any private party
challenging any of the transactions contemplated hereby as violative of any
Non-Competition Law, Buyer and Sellers shall reasonably cooperate in
responding to such objections or challenges so as to permit consummation of
the transactions contemplated by this Agreement.
(d) Nothing in this Section 7.4 shall require any of Buyer,
Sellers or their respective Affiliates to sell, hold separate or otherwise
dispose of or conduct their business in a specified manner, or agree to
sell, hold separate or otherwise dispose of or conduct their business in a
specified manner, or permit the sale, holding separate or other disposition
of, any assets of Buyer, Sellers and their respective Affiliates or conduct
of their business in a specified manner, as a condition to obtaining any
approval from a Governmental Authority under any Non-Competition Law or any
other Person or for any other reason.
7.5 Permits and Consents. Sellers shall use reasonable efforts to
obtain all consents, if any, of any person not a party to this Agreement which
are required to transfer any of the Transferred Assets to Buyer (collectively,
the "Required Consents") and cooperate with Buyer to obtain all permits, if any,
necessary to transfer the Transferred Assets to Buyer (collectively, the
"Permits"); provided, however, that Sellers shall not be required to expend any
funds in connection with the foregoing. Buyer shall diligently seek and obtain
all Permits, if any, and shall cooperate with Sellers to obtain all Required
Consents necessary to transfer the Transferred Assets to Buyer. Notwithstanding
the foregoing or any provision hereof to the contrary, nothing herein shall be
construed to require the consent of any party to a Contract or Lease to its
assignment to Buyer if assignment without such consent is permissible under
Section 365 of the Bankruptcy Code.
7.6 Title Commitments and Buyer's Surveys. Buyer acknowledges
access to the Title Information, the Surveys, and the Leases. Buyer may, at
Buyer's option and expense, obtain from a title company or companies acceptable
to Buyer (collectively, the "Title Company"), commitments for title insurance
covering the Real Estate included as part of the
38
Transferred Assets in form and substance satisfactory to Buyer (collectively the
"Title Commitments"). Buyer may also, at Buyer's option and expense, cause to be
prepared current boundary surveys (collectively, the "Buyer's Surveys") of such
Real Estate prepared by a registered public surveyor. Notwithstanding the
foregoing, obtaining the Title Commitments and the Buyer's Surveys shall not
delay the Closing and Sellers shall have no obligation to cure defects in title
or other matters disclosed by the Title Commitments or the Buyer's Surveys, it
being understood that any such defect or other matter shall be evaluated in the
context of Sections 9.1 and 9.7 of this Agreement.
7.7 Sales and Transfer Taxes. Sellers shall be responsible for and
agree to pay when due all sales, use, recording and transfer Taxes arising out
of the transfer of the Transferred Assets by Sellers and the other transactions
contemplated herein, specifically including, without limitation, all sales and
transfer Taxes with respect to any real or personal property (including
vehicles) to be transferred to Buyer hereunder.
7.8 Affiliate Rights. Buyer may not through any Affiliate take any
action or exercise any rights in connection with the purchase of the Transferred
Assets which Buyer would otherwise be prohibited from taking or exercising
directly.
7.9 Conduct of the Business Pending the Closing. Except as
otherwise contemplated by this Agreement (including the information on the
exhibits and schedules attached hereto), except with the prior written consent
of Buyer, and except for any actions or omissions that would not be expected to
have a Material Adverse Effect, during the period from the date hereof to and
through the Closing Date, Sellers shall, subject to the limitations imposed on
Sellers as a result of having filed the Bankruptcy Cases, conduct the Business
in all material respects in the Ordinary Course of Business and in compliance
with Applicable Law, and preserve in all material respects the present business
operations, organization and goodwill of the Business; and without limiting the
generality of the foregoing, from the date hereof until the Closing Date,
subject to the foregoing exceptions, Sellers shall not (a) change any method of
accounting or accounting practice used by them, except for any change required
by generally accepted accounting principles, (b) establish or increase the
benefits under, or promise to establish, modify or increase the benefits under,
any employee benefit plan or otherwise increase the compensation payable to any
Foods Employee, except in the Ordinary Course of Business or otherwise in
accordance with existing plans and agreements consistent with past practice, or
establish, adopt or enter into any collective bargaining agreement, (c) obtain
any rulings or make any elections with respect to Taxes, or enter into any
agreements with any taxing authority in the event the same could materially and
adversely impact the Business, (d) merge or consolidate with any other Person or
acquire a material amount of assets of any other Person, (e) except in the
Ordinary Course of Business, lease, license or otherwise surrender, relinquish,
encumber, or dispose of any Transferred Assets other than the disposition of
obsolete or damaged immaterial Transferred Assets, (f) fail to maintain
Inventory to and including the Closing Date of a quality usable and salable in
the Ordinary Course of Business (which takes into account normal levels of
damaged, short dated, obsolete or outdated goods or supplies), and in quantities
in accordance with the Ordinary Course of Business and adjusted for seasonality,
(g) create accounts receivable to be included among the Transferred Assets other
than those arising from bona fide transactions in the Ordinary Course of
Business, or (h) establish accounts payable to be included among the Assumed
Liabilities other than those arising from bona fide transactions in the Ordinary
Course
39
of Business. For the avoidance of doubt, the foregoing shall not require
Sellers to make any payments, incur any costs, or enter into or amend any
contractual arrangements, agreements or understandings, unless such payment,
incurrence or other action is required by Applicable Law, by contractual
obligation with such third parties or to operate in the Ordinary Course of
Business.
7.10 Public Announcements. Prior to the Closing Date, none of
Sellers, Buyer, or any of their respective Affiliates or Representatives, shall
issue any press release or public statement concerning this Agreement or the
transactions contemplated hereby without obtaining the prior written approval of
the other parties hereto, unless such disclosure is required by Applicable Law,
an Order of the Bankruptcy Court or by obligations pursuant to any agreement
with any national securities exchange; provided, that the party intending to
make such release shall give the other parties prior notice and shall use its
commercially reasonable efforts consistent with such Applicable Law, Order or
obligation to consult with the other parties with respect to the text thereof.
7.11 Releases of Guarantees. Industries and certain of its
Affiliates are guarantors with respect to certain obligations of Foods, as set
forth on the Disclosure Schedule, Section 7.11 (the "Guaranteed Indebtedness").
Prior to the Closing, Buyer shall use commercially reasonable efforts including,
without limitation, Buyer and Smithfield offering to substitute Smithfield
guarantees, to cause Industries or its Affiliates, as applicable, to be replaced
by Buyer or any Affiliate of Buyer, as guarantor or other applicable status with
respect to all of the Guaranteed Indebtedness.
7.12 Audited Financial Statements. At Buyer's request and at Buyer's
expense, Sellers shall authorize KPMG LLP to prepare and deliver to Buyer
promptly following the Closing Date, audited financial statements of the
Business as of and for the periods required by Regulation S-X promulgated under
the Securities Act of 1933, as amended. Sellers shall cooperate in a manner
consistent with their past practice in the preparation of such financial
statements.
7.13 Books and Records; Personnel. Except in the ordinary course of
business of such party regarding its own general records or in compliance with
such party's record retention policies, until the sooner to occur of (a) five
(5) years after the Closing Date or (b) the expiration or termination of the
Capital Improvements Agreement, Buyer and Sellers will maintain all books and
records, including electronic and computerized records that relate to the
pre-Closing business, operations, assets and properties related to the Business,
and shall give each other party full and complete access during regular business
hours to all such books, records, and personnel to the extent reasonably
required to enable such other party to satisfy its respective obligations
hereunder or under Applicable Law. In addition to the foregoing, neither Sellers
nor Buyer shall, without ninety (90) days prior written notification (a
"Destruction Notice") to the other, destroy any pre-Closing books and records,
including electronic and computerized records, related to the Business, unless
such destruction is to occur in the ordinary course of business of the party
destroying such books and records, or in compliance with such party's general
record retention policies. Notwithstanding any of the foregoing provisions of
this Section 7.13, neither party shall destroy any documents that remain
relevant to taxes or Tax Returns that are the responsibility of the other party
for which the statute of limitations has not
40
expired without prior giving of a Destruction Notice to the other party.
Following receipt of a Destruction Notice, if Sellers or Buyer, as applicable,
advises the other party in writing within such ninety (90) day period, the
applicable party will promptly deliver the applicable books and records to the
other.
SECTION 8. TAX MATTERS.
------------
8.1 Sales and Transfer Taxes. Sellers shall be responsible for and
agree to pay when due all sales, use, value added, documentary, stamp, gross
receipts, transfer, conveyance, excise, real estate recording and other similar
Taxes and fees (collectively, "Transfer Taxes") arising out of the transfer of
the Transferred Assets by Sellers and the other transactions contemplated
herein, specifically including, without limitation, all sales, recording and
transfer Taxes with respect to any real property or vehicles to be transferred
to Buyer hereunder. Sellers shall prepare and timely file all Tax Returns
required to be filed in respect of Transfer Taxes, if any, provided that Buyer
shall be permitted to prepare any such Tax Returns that are the primary
responsibility of Buyer under Applicable Law. Buyer's or Sellers' preparation of
any such Tax Returns shall be subject to Sellers' approval or Buyer's approval,
respectively, which approval shall not be unreasonably withheld, conditioned or
delayed. Buyer shall reasonably cooperate with Sellers in procuring any
available exemptions from any Transfer Taxes and shall reasonably cooperate in
procuring any documentation that may be necessary to establish any such
exemption.
8.2 Cooperation on Tax Matters. After the Closing, Sellers will
cooperate with Buyer, and Buyer will cooperate with Sellers, to the extent
necessary in the preparation of all Tax Returns and will provide (or cause to be
provided) any records and other information the other so reasonably requests and
will provide the cooperation of its employees and auditors. Sellers will
reasonably cooperate with Buyer and Buyer will reasonably cooperate with Sellers
in connection with any Tax investigation, audit or other proceeding. The Tax
Returns shall be prepared in accordance with all Applicable Law and previous
reporting methodologies utilized by Sellers.
8.3 Tax Clearance Certificates. Prior to the Closing, Sellers shall
use their commercially reasonable efforts to obtain Tax clearance certificates
or other documents which may be required by a taxing authority in order to
relieve Buyer of any obligation to withhold any portion of the payments to
Sellers pursuant to this Agreement.
8.4 IRS Form 8594. Sellers shall timely file IRS Form 8594
(including any amendments thereto) with the Internal Revenue Service with their
federal income Tax Return for the tax period which includes the Closing Date (or
as may otherwise be required by law) in a form reasonably acceptable to Buyer.
SECTION 9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS.
--------------------------------------------
The obligations of Buyer at the Closing hereunder are subject, at
Buyer's election, to the satisfaction on or prior to the Closing Date of the
conditions set forth below, although notwithstanding the failure of any one or
more of such conditions (other than the approval of the Bankruptcy Court), Buyer
may nevertheless proceed with Closing without satisfaction, in whole
41
or in part, of any one or more of such conditions and without written waiver;
provided, however, that if any of the conditions set forth in Sections 9.1, 9.2,
9.4, 9.6 or 9.7 of this Agreement shall not have been satisfied (or waived by
Buyer) as of the Closing Date, before Buyer may terminate this Agreement under
Section 13.1, Buyer shall first notify Sellers in writing of such failure of
satisfaction of such condition(s) and Buyer shall afford Sellers the opportunity
to cure, remedy or otherwise satisfy such condition(s), in which event Sellers
may elect to extend the Closing Date for a period designated by Sellers by
notice to Buyer upon receipt of Buyer's notice (but in no event shall the
Closing Date be extended beyond the Outside Date). To the extent that as of the
Closing Date Buyer has Knowledge of the failure of any of such conditions or the
breach by Sellers of any of the representations or warranties contained in this
Agreement and nevertheless proceeds with Closing, Buyer shall be deemed to have
waived for all purposes any rights or remedies it may have against Sellers by
reason of the failure of any such condition or the breach of any such
representation or warranty.
9.1 Representations and Warranties True. The representations and
warranties made by Sellers in this Agreement that are qualified by the term
"Material Adverse Effect," the word "material" or phrases of like import shall
be true and correct in all respects on and as of the Closing Date, and the
representations and warranties made by Sellers that are not so qualified shall
be true and correct in all material respects on and as of the Closing Date, in
each case with the same effect as though such representations and warranties had
been made or given on and as of the Closing Date (except for representations and
warranties that relate to a specific date).
9.2 Compliance with Agreement. Sellers shall have performed and
complied in all material respects with all of their obligations under this
Agreement which are to be performed or complied with by Sellers prior to or on
the Closing Date.
9.3 Bankruptcy Court Approval. This Agreement and the transactions
contemplated hereby, including, without limitation, the assumption and
assignment of the Executory Contracts, shall have been approved by the
Bankruptcy Court as provided in Section 7.1, and the Approval Order shall have
been entered by the Bankruptcy Court.
9.4 Status of Title and Survey. The Title Commitments and the
Buyer's Surveys shall not disclose any Encumbrances affecting the Real Estate
other than (i) those disclosed in the Title Information or the Surveys; (ii)
those to be released by the Approval Order; and (iii) those that were not
disclosed in the Title Information or the Surveys that will not have a Material
Adverse Effect.
9.5 Non-Competition Law. If premerger notifications are required
under the HSR Act, then all necessary filings shall have been made and the
applicable premerger waiting period(s) shall have expired or been earlier
terminated. In addition, if any foreign competition law filings are required in
connection with the transactions described in this Agreement, all foreign
approvals required for closing shall have been received. No statute, rule,
regulation, executive order, decree, ruling or preliminary or permanent
injunction shall have been enacted, entered, promulgated, or enforced by any
Governmental Authority or arbitrator that prohibits, restrains, or enjoins the
consummation of the transactions contemplated by this Agreement, that has not
been withdrawn or terminated, in each case arising under any Non-Competition
Law.
42
9.6 No Order. No statute, rule, regulation, executive order,
decree, ruling, or preliminary or permanent injunction, other than any of the
same constituting or arising under a Non-Competition Law, shall have been
enacted, entered, promulgated, or enforced by any Governmental Authority or
arbitrator that prohibits, restrains, enjoins, or restricts the consummation of
the transactions contemplated by this Agreement that has not been withdrawn or
terminated.
9.7 No Material Adverse Effect. Since the date of the Original
Agreement, no Material Adverse Effect (including, but not limited to, a Material
Adverse Effect occurring as a consequence of the applicability to the
Transferred Assets of a change in Environmental Laws after the date of this
Agreement) shall have occurred and be continuing on and as of the Closing Date.
SECTION 10. CONDITIONS PRECEDENT TO SELLERS' OBLIGATIONS.
---------------------------------------------
The obligations of Sellers at the Closing hereunder are subject, at
Sellers' election, to the satisfaction on or prior to the Closing Date of the
conditions set forth below, although notwithstanding the failure of any one or
more of such conditions, Sellers may nevertheless proceed with Closing without
satisfaction, in whole or in part, of any one or more of such conditions and
without written waiver; provided, however, that if any of the conditions set
forth in Sections 10.1, 10.2, or 10.5 of this Agreement shall not have been
satisfied (or waived by Sellers) as of the Closing Date, before Sellers may
terminate this Agreement under Section 13.1, Sellers shall first notify Buyer in
writing of such failure of satisfaction of such condition(s) and Sellers shall
afford Buyer the opportunity to cure, remedy or otherwise satisfy such
condition(s), in which event Buyer may elect to extend the Closing Date for a
period designated by Buyer by notice to Sellers upon receipt of Sellers' notice
(but in no event shall the Closing Date be extended beyond the Outside Date). To
the extent that as of the Closing Date Sellers have Knowledge of the failure of
any of such conditions or the breach by Buyer of any of the representations or
warranties contained in this Agreement and nevertheless proceed with Closing,
Sellers shall be deemed to have waived for all purposes any rights or remedies
it may have against Buyer by reason of failure of any condition or the breach of
any such representation or warranty.
10.1 Representations and Warranties True. The representations and
warranties made by Buyer and Smithfield in this Agreement that are qualified by
the term "Material Adverse Effect," the word "material" or phrases of like
import shall be true and correct in all respects on and as of the Closing Date,
and the representations and warranties made by Buyer and Smithfield that are not
so qualified shall be true and correct in all material respects on and as of the
Closing Date, in each case with the same effect as though such representations
and warranties had been made or given on and as of the Closing Date (except for
representations and warranties that relate to a specific date).
10.2 Compliance with Agreement. Buyer and Smithfield shall have
performed and complied in all material respects with all of their obligations
under this Agreement which are to be performed or complied with by them prior to
or on the Closing Date.
43
10.3 Non-Competition Law. If premerger notifications are required
under the HSR Act, then all necessary filings shall have been made and the
applicable premerger waiting period(s) shall have expired or been earlier
terminated. In addition, if any foreign competition law filings are required in
connection with the transactions described in this Agreement, all foreign
approvals required for closing shall have been received. No statute, rule,
regulation, executive order, decree, ruling or preliminary or permanent
injunction shall have been enacted, entered, promulgated, or enforced by any
Governmental Authority or arbitrator that prohibits, restrains, or enjoins the
consummation of the transactions contemplated by this Agreement, that has not
been withdrawn or terminated, in each case arising under any Non-Competition
Law.
10.4 Bankruptcy Court Approval. This Agreement and the transactions
contemplated hereby, including, without limitation, the assumption and
assignment of the Executory Contracts, shall have been approved by the
Bankruptcy Court as provided in Section 7.1, and the Approval Order shall have
been entered by the Bankruptcy Court.
10.5 No Order. No statute, rule, regulation, executive order,
decree, ruling, or preliminary or permanent injunction, other than any of the
same constituting or arising under a Non-Competition Law, shall have been
enacted, entered, promulgated, or enforced by any Governmental Authority or
arbitrator that prohibits, restrains, enjoins, or restricts the consummation of
the transactions contemplated by this Agreement that has not been withdrawn or
terminated.
SECTION 11. RELEASE AND INDEMNITY.
----------------------
Effective as of the Closing, Buyer and Smithfield hereby release
Sellers and their respective Affiliates, direct and indirect, shareholders,
directors and officers, employees, agents and Representatives (collectively, the
"Seller Released Parties") from any and all liabilities, actions, rights of
action, contracts, indebtedness, obligations, claims, causes of action, suits,
damages, demands, costs, expenses and attorneys' fees whatsoever, of every kind
and nature, known or unknown, disclosed or undisclosed, accrued or unaccrued,
existing at any time (collectively, "Claims"), that Buyer, Smithfield and their
respective Affiliates and all such Persons' respective successors or assigns,
have or may have against any of the Seller Released Parties (including, but not
limited to, Environmental Liabilities), other than Sellers' Liabilities under
Section 2.2 (with respect to the payment of disputed Cure Amounts), Section 3.4
(with respect to the post-Closing adjustments associated with the Final Net
Working Capital Calculation), Section 4.2 (with respect to the Transition
Services Agreement), Section 4.4 (with respect to the Capital Improvements
Agreement), or those other provisions of this Agreement which expressly survive
the Closing pursuant to Section 12 of this Agreement. At Closing, Buyer and
Smithfield further hereby agree to indemnify, hold harmless and defend the
Seller Released Parties from any and all Environmental Liabilities.
Effective as of the Closing, Sellers hereby release Buyer and
Smithfield and their respective Affiliates, direct and indirect, shareholders,
directors and officers, employees, agents and Representatives (collectively, the
"Buyer Released Parties") from any and all Claims that Sellers and their
respective Affiliates and all such Persons' respective successors or assigns,
have or may have against any of the Buyer Released Parties, other than
Liabilities under this Agreement and Liabilities under the assumptions,
indemnities and other documents and
44
instruments delivered at or in connection with the Closing by Buyer, Smithfield,
or any of the other Buyer Released Parties pursuant to Sections 2.2, 2.4, 3.4,
4.2, 4.4, or those other provisions of this Agreement which expressly survive
the Closing pursuant to Section 12 of this Agreement, and other than rights
against Smithfield and its Affiliates associated with the settlement of
unemployment tax liabilities relating to the sale of property in Dubuque, Iowa.
SECTION 12. SURVIVAL OF COVENANTS, AGREEMENTS, REPRESENTATIONS AND
------------------------------------------------------
WARRANTIES.
-----------
The covenants, representations and warranties contained in this
Agreement shall not survive the Closing; provided, however, that the provisions
of Sections 11 and 12 and all of the covenants, agreements and obligations
contained in Sections 2.2, 2.4, 3.2, 3.4, 4.4, 7.2, 7.7, 7.8, 7.12, 7.13, 8 and
14 shall survive the Closing indefinitely.
SECTION 13. TERMINATION, BREAK-UP FEE AND REMEDIES.
---------------------------------------
13.1 Termination and Abandonment. This Agreement may be terminated
and abandoned on or prior to the Closing Date as follows: (a) by Buyer if a
material breach of any provision of this Agreement has been committed by Sellers
and such breach has not been waived by Buyer or cured by Sellers (Buyer agreeing
to first notify Sellers in writing of such breach and to afford Sellers the
opportunity to cure such breach for a period designated by Sellers by notice to
Buyer upon receipt of Buyer's notice, in which event Buyer may not terminate
this Agreement by reason of such breach unless Sellers shall have failed to cure
the same by the end of such period so designated by Sellers; provided, however,
that in no event shall the cure period so designated by Sellers extend beyond
the Outside Date); (b) by Sellers if a material breach of any provision of this
Agreement has been committed by Buyer or Smithfield and such breach has not been
waived by Sellers or cured by Buyer or Smithfield (Sellers agreeing to first
notify Buyer in writing of such breach and to afford Buyer or Smithfield the
opportunity to cure such breach for a period designated by Buyer by notice to
Sellers upon receipt of Sellers' notice, in which event Sellers may not
terminate this Agreement by reason of such breach unless Buyer or Smithfield
shall have failed to cure the same by the end of such period so designated by
Buyer; provided, however, that in no event shall the cure period so designated
by Buyer extend beyond the Outside Date); (c) by Buyer if any condition in
Sections 9.1, 9.2, 9.3, 9.4, 9.6 or 9.7 has not been satisfied as of the Closing
Date (subject, however, to Sellers' option to extend set forth in Section 9 with
respect to Sections 9.1, 9.2, 9.4, 9.6 or 9.7) or if the satisfaction of such a
condition by the Closing is or becomes impossible (other than through the
failure of Buyer or Smithfield to comply with their obligations under this
Agreement), and Buyer has not waived such condition on or before such date; (d)
by Sellers if any condition in Sections 10.1, 10.2, 10.4, or 10.5 has not been
satisfied as of the Closing Date (subject, however, to Buyer's option to extend
set forth in Section 10 with respect to Sections 10.1, 10.2 or 10.5) or if the
satisfaction of such a condition by the Closing Date is or becomes impossible
(other than through the failure of Sellers to comply with their obligations
under this Agreement), and Sellers have not waived such condition on or before
such date; (e) by mutual written consent of the parties hereto; (f) by either
Buyer or Sellers, upon the consummation of an Alternative Transaction; (g) by
Sellers if the condition in Section 10.3 has not been satisfied by the Outside
Date; (h) by Buyer if the condition in Section 9.5 has not been satisfied by the
Outside Date; or (i) by Sellers or Buyer if the Approval Order shall not have
been entered by the
45
Bankruptcy Court by the third (3/rd/) Business Day prior to the Outside Date. In
the event of termination by any party as provided above, written notice shall
promptly be given to the other party and each party shall pay its own expenses
incident to the preparation for the consummation of this Agreement and the
transactions contemplated hereby. If validly terminated pursuant to this Section
13.1, this Agreement shall become wholly void and of no further force and effect
without liability to Buyer, Smithfield, Foods, Industries or any of their
respective Affiliates or Representatives, except that the obligations of Buyer
under the confidentiality agreement delivered by Buyer and the obligations of
the parties under the Deposit Escrow Agreement, this Section 13.1 and Sections
3.1, 7.10, 13.2, 13.3, 13.4, 13.5 and 14 of this Agreement shall remain in full
force and effect. Within ten (10) days of the effectiveness of any such
termination and, if applicable, the payment of the Break-up Fee or the
applicable portion thereof, Buyer shall deliver to Sellers copies of each of the
Title Commitments and Buyer's Surveys. Subject to the provisions of Section 13.4
and 13.5, Sellers shall instruct the Escrow Agent to release the Deposit to the
Buyer upon the termination of this Agreement.
13.2 Break-up Fee. In the event this Agreement is terminated
pursuant to Section 13.1(a) or Section 13.1(f), Sellers agree to pay to Buyer
the Break-up Fee on the date of consummation of such Alternative Transaction or
on the date of termination of this Agreement solely by reason of a material
breach of this Agreement by Sellers, as the case may be; provided, however, the
Break-up Fee shall not be due and payable if there shall have occurred and shall
then be continuing a material breach by Buyer or Smithfield of any of their
covenants, agreements, representations, warranties or other obligations
contained in this Agreement, and provided further, however, that only the amount
of $3,000,000 of the Break-up Fee shall be due and payable to Buyer upon
termination pursuant to Section 13.1(a) of this Agreement in the event of the
material breach of the representations and warranties of Sellers under this
Agreement (as contrasted with other material breaches). If this Agreement is
terminated under Section 13.1(f), and the Alternative Transaction that caused
the termination is a transaction in which Smithfield or an Affiliate thereof
obtains an interest in the Transferred Assets, only a portion of the Break-up
Fee shall be payable hereunder, which portion shall equal the product of the
Break-up Fee times a fraction (a) the numerator of which is the value of the
Transferred Assets in which Smithfield or an Affiliate thereof does not obtain
an interest, and (b) the denominator of which is the total value of the
Transferred Assets as determined pursuant to the order entered by the Bankruptcy
Court in connection with the "Auction" (as such term is defined in the Bid
Procedures Attachment) and the order(s) entered by the Bankruptcy Court
approving such Alternative Transaction.
13.3 BUYER'S REMEDIES. UNDER THE CIRCUMSTANCES SET FORTH IN SECTION
13.2 OF THIS AGREEMENT, IN CONNECTION WITH A TERMINATION OF THIS AGREEMENT BUYER
MAY BE ENTITLED TO THE BREAK-UP FEE OR A PORTION OF THE BREAK-UP FEE AS
LIQUIDATED DAMAGES, THE PARTIES ACKNOWLEDGING THAT ACTUAL DAMAGES WILL BE
DIFFICULT TO ASCERTAIN. IF THE BUYER SHALL BE ENTITLED TO RECEIPT OF THE
BREAK-UP FEE OR A PORTION OF THE BREAK-UP FEE UNDER THE EXPRESS TERMS OF THIS
AGREEMENT, BUYER AND SELLERS AGREE THAT NEITHER BUYER NOR SMITHFIELD MAY SEEK
ANY REMEDIES OTHER THAN COLLECTION OF THE BREAK-UP FEE OR SUCH PORTION OF THE
BREAK-UP FEE, AND NEITHER BUYER NOR SMITHFIELD MAY CLAIM ANY ADDITIONAL DAMAGES
AS A RESULT OF
46
SUCH TERMINATION, BUT OTHERWISE BUYER AND SMITHFIELD HEREBY WAIVE ANY RIGHT TO
SEEK ANY OTHER REMEDY OR TO SEEK ANY ADDITIONAL DAMAGES, INCLUDING CONSEQUENTIAL
DAMAGES, BY REASON OF ANY DEFAULT BY SELLERS OR TERMINATION OF THIS AGREEMENT;
PROVIDED, HOWEVER, IN THE EVENT THIS AGREEMENT IS TERMINATED PURSUANT TO SECTION
13.1(a) OR IF THE CLOSING DOES NOT OCCUR DUE TO ANY FAILURE OF SELLERS TO CLOSE
OR ANY MATERIAL BREACH BY SELLERS OF THEIR OBLIGATIONS UNDER THIS AGREEMENT,
BUYER AND SMITHFIELD MAY PURSUE THE REMEDY OF SPECIFIC PERFORMANCE WITH RESPECT
TO SALE OF THE TRANSFERRED ASSETS AND OTHERWISE WITH RESPECT TO CONSUMMATION OF
THE TRANSACTIONS CONTEMPLATED HEREIN.
13.4 SELLERS' REMEDIES. IN THE EVENT THIS AGREEMENT IS TERMINATED
PURSUANT TO SECTION 13.1(b) OR IF THE CLOSING DOES NOT OCCUR DUE TO ANY FAILURE
OF BUYER TO CLOSE IN MATERIAL BREACH OF ITS OBLIGATIONS UNDER THIS AGREEMENT,
THEN BUYER AND SELLERS AGREE THAT THE DEPOSIT SHALL BE FORFEITED TO SELLERS AS
LIQUIDATED DAMAGES, THE PARTIES ACKNOWLEDGING THAT ACTUAL DAMAGES WILL BE
DIFFICULT TO ASCERTAIN (PROVIDED, HOWEVER, THE DEPOSIT SHALL NOT BE FORFEITED IF
THERE SHALL HAVE OCCURRED AND SHALL THEN BE CONTINUING A MATERIAL BREACH BY
SELLERS OF ANY OF THEIR COVENANTS, AGREEMENTS, REPRESENTATIONS, WARRANTIES OR
OTHER OBLIGATIONS CONTAINED IN THIS AGREEMENT). IF THE SELLERS SHALL BE ENTITLED
TO RECEIPT OF THE DEPOSIT UNDER THE EXPRESS TERMS OF THIS AGREEMENT, BUYER AND
SELLERS AGREE THAT SELLERS MAY NOT SEEK ANY REMEDIES OTHER THAN COLLECTION OF
THE DEPOSIT AND SELLERS MAY NOT CLAIM ANY ADDITIONAL DAMAGES AS A RESULT OF SUCH
TERMINATION, BUT OTHERWISE SELLERS HEREBY WAIVE ANY RIGHT TO SEEK ANY OTHER
REMEDY OR TO SEEK ANY ADDITIONAL DAMAGES, INCLUDING CONSEQUENTIAL DAMAGES BY
REASON OF ANY DEFAULT BY BUYER OR TERMINATION OF THIS AGREEMENT.
13.5 Release of HSR Deposit. Buyer assumes the risk of and
responsibility for compliance of the transactions under this Agreement with the
HSR Act and applicable Non-Competition Law. If Buyer terminates this Agreement
pursuant to Section 13.1(h) or if Sellers terminate this Agreement pursuant to
Section 13.1(g), then notwithstanding anything contained in this Agreement to
the contrary, Buyer shall forfeit the HSR Deposit to Sellers and the HSR Deposit
shall be released and paid over to Sellers. Upon any such termination, if Buyer
is, as of the date of termination, otherwise in compliance with its obligations,
covenants, agreements, representations and warranties under this Agreement, then
Buyer shall be entitled to receive a refund of the balance of the Deposit, less
the HSR Deposit, in accordance with the Deposit Escrow Agreement. Sellers and
Buyer acknowledge and agree, in any event, that no failure by Sellers to
"reasonably cooperate" with Buyer in accordance with the provisions of Section
7.4 shall be the basis for termination of this Agreement pursuant to Section
13.1(a) of this Agreement unless Buyer shall, with reasonable promptness upon
obtaining knowledge thereof, have first provided written notice to Sellers
specifying the action or failure to act of Sellers which is the basis for
Buyer's claim of material breach by Sellers and Buyer shall have afforded to
Sellers reasonable opportunity to cure such claim of material breach; in
addition, any such
47
material breach or claim of material breach by Sellers as to which Buyer shall
have afforded Sellers notice and a reasonable opportunity to cure as described
above shall not be the basis for any relief of Buyer from its obligations under
this Section 13.5 of this Agreement unless such material breach or claim of
material breach directly and proximately caused the failure or nonsatisfaction
of the condition in Section 9.5 of this Agreement.
SECTION 14. MISCELLANEOUS.
--------------
14.1 Expenses. Except as otherwise expressly set forth in this
Agreement to the contrary, each of the parties hereto agrees to be responsible
for its own costs, without right of reimbursement from the other, incurred by it
incident to the performance of its obligations hereunder, whether or not the
transactions contemplated by this Agreement shall be consummated, including,
without limitation, those costs incident to the preparation of this Agreement,
and the fees and disbursements of legal counsel, accountants and consultants
employed by the respective parties in connection with the transactions
contemplated by this Agreement.
14.2 Further Assurances. Each party shall, from time to time at the
reasonable request of the other, and without further consideration, execute and
deliver such other instruments of sale, transfer, conveyance, assignment,
clarification, and termination, and take such other action as the party making
the request may reasonably require to effectuate the intentions of the parties,
including those required to sell, transfer, convey and assign to, and vest in
Buyer, and to place Buyer in possession of the Transferred Assets, to reserve
the Excluded Assets in favor of Sellers, and otherwise to consummate the
transactions hereunder.
14.3 Inform of Litigation. During the period from the date of this
Agreement to the Closing Date, each party will promptly inform the other party
in writing of any litigation commenced against such party in respect of the
transactions contemplated by this Agreement.
14.4 Assignment. This Agreement shall not be assigned by either
party without the prior written consent of the other party and any attempted
assignment without such written consent shall be null and void and without legal
effect; provided, however, that Sellers shall not withhold their consent to an
assignment by Buyer of its rights under this Agreement to an Affiliate of Buyer,
provided that (a) the assignee shall assume in writing (in form reasonably
satisfactory to Sellers), jointly and severally with Buyer, all obligations of
Buyer under this Agreement, (b) the assignment shall not require any third party
approvals or filing of notices and shall not otherwise delay the consummation of
the transactions contemplated herein, (c) the assignment shall not relieve Buyer
of its obligations under this Agreement if such assignee does not perform such
obligations and (d) Smithfield shall reaffirm in writing (in form reasonably
satisfactory to Sellers) its guarantee of the obligations of Buyer and such
assignee hereunder.
14.5 Governing Law. This Agreement shall be governed by and
construed and interpreted in accordance with the Laws of the State of Missouri
applicable to agreements made and to be performed entirely within such state,
including all matters of construction, validity and performance.
48
14.6 Amendment and Modification. Buyer and Sellers may amend, modify
and supplement this Agreement in such manner as may be mutually agreed by them
in writing.
14.7 Notices. All notices, requests, demands and other
communications hereunder shall be in writing and deemed to be duly given, (a)
when delivered by hand, with a record of receipt, (b) the fourth day after
mailing, if mailed by certified or registered mail, return receipt requested
with postage prepaid, (c) the day delivered by a nationally recognized overnight
courier, with a record of receipt, or (d) the day of transmission, with
confirmation of receipt, if delivered by facsimile or telecopy during regular
business hours (which regular business hours shall be 9:00 am - 5:00 pm, Monday
through Friday excluding office holidays, at the office where received), or the
day after transmission, with confirmation of receipt, if delivered by facsimile
or telecopy after regular business hours, to the parties at the following
addresses or telecopy numbers (or to such other address or telecopy number as a
party may have specified by the notice given to the other party pursuant to this
provision):
If to Sellers:
Farmland Foods, Inc.
00000 Xxxxx Xxxxxxxxxx Xxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx, General Counsel
Fax: (000) 000-0000
and
Farmland Industries, Inc.
00000 Xxxxx Xxxxxxxxxx Xxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx, General Counsel
Fax: (000) 000-0000
with a copy to (which shall not constitute notice):
Xxxxx Xxxx LLP
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx
Fax: (000) 000-0000
and with a copy to (which shall not constitute notice):
Xxxxx Xxxx LLP
000 X. Xxxxxxxx
Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
and
49
Xxxxxx X. Xxxxxxxxx
Fax: (000) 000-0000
If to Buyer:
KC Acquisition, Inc.
c/o Smithfield Foods, Inc.
000 Xxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X.X. Xxxxxxx, Executive Vice President, Senior
Advisor to the Chairman and General Counsel
Fax: (000) 000-0000
with a copy to (which shall not constitute notice):
Hunton & Xxxxxxxx LLP
Riverfront Plaza, East Tower
000 X. Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx
Fax: (000) 000-0000
or to such other addresses as either party may provide to the other in writing.
14.8 Entire Agreement. Except for any confidentiality agreements
between the parties (which shall survive the execution and delivery of this
Agreement), this Agreement cancels, merges and supersedes all prior and
contemporaneous understandings and agreements relating to the subject matter of
this Agreement, written or oral, between the parties hereto and contains the
entire agreement of the parties hereto, and the parties hereto have no
agreements, representations or warranties relating to the subject matter of this
Agreement which are not set forth herein.
14.9 Successors. This Agreement shall be binding upon and shall
inure to the benefit of each of the parties hereto and to their respective
successors and permitted assigns. In the event that a Chapter 11 trustee should
be appointed for Sellers, or in the event that Sellers' Chapter 11 case should
be converted to a case under Chapter 7, the obligations of Sellers hereunder
shall be binding upon such trustee or successor Chapter 7 estate.
14.10 Counterparts. This Agreement may be executed in one or more
counterparts each of which shall be deemed an original but all of which together
shall constitute but one and the same instrument.
14.11 Headings. The headings used in this Agreement are for
convenience only and shall not constitute a part of this Agreement.
14.12 Schedules. All of the exhibits and schedules attached hereto
are incorporated herein and made a part of this Agreement by reference, and any
matter disclosed in
50
any portion of a schedule shall be deemed fully disclosed to Buyer. The exhibits
and schedules refer to this Agreement sometimes as the "Agreement," sometimes as
the "Asset Purchase Agreement," and sometimes as the "Asset Purchase and Sale
Agreement;" and all of such references shall be understood to refer to this
Agreement and the provisions of this Agreement.
14.13 Jurisdiction. During the Bankruptcy Cases, any suit, action or
proceeding between the parties hereto relating to this Agreement or to any
agreement, document or instrument delivered pursuant hereto or in connection
with the transactions contemplated hereby, or in any other manner arising out of
or relating to the transactions contemplated by or referenced in this Agreement
shall be commenced and maintained exclusively in the Bankruptcy Court. The
parties hereto submit themselves unconditionally and irrevocably to the personal
jurisdiction of such court. Subsequent to the Bankruptcy Cases, any suit, action
or proceeding between the parties hereto relating to this Agreement or to any
agreement, document or instrument delivered pursuant hereto or in connection
with the transactions contemplated hereby, or in any other manner arising out of
or relating to the transactions contemplated by or referenced in this Agreement
shall be commenced and maintained exclusively in the United States District
Court for the Western District of Missouri, or if that court lacks jurisdiction
over the subject matter, in a state court of competent subject matter
jurisdiction sitting in Platte County, Missouri. The parties hereto submit
themselves unconditionally and irrevocably to the personal jurisdiction of such
courts, as applicable. The parties further agree that venue shall be in Western
District of Missouri. The parties hereto irrevocably waive any objection to such
personal jurisdiction or venue, including, but not limited to, the objection
that any suit, action or proceeding brought in Western District of Missouri, has
been brought in an inconvenient forum.
14.14 Severability. The provisions of this Agreement will be deemed
severable and the invalidity or unenforceability of any provision will not
affect the validity or enforceability of the other provisions hereof; provided
that if any provision of this Agreement, as applied to any party or to any
circumstance, is judicially determined not to be enforceable in accordance with
its terms, the parties agree that the court judicially making such determination
may modify the provision in a manner consistent with its objectives such that it
is enforceable, and/or to delete specific words or phrases, and in its modified
form, such provision will then be enforceable and will be enforced.
14.15 Construction. This Agreement has been freely and fairly
negotiated among the parties. If an ambiguity or question of intent or
interpretation arises, this Agreement will be construed as if drafted jointly by
the parties and no presumption or burden of proof will arise favoring or
disfavoring any party because of the authorship of any provision of this
Agreement. The words "include," "includes," and "including" will be deemed to be
followed by "without limitation." Pronouns in masculine, feminine, and neuter
genders will be construed to include any other gender, and words in the singular
form will be construed to include the plural and vice versa, unless the context
otherwise requires. The words "this Agreement," "herein," "hereof," "hereby,"
"hereunder," and words of similar import refer to this Agreement as a whole and
not to any particular subdivision unless expressly so limited. Except as
expressly stated herein, there are no third party beneficiaries to this
Agreement.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
FARMLAND FOODS, INC.
Debtor in Possession
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chairman, Board of Directors
FARMLAND INDUSTRIES, INC.
Debtor in Possession
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxx
Title: President and CEO
KC ACQUISITION, INC.
By: /s/ Xxxxxxx X. Xxxx
-------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Vice President
JOINDER AND GUARANTEE
---------------------
Smithfield Foods, Inc., a Virginia corporation, for value received and
to induce Sellers to enter into the foregoing Agreement, which Agreement is
hereby incorporated by reference into this Joinder and Guarantee (the
"Guarantee"), (a) joins with Buyer, jointly and severally, (i) in the
acknowledgments set forth in Section 2.1 of this Agreement, (ii) in the
indemnities, warranties, covenants and agreements set forth in Section 2.2,
Section 2.4, Section 3.4, Section 4.4 and Section 7.2 of the Agreement, (iii) in
the representations, warranties and indemnities set forth in Section 6 of the
Agreement, (iv) in the releases and indemnities set forth in Section 11 of the
Agreement, and (v) in the waivers set forth in Section 13.3 of the Agreement,
(b) agrees to join in and guarantee the escrow agreements delivered by Buyer
under the Agreement and the assumptions, indemnities and other documents and
instruments delivered at or in connection with the Closing by Buyer under the
Agreement, and (c) unconditionally guarantees to Sellers the full and faithful
payment when due and performance when owed of each and every undertaking of
Buyer hereunder and in all documents to be delivered by Buyer to Sellers at
Closing including, without limiting the generality of the foregoing, all
covenants and agreements of Buyer in the Agreement, all representations,
warranties and indemnities of Buyer under the Agreement (including, but not
limited to, the representations, warranties and
52
indemnities under Section 6 of the Agreement), all releases and indemnities by
Buyer set forth in the Agreement (including, but not limited to, the releases
and indemnities under Section 11 of the Agreement), and all other obligations,
indebtedness and liabilities of Buyer under the Agreement and under all of the
assumptions, indemnities, and other documents and instruments to be delivered by
Buyer to Sellers or either Seller at Closing. This Guarantee shall be a
continuing and unlimited guarantee of such obligations, indebtedness and
liabilities of Buyer hereunder, whether direct or indirect, liquidated or
unliquidated, absolute or contingent, joint or several, now existing or
hereafter arising, due or to become due. Smithfield Foods, Inc. hereby waives
notice of acceptance of this Guarantee, and notice of extension, renewal or
release of any obligation, indebtedness or liability of Buyer hereunder. If
Buyer defaults under or otherwise fails to pay or perform any of its
obligations, indebtedness or liabilities under the Agreement, Sellers or either
Seller may proceed directly against Smithfield Foods, Inc., or against Buyer, or
against both Smithfield Foods, Inc. and Buyer in the same lawsuit, and
Smithfield Foods, Inc. waives any claim to the contrary. Smithfield Foods, Inc.
consents to the jurisdiction and venue provisions set forth in Section 14.13 of
the Agreement with respect to enforcement of this Guarantee, and agrees that
this Guarantee shall be unimpaired by any release of Buyer, or by any
bankruptcy, reorganization or insolvency of Buyer. This Guarantee and the
representations, warranties, indemnities, releases, covenants, agreements and
obligations of Smithfield Foods, Inc. hereunder shall survive the Closing under
or termination of the Agreement. This Guarantee shall inure to the benefit of
Sellers and their respective successors and assigns.
SMITHFIELD FOODS, INC.
By: /s/ C. Xxxxx Xxxx
-------------------------------------
Name: C. Xxxxx Xxxx
Title: President and Chief Operating
Officer
53
Exhibits
--------
A Transferred Assets
B Assumed Liabilities
C Excluded Assets
D Deposit Escrow Agreement
E Working Capital Escrow Agreement
F Net Working Capital
G Form of Assignment and Assumption
H Form of Transition Services Agreement
I Form of Indemnity regarding Rejected Contracts
J Form of Capital Improvements Agreement
K Bid Procedures Attachment
L Bidding Procedures Order
Schedules
---------
5.0 Disclosure Schedules
54
