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EXHIBIT 2
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
XXXX XXX CORPORATION, A MARYLAND CORPORATION,
PYA/MONARCH, INC., A DELAWARE CORPORATION,
FRIGID FREEZE FOODS, INC., A DELAWARE CORPORATION,
PYA GENERAL PARTNER CORP., A DELAWARE CORPORATION,
PYA LIMITED PARTNER CORP., A DELAWARE CORPORATION,
X.X. XXXXXXX & SONS, INCORPORATED, A VIRGINIA CORPORATION,
SANDLER LIMITED PARTNER CORP., A VIRGINIA CORPORATION,
SANDLER GENERAL PARTNER CORP., A VIRGINIA CORPORATION,
XXXXXX X. XXXXXXX,
XXXXXX X. XXXXXXX,
XXXXX X. XXXXXXX, AND
CONSOLIDATED FOODSERVICE COMPANIES LIMITED PARTNERSHIP,
A DELAWARE LIMITED PARTNERSHIP
October 11, 1994
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TABLE OF CONTENTS
SECTION 1. THE CLOSING; ACQUISITION OF LMS SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1A. Acquisition Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1B. Acquisition Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1C. Allocation of SLC Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1D. The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2. CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2A. Confidential Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2B. Forced Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3A. Organization and Corporate Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3B. Authorization; Binding Effect; No Breach . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3C. SLC Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3D. Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3E. Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3F. Investment Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3G. SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3H. Accuracy on Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE LMS SHAREHOLDERS . . . . . . . . . . . . . . . . . . . 7
4A. Organization; Capacity and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4B. Authorization; Binding Effect; No Breach . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4C. Capital Stock and Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4D. Absence of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4E. Absence of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4F. Investment Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4G. Certain Other Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4H. Investor Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4I. Accuracy on Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5. ACCESS TO RECORDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 6. SURVIVAL AND INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6A. Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . 12
6B. Indemnification Obligations of the LMS Shareholders . . . . . . . . . . . . . . . . . . . . . 12
6C. Indemnification Obligations of SLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6D. Indemnification Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6E. Form of Indemnification Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 7. CONDITIONS TO THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7A. Conditions of SLC's Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7B. Conditions of the LMS Shareholders' Obligation . . . . . . . . . . . . . . . . . . . . . . . 18
7C. No Other Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 8. OTHER COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(i)
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8A. HSR; Satisfaction of Closing Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8B. Operation of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8C. Washington Beef Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8D. Disposition of Non-Partnership Related Assets . . . . . . . . . . . . . . . . . . . . . . . . 21
8E. Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8F. Notice by LMS Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8G. Notice by SLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8H. Transaction Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8I. Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8J. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8K. Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8L. Transfer of Restricted Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8M. Pre-Closing Termination of Certain Affiliate Agreements . . . . . . . . . . . . . . . . . . . 24
8N. Use of Sandler Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8O. Bank Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8P. Other Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8Q. Certain Deliveries at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8R. Antidilution Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8S. Registration of SLC Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8T. Listing of SLC Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8U. Tax Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8V. Conduct of Business on Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8W. Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8X. No Impairment of Current Indemnification Rights . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 9. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9A. Additional Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9B. Other Definitional Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 10. OTHER AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10A. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10B. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10C. Consent to Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10D. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10E. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10F. Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10G. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10H. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10I. Schedules and Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10J. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10K. Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10L. Special Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10M. No Impact on Other Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10N. No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10O. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10P. Merger and Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(ii)
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LIST OF EXHIBITS
Exhibit A - Form of Consulting Agreements
Exhibit B - Indemnification Agreement
Exhibit C - Form of Employment Agreements
Exhibit D - Form of Partnership Agreement Amendment
Exhibit E - Form of Benefit Plan Amendment
Exhibit F - Property Description
Exhibit G - Property Description
LIST OF DISCLOSURE SCHEDULES
Consents Schedule
Capitalization Schedule
Affiliate Agreement Schedule
(iii)
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made and
entered into this 11th day of October, 1994 by and among Xxxx Xxx Corporation,
a Maryland corporation ("SLC"), PYA/Monarch, Inc., a Delaware corporation
("PYA"), Frigid Freeze Foods, Inc., a Delaware corporation ("FFI"), PYA General
Partner Corp., a Delaware corporation ("PYA GP"), PYA Limited Partner Corp., a
Delaware corporation ("PYA LP"), X.X. Xxxxxxx & Sons, Incorporated, a Virginia
corporation ("LMS"), Sandler Limited Partner Corp., a Virginia corporation
("LMS LP"), Sandler General Partner Corp., a Virginia corporation ("LMS GP,"
and together with LMS LP, the "LMS Subsidiaries"), Xxxxxx X. Xxxxxxx, Xxxxxx X.
Xxxxxxx and Xxxxx X. Xxxxxxx (Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxx and Xxxxx X.
Xxxxxxx are collectively the "LMS Shareholders"), and Consolidated Foodservice
Companies Limited Partnership, a Delaware limited partnership (the
"Partnership"). SLC, PYA, FFI, PYA GP and PYA LP are referred to herein
collectively as the "SLC Parties." LMS, LMS GP, LMS LP and the LMS
Shareholders are referred to herein collectively as the "LMS Parties." The SLC
Parties, the LMS Parties and the Partnership are referred to collectively
herein as the "Parties." Certain capitalized terms which are used herein are
defined in Section 9 below.
WHEREAS, the LMS Shareholders own all of the outstanding capital
stock of LMS;
WHEREAS, LMS owns all of the outstanding capital stock of LMS GP and
LMS LP;
WHEREAS, SLC indirectly owns all of the outstanding capital stock of
PYA;
WHEREAS, PYA owns all of the outstanding capital stock of PYA GP and
FFI;
WHEREAS, PYA and FFI own all of the outstanding capital stock of PYA
LP;
WHEREAS, LMS GP, LMS LP, PYA GP and PYA LP collectively own all of
the issued and outstanding partnership interests of the Partnership; and
WHEREAS, the parties hereto desire to enter into a transaction
pursuant to which SLC will acquire from the LMS Shareholders and the LMS
Shareholders will transfer to SLC all of the issued and outstanding capital
stock of LMS (the "LMS Shares") in exchange for shares of common stock, $1.33
1/3 par value per share, of SLC (the "SLC Common Stock"), with the intent that
each of such transactions qualify as a "reorganization" within the
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meaning of Section 368 (a) (1) (B) of the Internal Revenue Code of 1986, as
amended (the "Code").
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties hereby agree as follows:
SECTION 1. THE CLOSING; ACQUISITION OF LMS SHARES.
1A. ACQUISITION GENERALLY. At the Closing: (i) SLC shall acquire
from the LMS Shareholders, and the LMS Shareholders shall convey, assign,
transfer, and deliver to SLC, all of the LMS Shares free and clear of any Lien
and (ii) and the LMS Shareholders shall acquire from SLC, and SLC shall issue
and deliver to the LMS Shareholders, the SLC Shares, free and clear of any
Lien.
1B. ACQUISITION CONSIDERATION. As consideration for the
Acquisition, SLC shall transfer to the LMS Shareholders a number of shares of
SLC Common Stock equal to the sum of (i) 2,362,117 shares and (ii) the quotient
of (x) the Allocable Earnings (as defined below) divided by (y) $22.4375
(collectively, as adjusted in accordance with the provisions of Section 8R
below, the "SLC Shares"). "Allocable Earnings" means the lesser of (i) 30% of
the pre-tax net income of the Partnership from July 1, 1994 to the date that is
three business days prior to the Closing Date (but not less than zero) or (ii)
$2.991 million. The initial calculation of Allocable Earnings shall be made by
SLC in good faith based on the financial statements and books and records of
the Partnership and in accordance with the past practice of the Partnership.
Without limiting the generality of the foregoing, the amount of Allocable
Earnings shall be increased if necessary to eliminate any impact on Allocable
Earnings which results from changes in the organization, financing or
operations of the Partnership after the date of this Agreement that are not
consistent with past practice of the Partnership; provided that in no event
shall Allocable Earnings exceed $2.991 million. SLC shall deliver to the LMS
Shareholders a statement setting forth its calculation of Allocable Earnings,
as of the most recent month-end, at least 15 days prior to the Closing Date.
If requested by the LMS Shareholders, SLC shall promptly meet with the LMS
Shareholders (or their representatives) prior to the Closing to review and
discuss the calculation of Allocable Earnings. The definitive amount of
Allocable Earnings shall be as mutually agreed by SLC and the LMS Shareholders
prior to Closing, or if such Parties do not agree within two business days
prior to the Closing, by the Partnership's independent public accountants whose
determination thereof shall be final and binding on the Parties in the absence
of manifest error.
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1C. ALLOCATION OF SLC COMMON STOCK. The SLC Shares issued to the
LMS Shareholders pursuant to Section 1B shall be allocated among the LMS
Shareholders in proportion to the number of LMS Shares held by each of the LMS
Shareholders at the Closing (determined after giving effect to any LMS Shares
redeemed by LMS pursuant to the Disposition (as defined in Section 8D below)),
as set forth in an Officer's Certificate of LMS delivered to SLC at least 5
business days prior to the Closing; and such SLC Shares shall be registered in
the name of each such Person or his or her designee.
1D. THE CLOSING. Subject to the satisfaction or waiver of each of
the conditions specified in Sections 7A and 7B below, the closing of the
acquisition of the LMS Shares by SLC and the acquisition of the SLC Shares by
the LMS Shareholders (collectively, the "Acquisition") and the transactions
relating thereto (collectively, the "Closing") will take place at the offices
of Xxxxxxxx & Xxxxx, 000 Xxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx, commencing at
10:00 a.m. local time on May 1, 1995 (or, if later, the fifth business day
following satisfaction or waiver of the conditions specified in paragraphs
(ii), (iii) and (iv) of Section 7A and paragraph (ii) of Section 7B below). In
the event that the conditions specified in Section 7A and Section 7B are
satisfied prior to May 1, 1995, the LMS Shareholders may elect (upon 10
business days prior written notice to SLC) to cause the Closing to occur on a
date prior to May 1, 1995. The date and time of the Closing are referred to as
the "Closing Date." At the Closing:
(i) SLC will deliver to the LMS Shareholders stock
certificates representing the SLC Shares registered in the name of each
such Person or his or her designee;
(ii) the LMS Shareholders will deliver to SLC the stock
certificates representing all of the LMS Shares then outstanding,
endorsed in blank or accompanied by duly executed assignment documents
and signature guarantees;
(iii) each of Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxx and Xxxxx X.
Xxxxxxx (and, if mutually agreed by SLC and LMS, each of Xxxxxx Xxxxxxx
and Xxxx Xxxxxxx) will enter into a consulting agreement with SLC in the
form attached as Exhibit A to this Agreement (the "Consulting
Agreements");
(iv) the first payments due under the Consulting Agreements
will be made by SLC; and
(v) SLC will deliver to the LMS Shareholders a certificate,
executed by SLC, repeating as of the Closing the statements set forth in
Section 3E.
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SECTION 2. CONFIDENTIALITY.
2A. CONFIDENTIAL TREATMENT. From and after the date of this
Agreement, the LMS Shareholders will (and will use their reasonable best
efforts to cause each of their Affiliates to) treat and hold as confidential
all information concerning the conduct, affairs or operations of the businesses
of the Partnership (subject to the following sentence, the "Confidential
Information"), refrain from using any Confidential Information and, at SLC's
request, deliver to SLC or destroy all tangible embodiments (and all copies) of
any Confidential Information which are in the LMS Shareholders' or any such
Affiliate's possession (except that the LMS Shareholders may retain
Confidential Information to the extent such information is contained in
information or reports primarily relating to the consolidated or overall
operations of LMS); provided that the LMS Shareholders may disclose the results
of the operations of the Business and other information to the extent necessary
to permit the LMS Shareholders to file any required tax return or comply with
any legal obligation or otherwise to address in a commercially reasonable
manner matters relating to the Partnership or the Business prior to the
Closing. This Section 2A will not apply to any information which is generally
available to the public or those in the foodservice distribution business
(other than by reason of any disclosure by the LMS Shareholders or an Affiliate
of the LMS Shareholders in breach of this Section 2A) prior to the time of
disclosure, and such information shall not be considered Confidential
Information.
2B. FORCED DISCLOSURE. If any of the LMS Shareholders or any
Affiliate of any of the LMS Shareholders is requested or required (by oral
question or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or other similar process)
to disclose any Confidential Information, such LMS Shareholder will notify SLC
promptly after such LMS Shareholder becomes aware of such request or
requirement so that SLC may seek an appropriate protective order or waive
compliance with the provisions of this Section 2B. If any LMS Shareholder or
any Affiliate of an LMS Shareholder, on the advice of counsel, is required (or
permitted hereunder) to disclose any Confidential Information to any Government
Entity or other Person, such LMS Shareholder will use its reasonable best
efforts to ensure that such disclosure is limited to such Confidential
Information which is so required to be disclosed and obtain an order or other
assurance (or, at SLC's option, cooperate with SLC if it wishes to seek an
order or other assurance) that confidential treatment will be accorded to any
such Confidential Information disclosed.
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SECTION 3. REPRESENTATIONS AND WARRANTIES OF SLC. As a material inducement to
the LMS Shareholders to enter into this Agreement and to transfer the LMS
Shares, SLC hereby represents and warrants that:
3A. ORGANIZATION AND CORPORATE POWER. SLC is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Maryland. SLC has the requisite corporate power and authority necessary to
enter into, deliver and carry out its obligations pursuant to each of the
Transaction Documents to which it is a party.
3B. AUTHORIZATION; BINDING EFFECT; NO BREACH. Each SLC Party's
execution, delivery and performance of each Transaction Document to which such
Person is a party has been duly authorized by such Person. Each Transaction
Document to which each SLC Party is a party constitutes a valid and binding
obligation of such Person which is enforceable against such Person in
accordance with its terms, except as such enforceability may be limited by (a)
applicable insolvency, bankruptcy, reorganization, moratorium or other similar
laws affecting creditors' rights generally and (b) applicable equitable
principles (whether considered in a proceeding at law or in equity). The
execution, delivery and performance by each of the SLC Parties of the
Transaction Documents do not and will not: (i) conflict with or result in a
breach of the terms, conditions or provisions of, (ii) constitute a default
under, (iii) result in a violation of, or (iv) require any authorization,
consent, approval, exemption or other action by or declaration or notice to any
Government Entity pursuant to, the charter or bylaws of the SLC Parties or any
agreement, instrument, or other document, or any Legal Requirement to which the
SLC Parties or any of their assets is subject; except (A) any requirements of
the HSR Act and (B) the filing (if deemed appropriate by SLC) of a Form D
pursuant to Regulation D of the SEC. As of the date of this Agreement, SLC
does not have any reason to believe that the waiting period required by the HSR
Act in connection with the Acquisition will not expire or be terminated on or
before May 1, 1995.
3C. SLC SHARES. Upon the issuance and delivery of the SLC Shares
in accordance with this Agreement, such SLC Shares will constitute legally and
validly authorized and issued, fully paid and nonassessable shares of SLC
Common Stock, free and clear of any Lien and no stockholder of SLC will have
any preemptive right of subscription or purchase in respect thereof.
3D. BROKERAGE. There is no claim, or any basis for the assertion
of any claim, for brokerage commissions, finders' fees or similar compensation
in connection with the transactions contemplated by the Transaction Documents
based on any arrangement
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or agreement made or entered into, or other action taken by, SLC or any of its
Affiliates.
3E. REORGANIZATION. SLC intends the Acquisition to qualify as a
tax-free reorganization described in Section 368(a)(1)(B) of the Code. SLC has
no present plan or intention on its part to take or cause (or cause LMS or any
Affiliate of SLC or LMS to take or cause) any of the following actions
following the date hereof or the Closing:
(i) to liquidate LMS or to cause LMS to merge with or into
another corporation;
(ii) to sell or otherwise dispose of a number of LMS Shares
acquired in the Acquisition, except for transfers described in Section
368(a)(2)(C) of the Code, that would result in SLC losing control of LMS
within the meaning of Section 368(c)(1) of the Code, or to have LMS sell
or otherwise dispose of a number of shares of capital stock of LMS GP or
LMS LP that would result in LMS GP or LMS LP ceasing to be a member of
the SLC Affiliated Group;
(iii) to cause LMS to issue a number of additional shares of
its stock that would result in SLC losing control of LMS within the
meaning of Section 368(c)(1) of the Code, or to have LMS GP or LMS LP
issue a number of additional shares of its stock that would result in LMS
GP or LMS LP ceasing to be a member of the SLC Affiliated Group;
(iv) to reacquire any of the SLC Shares issued in the
Acquisition (other than pursuant to Section 6 below);
(v) to cause LMS to cease to continue its historic business
(which the parties agree for this purpose is the Business) or to cease to
use a significant portion of its historic business assets in a business
(in each case as such historic business is in effect on the date hereof);
(vi) to cause LMS GP or LMS LP to merge with or into a
corporation which is not a member of the SLC Affiliated Group; and
(vii) to cause LMS, or LMS LP or LMS GP, to sell or otherwise
dispose of any of its assets, except for (A) dispositions made in the
ordinary course of its business and (B) dispositions to any member of the
SLC Affiliated Group.
3F. INVESTMENT PURPOSE. SLC is acquiring the LMS Shares for its
own account and not with a view to sale or distribution thereof in violation of
any securities laws, and it has no present
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11
intention of selling or distributing all or any portion of the LMS Shares in
violation of any securities laws.
3G. SEC REPORTS. SLC has filed all reports on Form 10-K, Form
10-Q, Form 8-K and all proxy statements required to be filed with the SEC since
July 4, 1993 (collectively the "SLC Reports"), and has previously furnished or
made available to the LMS Shareholders true and complete copies of all SLC
Reports. None of the SLC Reports, as of their respective dates (as amended
through the date hereof), contained any untrue statement of material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading.
3H. ACCURACY ON CLOSING DATE. Each representation and warranty
set forth in this Section 3 and all information contained in any certificate
delivered by or on behalf of SLC pursuant to this Agreement will be true and
correct as of the time of the Closing as though then made.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE LMS SHAREHOLDERS. As a
material inducement to SLC to enter into this Agreement and acquire the LMS
Shares, the LMS Shareholders hereby jointly and severally represent and warrant
that:
4A. ORGANIZATION; CAPACITY AND POWER.
(i) Each of the LMS Shareholders has the requisite capacity
and power to enter into, deliver and carry out his or her obligations
pursuant to each of the Transaction Documents to which he or she is a
party.
(ii) Each of LMS, LMS GP and LMS LP is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Virginia, and is qualified to do business in each jurisdiction
in which its ownership of property or conduct of business requires it to
so qualify. Each of LMS, LMS GP and LMS LP has the requisite power and
authority to enter into, deliver and carry out its obligations pursuant
to each of the Transaction Documents to which it is a party.
4B. AUTHORIZATION; BINDING EFFECT; NO BREACH. The LMS Parties'
execution, delivery and performance of each Transaction Document to which any
such Person is a party have been duly authorized by such Person. Each
Transaction Document to which any of the LMS Parties is a party constitutes a
valid and binding obligation of such Person which is enforceable against such
Person in accordance with its terms, except as such enforceability may be
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12
limited by (a) applicable insolvency, bankruptcy, reorganization, moratorium or
other similar laws affecting creditors' rights generally and (b) applicable
equitable principles (whether considered in a proceeding at law or in equity).
Except as set forth on the attached Consents Schedule, none of the execution,
delivery and performance of the Transaction Documents, including satisfaction
of the Closing condition contained in Section 7(a)(iv), does or will (i)
conflict with or result in a breach of the terms, conditions or provisions of,
(ii) constitute a default under, (iii) give any third party the right to modify,
terminate or accelerate any liability or obligation of the LMS Parties under,
(iv) result in a violation of, or (v) require any authorization, consent,
approval, exemption or other action by or declaration or notice to any
Government Entity pursuant to, the certificate of incorporation or by-laws of
the LMS Parties or any agreement, instrument or other document or any Legal
Requirement to which the LMS Parties or any of their assets is subject; except
any requirements of the HSR Act. As of the date of this Agreement, the LMS
Shareholders do not have any reason to believe that the waiting period required
by the HSR Act in connection with the Acquisition will not expire or be
terminated on or before May 1, 1995.
4C. CAPITAL STOCK AND RELATED MATTERS.
(i) The authorized capital stock of LMS consists of (A) 2,500
shares of common stock, no par value per share, of which 1,176 shares are
issued and outstanding, and (B) 11,600 shares of preferred stock, $100.00
par value per share, of which none are issued and outstanding. All of
the issued and outstanding shares of LMS have been duly authorized, are
validly issued, fully paid, and nonassessable, and are held of record and
beneficially by the Persons and in the amounts set forth in the attached
Capitalization Schedule, free and clear of any Lien. LMS does not own or
have any right to acquire any capital stock of or interest in any other
Person other than (i) LMS GP and LMS LP and (ii) Starch Realty, Inc.,
Galanides, Inc. and Ocean to Ocean (Seafood Sales), Inc.
(ii) The authorized capital stock of LMS GP consists of 100
shares of common stock, par value $1.00 per share, of which 10 shares are
issued and outstanding. All of the issued and outstanding shares of LMS
GP have been duly authorized, are validly issued, fully paid, and
nonassessable, and are held of record and beneficially by LMS, free and
clear of any Lien. LMS GP is the sole record and beneficial holder of
the general partnership interest in the Partnership originally issued to
it on August 5, 1989. Since acquiring its general partnership interest
in the Partnership, LMS GP has not transferred or sold any portion of
such interest. LMS GP does not own or have any right to acquire any
capital stock of or interest in any other Person other than the
Partnership.
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13
(iii) The authorized capital stock of LMS LP consists of 100
shares of common stock, par value $1.00 per share, of which 10 shares are
issued and outstanding. All of the issued and outstanding shares of LMS
LP have been duly authorized, are validly issued, fully paid, and
nonassessable, and are held of record and beneficially by LMS, free and
clear of any Lien. LMS LP is the sole record and beneficial holder of
the limited partnership interest in the Partnership originally issued to
it on August 5, 1989. Since acquiring its limited partnership interest
in the Partnership, LMS LP has not transferred or sold any portion of
such interest. LMS LP does not own or have any right to acquire any
capital stock of or interest in any other Person other than the
Partnership.
(iv) No class of capital stock of LMS, LMS GP or LMS LP is
entitled to contractual or other preemptive rights. Except as set forth
on the attached Capitalization Schedule: (A) there are no outstanding or
authorized options, warrants, purchase rights, subscription rights,
conversion rights, exchange rights, or other contracts or commitments
that could require LMS, LMS GP or LMS LP to issue, sell, or otherwise
cause to become outstanding any of its capital stock; (B) there are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to LMS, LMS GP or LMS LP;
and (C) there are no voting trusts, proxies, or other agreements or
understandings with respect to the voting of the capital stock of LMS,
LMS GP or LMS LP. To the extent any of the rights described in clauses
(A) or (B) above are in existence, the Capitalization Schedule sets forth
a description of the nature of such rights and the names of the Persons
holding such rights and the amounts thereof. Any and all rights listed on
the Capitalization Schedule will be terminated at or prior to the
Closing, with no liability or obligation to LMS, the LMS Subsidiaries or
the Partnership.
(v) Xxxxxx Xxxxxxx, Xxxxxx Xxxxxxx and Xxxxxx Xxxxxxx are all
of the directors of LMS GP and LMS LP. Those persons, together with Xxxx
Xxxxxxx, are all of the directors of LMS.
4D. ABSENCE OF LIABILITIES. Except for (i) liabilities and
obligations of the Partnership for which LMS GP or LMS LP may be liable in
their capacities as partners of the Partnership or liabilities and obligations
of the Partnership for which LMS may be liable as a controlling person of LMS
GP or LMS LP, (ii) liabilities and obligations arising out of LMS GP's conduct
of the Partnership's business or the rights, duties and obligations of LMS GP
or LMS LP under the Partnership Agreement or as partners of the Partnership or
their respective performance (or failure to perform) such rights, duties and
obligations, (iii) liabilities or
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14
obligations existing as a matter of law which LMS may have as a former owner of
the properties and assets contributed to the Partnership, and (iv) the LMS Debt
(as defined in Section 8D below), none of LMS, LMS GP and LMS LP will, as of
the Closing, have any liability or obligation (whether accrued, absolute,
contingent, unliquidated or otherwise, whether or not known to any Party,
whether arising out of a Legal Requirement or otherwise, whether due or to
become due, and regardless of when asserted) other than liabilities for taxes
not yet due and payable. Except for transactions that have been adequately
disclosed to, and consented to by, a PYA Committee Member under Section
6(c)(xviii) of the Partnership Agreement prior to the date of this Agreement,
none of (A) LMS GP or LMS LP, (B) any of LMS GP's or LMS LP's officers,
directors, employees or Related Parties, or (C) any person related by blood or
marriage to any Person described in clause (B) above, has entered into an
agreement or engaged in a transaction of any type or nature with the
Partnership. "Related Party" of any Person shall mean any other Person
directly or indirectly controlling, controlled by or under common control with
such Person. For purposes of this definition, "control" of any Person shall
include the direct or indirect ownership of, or right to acquire, 10% or more
of the voting securities or equity interests of such Person.
4E. ABSENCE OF ASSETS. Except for the capital stock of LMS GP
and LMS LP and Partnership Rights, LMS will have no assets as of the Closing.
Except for its general partnership interest in the Partnership and Partnership
Rights, LMS GP will have no assets as of the Closing. Except for its limited
partnership interest in the Partnership and Partnership Rights, LMS LP will
have no assets as of the Closing. "Partnership Rights" means any rights,
benefits and other assets (including any claims, causes of action or defenses)
(whether accrued, absolute, contingent, unliquidated or otherwise, and whether
or not known to any Party) which (i) LMS GP or LMS LP may have in their
capacities as partners of the Partnership or which LMS may have as a
controlling person of LMS GP or LMS LP or (ii) arise out of LMS GP's conduct of
the Partnership's business or the rights, duties and obligations of LMS GP or
LMS LP under the Partnership Agreement or as partners of the Partnership.
4F. INVESTMENT PURPOSE. Each of the LMS Shareholders is acquiring
the SLC Shares for his or her own account and not with a view to sale or
distribution thereof in violation of any securities laws, and he or she has no
present intention of selling or distributing all or any portion of the SLC
Shares in violation of any securities laws.
4G. CERTAIN OTHER MATTERS. The LMS Parties have delivered to SLC
true and complete copies of the Leases as in effect on the date of this
Agreement. The Affiliate Agreement
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Schedule contains a true and complete list of all Affiliate Agreements to which
the Partnership, LMS GP, LMS LP or LMS is a party as of the date of this
Agreement.
4H. INVESTOR STATUS. Each LMS Shareholder is an "accredited
investor" as defined under the Securities Act. Each LMS Shareholder has
received a copy of each of the SLC Reports. Each LMS Shareholder has had an
opportunity to ask questions of and receive answers from SLC concerning the
information contained in SLC Reports.
4I. ACCURACY ON CLOSING DATE. Except as a result of the merger or
other combination of the LMS Subsidiaries permitted by the proviso to the first
sentence of Section 8B hereof, each representation and warranty set forth in
this Section 4 and all information contained in any certificate delivered by or
on behalf of the LMS Shareholders pursuant to this Agreement will be true and
correct as of the time of the Closing as though then made.
SECTION 5. ACCESS TO RECORDS. From and after the date hereof and to the
extent reasonably required for any bona fide business purpose, each Party will
allow, and will use its reasonable best efforts to cause its Affiliates to
allow, the other Party (and the other Party's agents, representatives and
Affiliates) access to all business records and files concerning the Business
which relate to the period prior to the Closing Date and will permit such
Persons to make copies of the same, in each case at the expense of the Person
requesting such access. Such access will be granted upon reasonable advance
notice, during normal business hours, and in such a manner so as not to
interfere unreasonably with the operations of the Person affording such access.
Without limiting the generality of the foregoing, if either Party or any of its
Affiliates actively is contesting or defending against any charge, complaint,
action, suit, proceeding, hearing, investigation, claim, or demand in
connection with (i) any transaction contemplated by the Transaction Documents,
or (ii) any fact, situation, circumstance, status, condition, activity,
practice, plan, occurrence, event, incident, action, failure to act, or
transaction prior to the Closing Date relating to the Business, then the other
Party will cooperate, and use its reasonable best efforts to cause its
Affiliates to cooperate, with the contesting or defending Person and its
counsel in such contest or defense, and make available such other Party's and
its Affiliates' personnel and provide such testimony and access to books and
records as are reasonably requested in connection with such contest or defense
(giving due consideration to the needs and interests of the other Party as well
as the contesting or defending Person), all at the contesting or defending
Person's expense (except to the extent that the contesting or defending Person
is entitled to indemnification therefor pursuant to Sections 6B or 6C below).
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SECTION 6. SURVIVAL AND INDEMNIFICATION.
6A. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
(i) Regardless of any investigation made by or on behalf of
either Party or the results of any such investigation, the
representations and warranties set forth in this Agreement or any
certificate delivered pursuant to this Agreement will survive the
consummation of the Closing and continue in full force and effect forever
thereafter, and the covenants set forth in this Agreement and the other
Transaction Documents will survive the Closing.
(ii) Neither a Party's participation in the consummation of
any transaction pursuant to any Transaction Document nor any waiver of
any condition to such participation will constitute a waiver by such
participating Party of any representation or warranty of any other Party
specified in the preceding sentence or otherwise affect the survival of
any such representation and warranty.
6B. INDEMNIFICATION OBLIGATIONS OF THE LMS SHAREHOLDERS. The LMS
Shareholders will indemnify SLC and its Affiliates (including, from and after
the Closing, LMS, LMS GP, LMS LP and the Partnership) and their respective
stockholders, officers, directors, employees, agents, representatives and
successors and assigns (collectively, the "SLC Indemnitees") in respect of, and
save and hold each SLC Indemnitee harmless against and pay on behalf of or
reimburse each SLC Indemnitee as and when incurred, any Loss which any SLC
Indemnitee suffers, sustains or becomes subject to as a result of, arising out
of, or directly or indirectly caused by, without duplication:
(i) any facts or circumstances which constitute a breach of
any representation or warranty of any LMS Shareholder in this Agreement
(including any Schedule) or in any certificate delivered by any LMS
Shareholder pursuant to this Agreement;
(ii) any nonfulfillment or breach of any covenant of the LMS
Shareholders or any of their Affiliates (other than the Partnership) set
forth in this Agreement;
(iii) the existence of any liability (whether accrued,
absolute, contingent, unliquidated or otherwise, whether or not known to
any Party, whether due or to become due, and regardless of when asserted,
and including liabilities for taxes (including interest and penalties
thereon and additions thereto)) of LMS, LMS GP or LMS LP, which liability
resulted from, arose out of, or was directly
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or indirectly caused by, facts, conditions or circumstances existing
prior to the Closing, other than (a) liabilities and obligations of the
Partnership for which LMS GP or LMS LP may be liable in their capacities
as partners of the Partnership or liabilities and obligations of the
Partnership for which LMS may be liable as a controlling person of LMS GP
or LMS LP, (b) liabilities and obligations arising out of LMS GP's
conduct of the Partnership's business or the rights, duties and
obligations of LMS GP or LMS LP under the Partnership Agreement or as
partners of the Partnership or their respective performance (or failure
to perform) such rights, duties and obligations, (c) liabilities and
obligations existing as a matter of law which LMS may have as a former
owner of the properties and assets contributed to the Partnership and (d)
the LMS Debt; provided that, in the case of any liability for taxes
(including interest and penalties thereon and additions thereto), (w)
such liability shall be net of refunds of any taxes the liability for
which would be the responsibility of the LMS Shareholders pursuant to
this Section 6B (including interest on such refunds) and, if any such
refund is received after the LMS Shareholders have made a payment in
indemnification of such a tax liability, the refund, to the extent of
such prior indemnification payment, shall be paid to the LMS Shareholders
by SLC as described in Section 6E(ii), (x) except as provided in clauses
(y) and (z) of this Section 6B(iii), such liability shall include
liabilities for income taxes for which LMS or any of the LMS Subsidiaries
may be liable (including franchise or similar taxes) attributable to the
income of the Partnership for any period (or portion thereof) ending on
or before the Closing Date, (y) the LMS Shareholders have no obligation
to indemnify the SLC Indemnitees against the excess amount described in
Section 6C(iii) in respect of the period ending on or before the Closing
Date; and (z) the LMS Shareholders shall not be responsible for any
liability for taxes (including interest and penalties thereon and
additions thereto) attributable to the excess loss account of LMS with
respect to either of the LMS Subsidiaries to the extent such tax is the
result of (A) the failure of LMS and the LMS Subsidiaries to be
immediately after the Closing members of a single group of corporations
which files a consolidated return for federal income tax purposes for the
first taxable year of LMS and the LMS Subsidiaries ending after the
Closing Date or (B) any other action of SLC or any of its Affiliates
after the Closing; or
(iv) if the Washington Beef Shares are disposed of by LMS and
the LMS Subsidiaries prior to the Closing pursuant to Section 8C, the
existence of (A) any liability (whether accrued, absolute, contingent,
unliquidated or otherwise, whether or not known to any Party, whether due
or to become due, and regardless of when asserted) attributable to the
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Partnership's, LMS's and the LMS Subsidiaries' ownership of or dealings
with Washington Beef prior to the Closing and (B) any liabilities or
obligations of Washington Beef (in each case, other than liabilities and
obligations relieved or assumed by the Partnership pursuant to clause
(ii) of Section 8C below and liabilities and obligations resulting from
Washington Beef's purchase and sale of goods and services in the ordinary
course conduct of business of the Partnership).
6C. INDEMNIFICATION OBLIGATIONS OF SLC. SLC will indemnify the
LMS Shareholders and their Affiliates (excluding, from and after the Closing,
LMS, LMS GP, LMS LP and the Partnership) and their respective stockholders,
officers, managers, directors, employees, agents, heirs, representatives and
permitted successors and assigns (collectively, the "LMS Indemnitees") in
respect of, and save and hold each LMS Indemnitee harmless against any Loss
which such LMS Indemnitee suffers, sustains or becomes subject to as a result
of, arising out of, or directly or indirectly caused by, without duplication:
(i) any facts or circumstances which constitute a breach of
any representation or warranty of SLC in this Agreement or in any
certificate delivered by SLC pursuant to this Agreement;
(ii) any nonfulfillment or breach of any covenant or agreement
of SLC set forth in this Agreement or any action or transaction referred
to in the penultimate sentence of Section 8I below; or
(iii) the excess, if any, of (a) any income taxes (including
franchise or similar taxes) including interest and penalties thereon and
additions thereto of LMS or the LMS Subsidiaries attributable to their
distributive shares of the taxable income of the Partnership for any
period (or portion thereof) beginning after June 30, 1994 (the "Post-June
Partnership Income") over (b) any distribution made before the
Disposition by the Partnership to the LMS Subsidiaries in respect of such
taxes. If the Post-June Partnership Income is included on a
consolidated, combined or unitary income or franchise tax return with
other income of LMS or the LMS Subsidiaries, the portion of the tax
liability with respect to such return which shall be treated as
attributable to the Post-June Partnership Income shall equal the lesser
of (x) the total amount of such tax liability or (y) the amount of such
tax liability determined as though the relevant LMS Subsidiary had filed
a stand-alone income, franchise or similar tax return which included only
the Post-June Partnership Income.
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6D. INDEMNIFICATION PROCEDURES.
(i) Notice of Claim. Any Person making a claim for
indemnification pursuant to Section 6B or 6C above (an "Indemnified
Party") must give the Party from whom indemnification is sought (an
"Indemnifying Party") written notice of such claim (an "Indemnification
Claim Notice") promptly after the Indemnified Party receives any written
notice of any action, lawsuit, proceeding, investigation or other claim
(a "Proceeding") against or involving the Indemnified Party by a
Government Entity or other third party or otherwise discovers the
liability, obligation or facts giving rise to such claim for
indemnification; provided that the failure to notify or delay in
notifying an Indemnifying Party will not relieve the Indemnifying Party
of its obligations pursuant to Section 6B or 6C above, as applicable,
except to the extent that such failure actually xxxxx the Indemnifying
Party. Such notice must contain a description in reasonable detail of
the claim and the nature and amount of such Loss (to the extent that the
nature and amount of such Loss is known at such time), and refer to
Section 6B or 6C, as applicable.
(ii) Control of Defense; Conditions. With respect to the
defense of any Proceeding against or involving an Indemnified Party
(other than a Proceeding which involves claims for injunctive or other
equitable relief which could reasonably be expected to have a material
adverse effect on the ability of the Indemnified Party or its Affiliates
to conduct their businesses on an ongoing basis in accordance with their
past practice), at its option an Indemnifying Party may appoint as lead
counsel of such defense a nationally recognized law firm with the
appropriate expertise selected by the Indemnifying Party; provided that
the Indemnifying Party must conduct the defense of such Proceeding
actively, diligently and vigorously thereafter.
(iii) Participation in Defense; Exceptions, etc.
Notwithstanding Section 6D(ii) above:
(a) the Indemnified Party will be entitled to participate
in the defense of such claim and to employ counsel of its choice for
such purpose at its own expense (provided that the Indemnifying
Party will bear the reasonable fees and expenses of such separate
counsel incurred prior to the date upon which the Indemnifying Party
effectively assumes control of such defense),
(b) notwithstanding Section 6D(iii)(a) above, the
Indemnified Party will be entitled to participate in the defense of
such claim and to employ one law firm of
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its choice for such purpose, and the reasonable fees and expenses of
such law firm will be borne by the Indemnifying Party, if:
(1) the Indemnified Party reasonably believes
that such claim could reasonably be expected to be materially
detrimental to or materially injure the Indemnified Party's
reputation or future business prospects; or
(2) the Indemnified Party reasonably believes
that there exists or could reasonably be expected to arise a
conflict of interest which, under applicable principles of
legal ethics, could reasonably be expected to prohibit a
single legal counsel from representing both the Indemnified
Party and the Indemnifying Party in such Proceeding; and
(c) the Indemnifying Party must obtain the prior written
consent of the Indemnified Party (which the Indemnified Party will
not unreasonably withhold) prior to entering into any settlement,
compromise or consent to entry of judgment, of any such claim or
Proceeding or ceasing to defend any such claim or Proceeding, unless
the proposed settlement, compromise or judgment involves only the
payment of money damages by the Indemnifying Parties and does not
impose an injunction or other equitable relief upon the Indemnified
Party.
(iv) Control of Defense in Other Situations. In the event that
the Indemnifying Party is not entitled to assume control of the defense
of a particular claim (or is so entitled but does not do so), the
Indemnified Party shall be entitled to control the defense of such claim,
and the Indemnifying Party will pay the reasonable fees and expenses of
legal counsel retained by the Indemnified Party for such purpose. The
Indemnifying Party will be entitled to participate in the defense of such
claim and to employ counsel of its choice for such purpose at its own
expense. The Indemnified Party must obtain the prior written consent of
the Indemnifying Party (which the Indemnifying Party will not
unreasonably withhold) prior to entering into any settlement, compromise
or consent to entry of judgment, of such claim or Proceeding or ceasing
to defend such claim or Proceeding.
6E. FORM OF INDEMNIFICATION PAYMENTS.
(i) Any indemnification of Losses hereunder made by any LMS
Shareholders shall be payable, at such LMS Shareholder's option, by such
LMS Shareholder's delivery to
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the SLC Indemnitees of either cash or shares of SLC Common Stock. In the
event an LMS Shareholder desires to make indemnification for a Loss
hereunder in shares of SLC Common Stock, the value of a share of SLC
Common Stock so delivered shall be deemed to be the lesser of (i)
$22.4375 (as proportionately adjusted for all stock splits, stock
dividends and other recapitalizations affecting the SLC Common Stock
after the date hereof) and (ii) the average of the closing trading prices
of the SLC Common Stock on the New York Stock Exchange Composite Tape on
the 20 trading days immediately preceding the date of such LMS
Shareholder's delivery of SLC Common Stock under this paragraph (such
average to be adjusted as appropriate to reflect any stock splits, stock
dividends, extraordinary dividends, recapitalizations, reclassifications
or other like transactions during such 20 trading days).
(ii) Any indemnification of Losses hereunder made by SLC
shall be payable by SLC's delivery to the LMS Indemnitees of shares of
SLC Common Stock. The value of a share of SLC Common Stock so delivered
shall be deemed to be the average of the closing trading prices of the SLC
Common Stock on the New York Stock Exchange Composite Tape on the 20
trading days immediately preceding the date of SLC's delivery of SLC
Common Stock under this paragraph (such average to be adjusted as
appropriate to reflect any stock splits, stock dividends, extraordinary
dividends, recapitalizations, reclassifications or other like transactions
during such 20 trading days).
SECTION 7. CONDITIONS TO THE CLOSING.
7A. CONDITIONS OF SLC'S OBLIGATION. SLC's obligation to effect
the Acquisition at the Closing is subject to the satisfaction as of the Closing
of the following conditions precedent:
(i) Proceedings. There shall not be in effect any judgment,
order, decree, injunction or ruling preventing or prohibiting the
consummation of the Acquisition or any other transaction pursuant to the
Transaction Documents that would reasonably be expected to deprive SLC of
a material benefit to be derived from the transactions contemplated by
the Transaction Documents.
(ii) Consents. The consents, approvals and authorizations
listed on the Consents Schedule and any other consents, approvals and
authorizations required in order for the LMS Parties to consummate the
transactions contemplated by this Agreement will have been duly made or
obtained; provided that if the LMS Parties are unable to obtain a
consent, approval or authorization necessary to release LMS from any
liability, the LMS Parties may provide collateral security or
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other assurances (such as an irrevocable letter of credit) adequate to
fully protect SLC and its affiliates (the adequacy of such collateral or
other assurances to be determined by SLC in its reasonable judgment) from
the amount of any Loss which SLC reasonably expects that it or its
Affiliates may suffer, sustain or become subject to, as a result of,
arising out of or caused by the failure to obtain such consent, approval
or authorization, and the provision of such collateral security or
other assurances determined by SLC to be so adequate shall be deemed to
satisfy this condition.
(iii) HSR Act. All filings required by the HSR Act in
connection with the Acquisition will have been made, and any waiting
period required by the HSR Act in connection with the Acquisition will
have expired or been terminated.
(iv) Disposition. The Disposition (as defined in Section 8D)
shall have been completed substantially in accordance with Section 8D;
provided that for this purpose, a liability or obligation will be deemed
to have been satisfied upon the provision of collateral security or other
assurances determined by SLC in its reasonable judgment to be adequate
under paragraph (ii) above.
Any condition set forth in this Section 7A may be waived only in a writing
executed by SLC.
7B. CONDITIONS OF THE LMS SHAREHOLDERS' OBLIGATION. The LMS
Shareholders' obligation to effect the Acquisition at the Closing is subject to
the satisfaction as of the Closing of the following conditions precedent:
(i) Proceedings. There shall not be in effect any judgment,
order, decree, injunction or ruling preventing or prohibiting the
consummation of the Acquisition or any other transaction pursuant to the
Transaction Documents that would reasonably be expected to deprive the
LMS Shareholders of a material benefit to be derived from the
transactions contemplated by the Transaction Documents.
(ii) HSR Act. All filings required by the HSR Act in
connection with the Acquisition will have been made, and any waiting
period required by the HSR Act in connection with the Acquisition will
have expired or been terminated.
Any condition set forth in this Section 7B may be waived only in a writing
executed by the LMS Shareholders.
7C. NO OTHER CONDITIONS. There are no conditions to the Parties'
obligations to effect the Closing except for the obligations expressly set
forth in Section 1 and the conditions
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expressly set forth in Sections 7A and 7B. However, if a Party is in breach of
any representation, warranty, covenant or agreement, it shall be liable for
such breach, and remain liable after the Closing for such breach, under Section
6 hereof notwithstanding the other Party's obligation to effect the Closing.
SECTION 8. OTHER COVENANTS.
8A. HSR; SATISFACTION OF CLOSING CONDITIONS. The SLC and the LMS
Shareholders have filed with the United States Federal Trade Commission (the
"FTC") and the Antitrust Division of the United States Department of Justice
(the "DOJ") a Notification with respect to the transactions contemplated by
this Agreement. SLC and the LMS Shareholders each will promptly supply (or
cause to be supplied) any additional materials and information which reasonably
may be required or requested by the FTC or the DOJ. SLC and the LMS
Shareholders each will take (or cause to be taken) all such actions and will
file and use all commercially reasonable efforts to have declared effective or
approved, all documents and notifications with any governmental or regulatory
bodies, as may be necessary or may reasonably be requested under federal
antitrust laws for the consummation of the transactions contemplated by this
Agreement; provided that the SLC Parties shall not be required to divest any
portion of their existing businesses or agree to any restrictions on the
conduct of their existing or future businesses in order to obtain antitrust
clearance (other than divestitures and restrictions that are immaterial to both
the Partnership and also SLC's other foodservice businesses and investments, as
reasonably determined by SLC in good faith). Each Party shall have the
opportunity to participate fully in any discussions with or presentations to
the FTC, the DOJ and other governmental or regulatory bodies with regard to
antitrust matters or other matters requiring governmental or regulatory
approval or clearance. In addition, each of SLC and the LMS Shareholders will
take (or cause to be taken) all actions, and do or cause to be done all things,
which are necessary, proper or advisable to cause the conditions set forth in
Sections 7A and 7B above to be fully satisfied, and will consummate and make
effective as promptly as practicable the transactions contemplated by the
Transaction Documents, including using all commercially reasonable efforts to
obtain the consents, approvals and authorizations listed on the Consents
Schedule.
8B. OPERATION OF BUSINESS.
(i) Until the expiration or other termination of all
applicable waiting periods (and any extensions thereof) with respect to
the transactions contemplated by this Agreement under the HSR Act, the
LMS Shareholders covenant and agree that, except as SLC may agree
otherwise in writing, or as otherwise expressly contemplated or permitted
by the
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24
Transaction Documents (including, whether or not expressly stated, to the
extent necessary to satisfy the conditions to Closing set forth in
Section 7A above), the LMS Shareholders will cause LMS, LMS GP, LMS LP
and the Partnership to conduct their business and the Business in, and
the LMS Shareholders will cause LMS, LMS GP and LMS LP to not take any
action with respect to their business and the Business other than in, the
ordinary course, and in accordance with all Legal Requirements and LMS's,
LMS GP's, LMS LP's and the Partnership's past custom and practice;
provided that LMS may, if it so elects, cause there to be a merger or
other combination of LMS GP with LMS LP.
(ii) Without limiting the Partnership's rights under Section
8N, the LMS Shareholders may change the names of LMS, LMS GP and LMS LP
to eliminate therefrom the "Sandler" name.
(iii) From and after the date of this Agreement (but except
during such times when the provisions of Article II of the Partnership
Amendment are in effect), each of LMS GP and PYA GP shall take action on
behalf of the Partnership in its capacity as a general partner only with
the approval of the Management Committee, and will cause the business and
affairs of the Partnership to be conducted by the Management Committee
established under the Partnership Agreement and by the executive officers
of the Partnership.
(iv) Prior to the Disposition, LMS GP and PYA GP shall cause
the Partnership to make distributions (pro rata to each of its partners)
in an amount equal to the Tax Distribution Amount. Not less than five
business days prior to the Disposition, LMS shall provide written notice
to the Partnership setting forth a detailed calculation of the Tax
Distribution Amount (which will be subject to review by the Partnership
and PYA GP).
8C. WASHINGTON BEEF SHARES. If the LMS Shareholders provide
written notice to SLC on or prior to December 1, 1994, the Partnership will
distribute to the LMS Subsidiaries prior to the Disposition (as defined below)
all of the outstanding shares of capital stock (the "Washington Beef Shares")
of Xxxxxx Brothers Inc. T/A Washington Beef Co., a corporation owned by the
Partnership ("Washington Beef"), in which case the Washington Beef Shares shall
be disposed of by LMS and the LMS Subsidiaries prior to the Closing. Prior to
the distribution to the LMS Subsidiaries of the Washington Beef Shares, (i)
Washington Beef shall have conveyed to the Partnership all of its cash and
accounts receivable and other tangible and intangible assets necessary or
useful in the business of the Partnership (the "Transferred Assets") including,
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25
without limitation, the right to the use of the name "Washington Beef" and (ii)
the Partnership will relieve Washington Beef of all of its liabilities to the
Partnership secured by any of the Transferred Assets and shall assume all trade
payables of Washington Beef to third parties. In connection with the
foregoing, the Partnership shall distribute to the LMS Subsidiaries all of its
interest as a creditor in debt of Washington Beef that (A) was issued by
Washington Beef in connection with its acquisition by the Partnership or (B)
was outstanding prior to the consummation of the bankruptcy reorganization of
Washington Beef pursuant to Chapter 11, Title 11 of the United States Code
approved by the United States Bankruptcy Court on August 5, 1992.
8D. DISPOSITION OF NON-PARTNERSHIP RELATED ASSETS. Prior to the
Closing, the LMS Shareholders shall take, or cause to be taken, whatever action
is necessary or desirable in order for the representations and warranties
contained in Section 4D (Absence of Liabilities) and Section 4E (Absence of
Assets) above to be true and correct in all respects as of the Closing (the
"Disposition"). The Disposition shall include (a) distributing or otherwise
disposing of currently outstanding debt owed by the Partnership to the LMS
Subsidiaries in respect of tax distributions for the fiscal year ended June 30,
1992 (the "1992 Notes") and (b) causing the assumption or payment by Persons
other than LMS, the LMS Subsidiaries or the Partnership of (i) all liabilities
and expenses incurred by LMS and the LMS Subsidiaries in connection with the
Disposition, including any tax liabilities resulting from the Disposition and
(ii) all liabilities which may exist under that certain Indemnification
Agreement, dated as of August 5, 1989, by and between LMS and the Partnership
attached hereto as Exhibit B. Responsibility for the following items shall be
retained by LMS or the LMS Subsidiaries (as applicable): (a) currently
outstanding debt owed by LMS to LMS GP in the principal amount of $2.2 million
(the "LMS Debts"), and (b) any income tax (including franchise and similar tax)
liabilities of LMS and the LMS Subsidiaries attributable to the income of the
Partnership for any period (or portion thereof) beginning after the end of the
fiscal year ended June 30, 1994. At or prior to the Closing, the Partnership
shall pay the 1992 Notes, plus any accrued but unpaid interest thereon.
8E. EXCLUSIVITY. Each of the LMS Shareholders agrees not to (and
will not permit any Affiliate, employee, officer, director, shareholder, agent
or other person acting on its or any of their behalf to) sell or agree to sell
to any other Person, negotiate or have any discussions with any other Person
concerning a possible sale of, or solicit or accept any offer to purchase from
any other Person, all or any part of the LMS Shares (or the Partnership or LMS'
direct or indirect interest in the Partnership), whether such transaction takes
the form of a sale of stock, merger, consolidation, sale of assets or
otherwise, or provide any information to any other Person concerning the
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26
foregoing insofar as the LMS Shareholders have any reason to believe that the
information may be utilized to evaluate a possible acquisition. The LMS
Shareholders further agree to promptly notify SLC should they receive any such
inquiries from any other Person indicating or suggesting an interest in a
possible acquisition.
8F. NOTICE BY LMS SHAREHOLDERS. From the date of this Agreement
until the Closing, the LMS Shareholders promptly will notify SLC if any
representation and warranty of the LMS Shareholders set forth in this Agreement
was untrue when made or subsequently has become untrue.
8G. NOTICE BY SLC. From the date of this Agreement until the
Closing, SLC promptly will notify the LMS Shareholders if any representation
and warranty of SLC set forth in this Agreement was untrue when made or
subsequently has become untrue.
8H. TRANSACTION EXPENSES. SLC will be responsible for all costs
and expenses incurred by the SLC Parties in connection with the negotiation,
preparation and entry into the Transaction Documents and the consummation of
the transactions to be consummated pursuant to the Transaction Documents. The
LMS Shareholders will pay all costs and expenses incurred by the LMS Parties in
connection with the negotiation, preparation and entry into the Transaction
Documents and the consummation of the transactions to be consummated pursuant
to the Transaction Documents. The Parties specifically agree that neither LMS
nor LMS GP nor LMS LP nor the Partnership shall pay any of the fees, costs or
other expenses referred to in the preceding sentence. No costs or expense
incurred in connection with the negotiation, preparation and entry into the
Transaction Documents and the consummation of the transactions to be
consummated pursuant to the Transaction Documents shall be paid by the
Partnership unless SLC and the LMS Shareholders so agree in writing.
8I. TAX TREATMENT. The Parties intend the Acquisition to qualify
as a tax-free reorganization described in section 368(a)(1)(B) of the Code.
SLC agrees that from and after the date hereof and until the second anniversary
of the Closing, it shall not take or cause (or cause LMS or any Affiliate of
SLC or LMS to take or cause) any of the actions described in clauses (i)
through (vi) of Section 3E (the "Prohibited Actions"), unless SLC provides the
LMS Shareholders (at least five days in advance of the proposed action) with an
opinion of a nationally recognized law firm with expertise in federal income
tax law matters (a "Tax Opinion"), addressed to and in form and substance
reasonably acceptable to the LMS Shareholders (but based on customary officers'
certificates), that such actions will not cause the Acquisition to fail to so
qualify. In the event that SLC is unable or unwilling to furnish the LMS
Shareholders with such a reasonably acceptable Tax Opinion prior to such
five-day period, SLC may nonetheless proceed with the
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27
action or transaction in question if SLC notifies the LMS Shareholders of such
action in reasonable detail and indemnifies the LMS Shareholders pursuant to
Section 6C above against any tax-related Losses they may incur as a result
thereof. SLC will report the Acquisition as a reorganization described in
Section 368(a)(1)(B) of the Code and, upon the request of the LMS Shareholders,
will report the Disposition as a transaction described in Sections 355 and
368(a)(1)(D) of the Code, for all tax, financial statement and other purposes
and shall not take any position inconsistent with such reporting.
8J. FURTHER ASSURANCES. From and after the Closing, each of SLC
and the LMS Shareholders will, and will cause its Affiliates to, execute all
documents and take any other action which it is reasonably requested to execute
or take to further effectuate the transactions contemplated by the Transaction
Documents.
8K. ANNOUNCEMENTS. Except to the extent necessary or advisable
pursuant to federal or state securities laws or stock exchange regulations (as
determined by SLC in good faith), prior to the Closing, SLC will not, and will
cause its Affiliates to not, make any public announcement of or regarding the
transactions contemplated by this Agreement. In the event that SLC so
determines that a public announcement is necessary or advisable, it shall
advise the LMS Shareholders a reasonable time in advance of making such
announcement. The LMS Shareholders will not, and will cause its Affiliates to
not, make any public announcement of or regarding the transactions contemplated
by this Agreement.
8L. TRANSFER OF RESTRICTED SECURITIES.
(i) General Provisions. Restricted Securities are
transferable only pursuant to (a) public offerings registered under the
Securities Act, (b) Rule 145 and/or Rule 144 of the Securities and
Exchange Commission (or any similar rule or rules then in force) and (c)
subject to the conditions specified in Section 8L(ii) below, any other
legally available means of transfer. "Restricted Securities" means (A)
any SLC Shares issued pursuant to the Acquisition and (B) any securities
issued with respect to the securities referred to in clause (A) above by
way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. As to any particular Restricted Securities, such
securities shall cease to be Restricted Securities when they have (1)
been effectively registered under the Securities Act and disposed of in
accordance with the registration statement covering them, (2) been
distributed to the public through a broker, dealer or market maker
pursuant to Rule 145 and/or Rule 144 (or any similar provisions then in
force)
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under the Securities Act or become eligible for sale pursuant to Rule
144(k) (or any similar provision then in force) under the Securities Act
or (3) been otherwise transferred and new certificates for them not
bearing the Securities Act legend set forth in Section 8L(iii) below have
been delivered by SLC in accordance with Section 8L(ii) below. Whenever
any particular securities cease to be Restricted Securities, the holder
thereof shall be entitled to receive from SLC, without expense, new
securities of like tenor not bearing a Securities Act legend of the
character set forth in Section 8L(iii) below.
(ii) Opinion Delivery. In connection with the transfer of any
Restricted Securities (other than a transfer described in clauses (a) or
(b) of Section 8L(i) above), the holder thereof shall deliver written
notice to SLC describing in reasonable detail the transfer or proposed
transfer, together with an opinion of counsel which (to SLC's reasonable
satisfaction) is knowledgeable in securities law matters to the effect
that such transfer of Restricted Securities may be effected without
registration of such Restricted Securities under the Securities Act. In
addition, if the holder of the Restricted Securities delivers to SLC an
opinion of such counsel that no subsequent transfer of such Restricted
Securities shall require registration under the Securities Act, SLC shall
promptly upon such contemplated transfer deliver new certificates for
such Restricted Securities which do not bear the Securities Act legend
set forth in Section 8L(iii) below. If SLC is not required to deliver
new certificates for such Restricted Securities not bearing such legend,
the holder thereof shall not transfer the same until the prospective
transferee has confirmed to SLC in writing its agreement to be bound by
the conditions contained in this Section 8L.
(iii) Legend. Each certificate or instrument representing
Restricted Securities shall be imprinted with an appropriate legend
8M. PRE-CLOSING TERMINATION OF CERTAIN AFFILIATE AGREEMENTS. Upon
the written request of SLC at any time on or after the date of this Agreement,
the LMS Parties shall cause any or all Affiliate Agreements to which the
Partnership is a party to be terminated without cost or obligation to the
Partnership. Subject to Section 10M(iii), the LMS Parties have no obligation
to terminate the Leases and the Leases may be terminated only in accordance
with their terms. At or prior to the Closing, the LMS Parties shall cause all
Affiliate Agreements then in effect (other than (i) the Leases, which, subject
to Section 10M(iii), may be terminated only in accordance with their terms, and
(ii) such other Affiliate Agreements to which the Partnership is a party as SLC
so
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requests) to be terminated without cost or obligation to LMS, the LMS
Subsidiaries or the Partnership.
8N. USE OF SANDLER NAME. Following the Closing, the Partnership
shall phase out its commercial use of the "Sandler" name, and the Partnership
shall use its best efforts to cease all use of the "Sandler" name within four
years following the date of this Agreement. The LMS Shareholders shall not
(and shall not permit their Affiliates to) (i) use commercially, (ii) license
the commercial use of or (iii) sell for use the "Sandler" name in connection
with the food service business, in each case at any time within ten years
following the date of this Agreement.
8O. BANK DEBT. The portion of the Partnership's bank debt
currently held by LMS shall be paid by the Partnership or directly or
indirectly acquired by SLC at or prior to Closing, unless such transactions
cannot be consummated under the terms of the Partnership's Credit Agreement.
In the event that such transactions cannot be so consummated, the Parties will
develop an alternative means of cashing out LMS's position in the bank debt on
as expeditious a basis as is commercially reasonable.
8P. OTHER ACTIONS.
(i) On the date of this Agreement, LMS GP and each of Xxxxx
Xxxxxxx and Xxx Xxxxxx (the "Executives") will enter into employment
agreements in the form attached as Exhibit C to this Agreement (the
"Employment Agreements"), which Employment Agreements shall
automatically become effective on the HSR Date. In addition, the
following arrangements shall automatically become effective on the
HSR Date: (a) Xxxxx Xxxxxxx shall be appointed as the Partnership's
Chairman and Xxx Xxxxxx shall be appointed as the Partnership's
President and Chief Operating Officer and (b) Xxxxxx Xxxxxxx and
Xxxxxx Xxxxxxx shall be appointed as Vice Presidents of the
Partnership (and Xxxxxx Xxxxxxx shall resign from his current
position as Chairman of the Partnership and Xxxxxx Xxxxxxx shall
resign from his current position as President and Chief Operating
Officer of the Partnership). In their new capacities as Vice
Presidents, Xxxxxx Xxxxxxx and Xxxxxx Xxxxxxx shall report to Xxxxx
Xxxxxxx and shall have such Partnership duties, responsibilities and
authority as Xxxxx Xxxxxxx shall designate from time to time, such
duties to be performed on terms and conditions mutually agreeable to
Xxxxxx Xxxxxxx, Xxxxxx Xxxxxxx and Xxxxx Xxxxxxx (but they shall not
be removed as Vice Presidents prior to the Closing). In their
capacity as Vice Presidents of the Partnership, Xxxxxx Xxxxxxx and
Xxxxxx Xxxxxxx shall not be entitled to any compensation other than
their compensation as employees of LMS GP. In the event that Xxxxx
Xxxxxxx ceases to be employed by LMS GP as its Chief Executive
Officer for any reason, Xxx Xxxxxx shall
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automatically and immediately assume the position of Chief Executive
Officer of LMS GP and shall automatically and immediately become a Sandler
Committee Member (and his Employment Agreement shall be deemed to have been
automatically amended to reflect the foregoing). If Xxx Xxxxxx or any
other individual (other than Xxxxx Xxxxxxx) then serving as the Chief
Executive Officer or President of LMS GP shall cease for any reason to be
employed as LMS GP's Chief Executive Officer or President, SLC will
promptly provide LMS GP with a list of at least four individuals (each of
whom shall have at least three years of experience in the foodservice
distribution business) and within 24 hours of being provided with such
list, LMS GP shall appoint one of such individuals as its Chief Executive
Officer and a Sandler Committee Member or as its President (as the case may
be); provided that such individual executes an Employment Agreement; and
provided further that if LMS GP does not make such a selection within the
prescribed time period, the first name on such list shall conclusively be
presumed to have been so appointed as CEO and Sandler Committee Member or
as President, depending on the position to be filled (or, if both such
positions are being filled, the first name shall be appointed as CEO and
Sandler Committee Member and the second name shall be appointed as
President).
(ii) On the date of this Agreement, PYA GP, PYA LP and the LMS
Subsidiaries will execute and deliver the amendment to the Partnership
Agreement attached as Exhibit D hereto (the "Partnership Amendment").
(iii) On the date of this Agreement, the LMS Shareholders shall
cause LMS GP to amend its bylaws so as to, among other things, (A) provide
that the President of LMS GP need not be a director of LMS GP, (B) create
the office of Chief Executive Officer of LMS GP and (C) modify Section 4.2
thereof to reflect the terms of the Employment Agreements.
8Q. CERTAIN DELIVERIES AT CLOSING. At Closing, the LMS
Shareholders shall deliver to SLC all existing minute books, stock transfer
records, corporate seals and other materials relating to LMS's, LMS GP's and
LMS LP's respective corporate administration which are in the possession of the
LMS Shareholders or any Affiliate of the LMS Shareholders.
8R. ANTIDILUTION PROVISION.
(i) If SLC, at any time after the date hereof and prior to the
Closing, shall subdivide or combine the SLC Common Stock or take a record
of holders of SLC Common Stock for the purpose of so subdividing or
combining the SLC Common Stock, the number of SLC Shares issuable to the
LMS
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31
Shareholders pursuant to Section 1B shall be proportionately increased
or reduced, as the case may be.
(ii) If SLC, at any time after the date hereof and prior to the
Closing, shall (A) pay a dividend in, or make any other distribution to its
stockholders of, SLC Common Stock or (B) make a distribution of any other
property to the holders of SLC Common Stock as a dividend or by way of
return of capital or otherwise (other than regular quarterly dividends, as
the same may be increased from time to time), the LMS Shareholders shall be
entitled to receive on the Closing Date, in addition to the SLC Shares
issuable to the LMS Shareholders pursuant to Section 1B, after giving
effect to the provisions of paragraph (i) above, an aggregate number of
shares of SLC Common Stock equal to (x) the aggregate number of shares of
SLC Common Stock that the LMS Shareholders would have been entitled to
receive by reason of such dividend or other distribution described in
clause (A) above had the LMS Shareholders been the holders of record of the
SLC Shares on the record date for such dividend or other distribution or
(y) an aggregate number of shares of SLC Common Stock the aggregate Market
Price of which is equal to the aggregate fair market value (as determined
in good faith by the Board of Directors of SLC) of the property that the
LMS Shareholders would have been entitled to receive by reason of such
distribution described in clause (B) above had the LMS Shareholders been
the holders of record of the SLC Shares on the record date for such
distribution.
(iii) If SLC, at any time prior to the Closing, effects a
recapitalization, reorganization or reclassification, or is party to any
consolidation or merger, and the failure to adjust the number of shares of
SLC Common Stock issuable to the LMS Shareholders pursuant to this
Agreement would not fairly protect the rights of the LMS Shareholders to
acquire SLC Common Stock under this Agreement in accordance with the
essential intent and principle of Section 1B and this Section 8S, then the
number of shares of SLC Common Stock issuable to the LMS Shareholders
hereunder shall be adjusted in such manner and at such time as the Board of
Directors of SLC may in good faith determine to be equitable in the
circumstances.
For the purposes of this Section 8R, "Market Price" means, with respect to one
share of SLC Common Stock, the average of the closing trading price of SLC
Common Stock on the New York Stock Exchange Composite Tape on the 20 trading
days ending on the fifth business day prior to the date of determination (such
average to be adjusted as appropriate to reflect any stock splits, stock
dividends, extraordinary dividends, recapitalizations, reclassifications or
other like transactions during such 20 trading
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days).
8S. REGISTRATION OF SLC SHARES.
(i) S-4 Registration Statement. The LMS Shareholders may
elect by written notice given to SLC no later than December 1, 1994 that
SLC prepare and file (in which case SLC will prepare and file), as promptly
as practicable following its receipt of all of the information to be
provided to it pursuant to the immediately following sentence, with the
Securities and Exchange Commission (the "SEC") a registration statement on
Form S-4 (the "Registration Statement") covering the issuance of the SLC
Shares in the Acquisition. In the case of such election, the LMS
Shareholders shall use reasonable best efforts to provide SLC, on or prior
to January 2, 1995, with all information concerning the LMS Parties which
is required under applicable SEC rules and regulations to be disclosed in
the Registration Statement. On and after such date, the LMS Shareholders
shall promptly provide SLC with such additional or updated information as
is necessary or desirable in connection with the preparation, filing or SEC
clearance of the Registration Statement. Each of the LMS Shareholders, on
the one hand, and SLC, on the other hand, hereby represents and warrants
that none of the information supplied or to be supplied by it for inclusion
or incorporation by reference in the Registration Statement shall, at the
time the Registration Statement is filed with the SEC and at the time it
becomes effective under the Securities Act, contain any untrue statement of
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading. SLC
shall use reasonable best efforts to cause the Registration Statement to be
declared effective on or prior to the Closing Date, it being understood
that the failure of the Registration Statement to be declared effective on
or prior to such date because of the LMS Shareholders' failure to provide
information to SLC on a timely basis shall not constitute a breach of, or
the failure to perform or satisfy, any covenant by SLC. If,
notwithstanding SLC's reasonable best efforts, the Registration Statement
is not declared effective on or prior to the Closing Date because the LMS
Shareholders elected to accelerate the Closing Date under Section 1D, such
failure to be declared effective shall not constitute a breach of, or the
failure to perform or satisfy, any covenant of SLC. In addition, SLC shall
not be required to agree to any amendment, modification or recission of any
of the Transaction Documents in connection with the SEC clearance of the
Registration Statement. Before filing the Registration Statement or any
amendment thereto, SLC will furnish to counsel selected by the LMS
Shareholders copies of all such documents proposed to be filed, which
documents will be
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33
subject to the review of such counsel before any such filing is made, and
SLC will comply with any reasonable request by such counsel to make changes
in any information contained in such documents relating to LMS or the LMS
Shareholders.
(ii) Cost and Expenses of Registration. SLC agrees to bear
all costs and expenses incurred by it in connection with the Registration
Statement, including filing fees, printing expenses, and the fees and
disbursements of counsel and of independent public accountants and other
experts of SLC. It is expressly acknowledged that the costs and expenses
to be borne by SLC shall exclude commissions and expenses, brokerage fees,
transfer taxes applicable to the registration and sale of the SLC Shares
and the fees and disbursements of counsel to and any accountants or other
experts for LMS or the LMS Shareholders.
8T. LISTING OF SLC SHARES. SLC will use commercially reasonable
efforts to cause the SLC Shares to be issued pursuant to this Agreement to be
listed for trading on the New York Stock Exchange prior to the Closing Date.
8U. TAX RESPONSIBILITY.
(i) The LMS Shareholders shall file, or cause to be filed, on or
before the Closing Date all tax returns relating to the business or assets
of LMS and the LMS Subsidiaries required to be filed on or before the
Closing Date.
(ii) SLC shall file, or cause to be filed, all tax returns
relating to the business or assets of LMS and the LMS Subsidiaries required
to be filed after the Closing Date. With respect to any tax return
described in the preceding sentence which relates to a period ending before
or including the Closing Date (a "Straddle Return"), SLC shall provide the
LMS Shareholders with a copy of such return in draft form (a "Draft
Return") and a statement certifying the amount of tax shown on such return
for which the LMS Shareholders are responsible pursuant to Section 6B,
together with appropriate supporting information and schedules, at least 30
business days prior to the due date for the filing of such return. The LMS
Shareholders shall have the right at their own expense to review all Draft
Returns and any work papers and procedures used to prepare such returns.
The LMS Shareholders, within 15 business days after delivery to them of a
Draft Return, shall notify SLC in writing of any revisions to such return
(which revisions shall relate principally to the determination of the
amount of tax (i) shown on such return for which the LMS Shareholders would
be responsible pursuant to Section 6B or (ii) for which the LMS
Shareholders are responsible directly as a result of the transactions
contemplated by this Agreement
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34
including, without limitation, the Disposition) proposed by the LMS
Shareholders. The Straddle Returns shall incorporate the revision or
revisions to the Draft Returns requested by the LMS Shareholders unless SLC
believes, in good faith, that such revision or revisions are not permitted
by law; provided that the Straddle Returns shall incorporate such revision
or revisions in any event if the LMS Shareholders shall have provided an
opinion of Debevoise & Xxxxxxxx or other law firm of national standing to
the effect that there is a reasonable basis for such revision or revisions
and shall have agreed in writing to indemnify SLC against any tax-related
Losses resulting from such revision or revisions.
(iii) SLC and the LMS Shareholders shall cooperate, and SLC shall
cause LMS and the LMS Subsidiaries to cooperate with the LMS Shareholders,
with respect to the preparation and filing of any tax return for which the
other is responsible pursuant to this Section 8U as described in Section 5.
SLC shall notify the LMS Shareholders in writing within ten business days
from its receipt of notice of any pending or threatened tax audits or
assessments of LMS or either of the LMS Subsidiaries that may affect the
tax liabilities of the LMS Shareholders for taxable periods ending on or
prior to or including the Closing Date. Except as provided in Section
6D(iii), the LMS Shareholders shall have the right to represent the
interests of LMS and the Subsidiaries in any tax audit or administrative or
court proceeding to the extent relating to (A) taxes for which the LMS
Shareholders are responsible pursuant to Section 6B or (B) taxes for which
the LMS Shareholders may be liable in their capacity as shareholders of
LMS, and to employ counsel of their choice at their expense, provided that
the LMS Shareholders shall give notice to SLC with respect to any issue
relating to such audit or proceeding that could have a material adverse
effect on SLC, LMS or its Subsidiaries, with respect to which issue the LMS
Shareholders and SLC, each at its own expense, shall jointly have the right
to represent the interests of LMS and its Subsidiaries. SLC and the LMS
Shareholders shall cooperate, and SLC shall cause LMS and its Subsidiaries
to cooperate with the LMS Shareholders, with respect to any tax audit or
administrative or court proceeding relating to taxes referred to in this
paragraph (iii) as described in Section 5. Such cooperation shall include
providing all relevant information available to the LMS Shareholders or SLC
(through LMS or otherwise), as the case may be, with respect to any such
audit or proceeding and making personnel available at and for reasonable
times, provided that the foregoing shall be done in a manner so as not to
interfere unreasonably with the conduct of the business of the Parties.
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35
(iv) Any failure by SLC or the LMS Shareholders to provide the
notices or other materials contemplated in this Section 8U will not relieve
the other Party from any obligations under this Agreement, except to the
extent that such failure actually xxxxx such other Party.
8V. CONDUCT OF BUSINESS ON CLOSING DATE. Notwithstanding any
other provision of this Agreement, SLC shall be responsible for, and the LMS
Shareholders shall not bear, and shall be saved and held harmless by SLC from
and against any taxes (including interest, penalties and additions thereto)
that arise due to the failure, following the Closing, of SLC to cause LMS and
the LMS Subsidiaries to carry out their business on the Closing Date in the
ordinary course and in substantially the same manner as heretofore conducted.
8W. BENEFIT PLANS. Prior to the Closing, the Partnership shall,
and the Parties shall cause the Partnership to, (i) adopt an amendment to the
five Consolidated Foodservice Companies Limited Partnership Retirement and
Disability Plans (one plan for each division) in the form attached hereto as
Exhibit E, and (ii) forward a notice of such amendments (which notice shall be
prepared by the LMS Shareholders) to each Person set forth on a list of plan
participants prepared by the LMS Shareholders and provided to the Partnership.
Xxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxxx jointly and severally represent and
warrant to SLC that the actions described in the preceding sentence (A) will
comply with all Legal Requirements including, without limitation, the Employee
Retirement Income Security Act of 1974, as amended and (B) will not subject
the Partnership to any liability or obligation (under any Legal Requirement or
otherwise) except obligations to make distributions to participants upon
termination of employment under such amendments.
8X. NO IMPAIRMENT OF CURRENT INDEMNIFICATION RIGHTS. Following
the date hereof, Xxxxxx Xxxxxxx and Xxxxxx Xxxxxxx and each other Person
entitled to indemnification pursuant to Section 6.11 of the Partnership
Agreement as such section is in effect on the date of this Agreement shall
retain their rights pursuant to Section 6.11 of the Partnership Agreement as
such section is in effect on the date of this Agreement.
SECTION 9. DEFINITIONS.
9A. ADDITIONAL DEFINED TERMS. For the purposes of this
Agreement, the following terms have the meanings set forth below:
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under
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36
common control with such first Person within the meaning of the Securities
Exchange Act.
"Affiliate Agreement" means any contract, agreement or arrangement
between LMS, the LMS Subsidiaries or the Partnership, on the one hand, and the
LMS Shareholders or any Affiliate of any of the LMS Shareholders (other than
LMS, the LMS Subsidiaries or the Partnership), on the other hand.
"Business" means the business of the Partnership as of the date of
this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contribution Agreement" means the Capital Contribution Agreement,
dated as of July 25, 1989, by and among PYA, FFI, PYA GP, PYA LP, LMS, LMS GP,
LMS LP, SLC and the Partnership.
"Environmental and Safety Requirements" means all federal, state,
local and foreign statutes, regulations, ordinances and similar provisions
having the force or effect of law, all judicial and administrative orders, all
contractual obligations and all common law concerning public health and safety,
worker health and safety, and pollution or protection of the environment,
including without limitation all those relating to the presence, use,
production, generation, handling, transport, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control, or cleanup of any hazardous or otherwise regulated materials,
substances or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, or radiation.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Government Entity" means the United States of America or any state or
other political subdivision thereof, or any entity exercising executive,
legislative, judicial, regulatory or administrative functions of government.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"HSR Date" means the date on which the waiting period under the HSR
Act for the transactions contemplated hereby expires (which expiration is
scheduled to occur on October 12, 1994).
"Leases" means (i) the Indenture of Lease made as of August 5, 1989
between LMS and the Partnership covering the
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37
premises as shown on Exhibit F hereto, (ii) the Indenture of Lease made as of
January 1, 1993 between LMS and the Partnership covering the premises as shown
on Exhibit G hereto, and (iii) the lease covering the warehouse and office
facilities located at 000-000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx.
"Legal Requirement" means any requirement arising under any action,
law, treaty, rule or regulation, determination or direction of an arbitrator or
Government Entity, including any Environmental and Safety Requirement.
"Lien" means any mortgage, pledge, security interest, encumbrance,
charge, lien, restriction or adverse claim (other than restrictions on transfer
imposed by applicable securities laws).
"Loss" means, with respect to any Person, any diminution in value,
consequential or other damage, liability, demand, claim, action, cause of
action, cost, damage, deficiency, tax, penalty, fine or other loss or expense,
whether or not arising out of a third party claim, including all interest,
penalties, reasonable attorneys' fees and expenses and all amounts paid or
incurred in connection with any action, demand, proceeding, investigation or
claim by any third party (including any Government Entity) against or affecting
such Person and including the investigation, defense or settlement of any of
the foregoing, together with interest thereon from the date on which the Loss
to which the claim relates is suffered through and including the date on which
the total amount of the claim, including such interest, is recovered or
recouped pursuant to Section 6 above.
"Partnership Agreement" means the Amended and Restated Agreement of
Limited Partnership of Consolidated Foodservice Companies Limited Partnership,
dated as of August 5, 1989, by and among LMS GP, LMS LP, PYA GP and PYA LP, as
amended.
"Person" means an individual, a partnership, a corporation, an
association, a limited liability company, a joint stock company, a trust, a
joint venture, an unincorporated organization and a Government Entity.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"SLC Affiliated Group" means SLC's affiliated group within the meaning
of section 1504 of the Code.
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38
"Tax Distribution Amount" means an amount such that the pro rata
portion thereof distributed to LMS GP and LMS LP will be sufficient to
reimburse such corporations for any payments (by such corporations or by LMS on
their behalf) of taxes (including estimated taxes) attributable to their
distributive shares of the taxable income of the Partnership (including, for
this purpose, taxes paid in respect of such income by a consolidated, combined
or unitary group of which any such partner is a member) for any period
beginning on or after July 1, 1994.
"Transaction Documents" means this Agreement, the Consulting
Agreements, the Employment Agreements, the Partnership Amendment and all other
agreements, instruments, certificates and other documents to be entered into or
delivered by any Party pursuant to or in connection with any of the foregoing.
9B. OTHER DEFINITIONAL PROVISIONS.
(i) Accounting Terms. Accounting terms which are not otherwise
defined in this Agreement have the meanings given to them under GAAP. To
the extent that the definition of any accounting term that is expressly
defined in this Agreement is inconsistent with the meaning of such term
under GAAP, the definition set forth in this Agreement will control.
(ii) "Hereof," etc. The "hereof," "herein" and "hereunder"
and terms of similar import will refer to this Agreement as a whole and not
to any particular provision of this Agreement. Section, clause, Schedule
and Exhibit references contained in this Agreement are references to
Sections, clauses, Schedules and Exhibits in or to this Agreement, unless
otherwise specified.
(iii) Number and Gender. Each defined term used in this
Agreement has a comparable meaning when used in its plural or singular
form. Each gender-specific term used in this Agreement has a comparable
meaning whether used in a masculine, feminine or gender-neutral form.
(iv) Including. Whenever the term "including" (whether or not
that term is followed by the phrase "but not limited to" or "without
limitation" or words of similar effect) is used in this Agreement in
connection with a listing of items within a particular classification, that
listing will be interpreted to be illustrative only and will not be
interpreted as a limitation on, or an exclusive listing of, the items
within that classification.
(v) Successor Laws. Any reference to any particular Code
section or any other law or regulation will be
- 34 -
39
interpreted to include any revision of or successor to that section
regardless of how it is numbered or classified.
SECTION 10. OTHER AGREEMENTS.
10A. TERMINATION. This Agreement may be terminated:
(i) at any time prior to the Closing by agreement of SLC and the
LMS Shareholders,
(ii) by SLC, at any time after September 30, 1995, if the
Closing shall not have occurred by reason of the failure of any condition
precedent under paragraphs (ii) or (iv) of Section 7A hereof (unless the
failure results primarily from an SLC Party itself breaching any
representation, warranty, or covenant contained in this Agreement),
(iii) by SLC, at any time after December 31, 1995, if the
Closing shall not have occurred by reason of the failure of any condition
precedent under paragraphs (i) or (iii) of Section 7A hereof (unless the
failure results primarily from an SLC Party itself breaching any
representation, warranty, or covenant contained in this Agreement),
(iv) by the LMS Shareholders, at any time after December 31, 1995,
if the Closing shall not have occurred by reason of the failure of any
condition precedent under Section 7B hereof (unless the failure results
primarily from an LMS Party itself breaching any representation, warranty,
or covenant contained in this Agreement).
Any termination of this Agreement pursuant to clause 10A(ii), (iii) or (iv)
will effected by written notice from the terminating Party to the others. Any
termination of this Agreement will not terminate the liability of any Party for
any breach or default of any representation, warranty, covenant or other
agreement set forth in any Transaction Document which exists at the time of
such termination.
10B. REMEDIES. No failure to exercise, and no delay in
exercising, any right, remedy, power or privilege under this Agreement by any
Party will operate as a waiver of such right, remedy, power or privilege, nor
will any single or partial exercise of any right, remedy, power or privilege
under this Agreement preclude any other or further exercise of such right,
remedy, power or privilege or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges provided pursuant to
this Agreement are cumulative and not exhaustive of any other rights, remedies,
powers and privileges which may be provided by law.
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40
10C. CONSENT TO AMENDMENTS. No amendment, modification or
supplement of this Agreement will be binding upon any Party unless such
amendment, modification or supplement is set forth in writing and is executed
by such Party. No other course of dealing between or among any of the Parties
or any delay in exercising any rights pursuant to this Agreement will operate
as a waiver of any rights of any Party. In the event that the Proceedings
condition contained in Sections 7A(i) and 7B(i) or the HSR Act condition
contained in Sections 7A(iii) and 7B(ii) are not satisfied, both SLC and the
LMS Shareholders must waive the unsatisfied condition in order for the Closing
to occur. In the event that the Consents condition contained in Section 7A(ii)
or the Disposition condition contained in Section 7(a)(iv) is not satisfied,
SLC shall have the unilateral right to waive the unsatisfied condition and, if
SLC does so, then the LMS Shareholders shall be obligated to close.
10D. SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided in this Agreement, all covenants and agreements set forth in this
Agreement by or on behalf of the Parties will bind and inure to the benefit of
the respective successors and assigns of the Parties and their heirs and legal
representatives, whether so expressed or not, except that neither this
Agreement or any of the rights, interests or obligations hereunder may be
assigned by SLC or the LMS Shareholders without the other's prior written
consent. Notwithstanding the foregoing, any LMS Shareholder (the "LMS
Transferor") may transfer any LMS Shares or any SLC Shares acquired hereunder
(a) by will or under the laws of descent and distribution upon the death of LMS
Transferor, or (b) to any "Permitted Transferee" (as defined below) and any
such transferee shall be deemed to have been assigned the LMS Transferor's
rights and interests hereunder and to have assumed and become liable for the
LMS Transferor's liabilities and obligations hereunder; provided that in any
event, the LMS Transferor shall remain directly liable for all liabilities and
obligations hereunder. For the purposes of this Section 10D, the term
"Permitted Transferee" shall mean, with respect to an LMS Shareholder, (i) any
"affiliate" (as such term is defined in Rule 12b-2 of the Securities Exchange
Act) of such LMS Shareholder; (ii) his or her spouse and his or her descendants
and ancestors, and their respective spouses; (iii) any organization that is
described under Section 501(c) of the Internal Revenue Code of 1986, as
amended, or any comparable provision under any successor statute; and (iv) a
trust the beneficiaries of which include only the LMS Shareholders and
Permitted Transferees under the cause (i), (i) or (iii) above, provided that
during the period any such trust owns any LMS Shares or SLC Shares, no person
other than any LMS Shareholder and such Permitted Transferees may become
beneficiaries thereof; or (v) a corporation, partnership or other entity (that
is not a Permitted Transferee under clause (i) above) at least 80% of the
voting power and equity of which is owned by Permitted Transferees under clause
(i), (ii) or (iii) above, provided that
- 36 -
41
during the period any such entity owns any LMS Shares or SLC Shares, such
entity shall continue to be at least 80% owned by such Permitted Transferees.
10E. GOVERNING LAW. This Agreement will be governed by and
construed in accordance with the domestic laws of the State of Delaware,
without giving effect to any choice of law or conflict provision or rule
(whether of the State of Delaware or any other jurisdiction) that would cause
the laws of any jurisdiction other than the State of Delaware to be applied.
In furtherance of the foregoing, the internal law of the State of Delaware will
control the interpretation and construction of this Agreement, even if under
such jurisdiction's choice of law or conflict of law analysis, the substantive
law of some other jurisdiction would ordinarily apply.
10F. CONSENT TO JURISDICTION. Any proceeding relating to this
Agreement shall be brought in a state court of Delaware. Each party hereto
hereby (i) consents to personal jurisdiction in any such action brought in any
such Delaware court, (ii) consents to service of process made upon such party
in accordance with the notice provisions of Section 10G and (iii) waives any
objection to venue in any such Delaware court or to any claim that any such
Delaware court is an inconvenient forum.
10G. NOTICES. All demands, notices, communications and reports
provided for in this Agreement will be in writing and will be either personally
delivered, sent by telefax or sent by reputable overnight courier service
(delivery charges prepaid) to any Party at the address specified below, or at
such address, to the attention of such other Person, and with such other copy,
as the recipient party has specified by prior written notice to the sending
Party pursuant to the provisions of this Section 10G.
If to Xxxxxx X. Xxxxxxx or Xxxxxx X. Xxxxxxx:
Xxxxxx X. Xxxxxxx or
Xxxxxx X Xxxxxxx
000 Xxxxxx Xxxxx
Xxxxxxxx Xxxxx, Xxxxxxxx 00000
with a copy, which will not constitute notice to the Sandlers, to:
Xxxxxxxx & Xxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Telefax: (000) 000-0000
If to Xxxxx X. Xxxxxxx:
Xxxxx X. Xxxxxxx
000 Xxxxxxx Xxxx Xxxx
Xxx. 0X
Xxx Xxxx, Xxx Xxxx 00000
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42
with a copy, which will not constitute notice to Xxxxx X. Xxxxxxx, to:
Xxxxxxx X. Xxxxxxxxxx, Esq.
Phillips, Nizer, Xxxxxxxx, Xxxx & Ballon
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telefax: (000) 000-0000
If to SLC:
Xxxx Xxx Corporation
Three First Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: General Counsel
Telefax: (000) 000-0000
with a copy, which will not constitute notice to SLC, to:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn:Xxxxx X. Xxxx, Esq.
Xxxxxxx X. Perl, Esq.
Telefax: 000-000-0000
Any such demand, notice, communication or report will be deemed to have been
given pursuant to this Agreement when delivered personally or by telefax, or on
the business day after deposit with a reputable overnight courier service, as
the case may be.
10H. SEVERABILITY OF PROVISIONS. If any covenant, agreement,
provision or term of this Agreement is held to be invalid for any reason
whatsoever, then such covenant, agreement, provision or term will be deemed
severable from the remaining covenants, agreements, provisions and terms of
this Agreement and will in no way affect the validity or enforceability of any
other provision of this Agreement; provided that the Parties will negotiate in
good faith with respect to an alternative provision that will effectuate the
intent of the invalidated covenant, agreement or provision.
10I. SCHEDULES AND EXHIBITS. The Schedules and Exhibits
constitute a part of this Agreement and are incorporated into this Agreement
for all purposes.
10J. COUNTERPARTS. The Parties may execute this Agreement in two
or more counterparts (no one of which need contain the signatures of all
Parties), each of which will be an original and all of which together will
constitute one and the same instrument.
10K. SPECIFIC PERFORMANCE. Each of the Parties acknowledges and
agrees that the other Party would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees
- 38 -
43
that the other Party shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in addition to
any other remedy to which they may be entitled, at law or in equity.
10L. SPECIAL REMEDIES. In addition to and without limiting any
other remedy to which any of the Parties may be entitled, whether at law or in
equity (including without limitation the specific performance contemplated by
Section 10K above):
(i) If a Sandler Default (as defined in the Partnership
Amendment) occurs, (A) all of SLC's attorneys' fees and expenses and all
amounts paid or incurred by SLC or any of its Affiliates in connection with
any legal action to enforce the provisions of this Agreement shall be paid
(on a joint and several basis) by the LMS Shareholders, (B) SLC shall not
be obligated to enter into the Consulting Agreements or make the Consulting
and Noncompetition Payments (as defined in the Consulting Agreements)
regardless of whether or not SLC ultimately acquires the LMS Shares or
otherwise directly or indirectly acquires the Partnership interests
currently held by LMS GP and LMS LP, and (C) notwithstanding any provision
of the Partnership Agreement or the Contribution Agreement to the contrary,
until such time as there has been a final non-appealable adjudication of
claims between the Parties as to whether a Sandler Default exists, neither
the LMS Shareholders nor LMS nor LMS GP nor LMS LP shall be permitted to
sell, transfer, assign, pledge or otherwise dispose of (whether with or
without consideration and whether voluntarily or involuntarily or by
operation of law) any interest in the Partnership, the LMS Subsidiaries or
LMS without the prior written consent of SLC (except transfers of LMS
Shares permitted under Section 10D hereof). In addition, if a Sandler
Default occurs and SLC subsequently acquires the LMS Shares or otherwise
directly or indirectly acquires the Partnership interests currently held by
LMS GP and LMS LP, the LMS Shareholders shall not be entitled to receive or
otherwise be compensated for any dividends which have been declared or paid
on the SLC Common Stock during the period between May 15, 1995 and the date
on which such acquisition actually occurs.
(ii) If an SLC Default occurs, all of the LMS Shareholders'
attorneys' fees and expenses and all amounts paid or incurred by the LMS
Shareholders or any of their Affiliates in connection with any legal action
to enforce the provisions of this Agreement shall be paid by SLC; and, in
addition, if an SLC Default occurs and SLC subsequently acquires the LMS
Shares or otherwise directly or indirectly acquires the Partnership
interests currently held by LMS GP and LMS LP, the LMS Shareholders shall
be entitled to receive
- 39 -
44
the amount of any and all dividends which have been declared or paid on
the SLC Common Stock during the period between May 15, 1995 and the date on
which such acquisition actually occurs. Any amounts payable pursuant to
the preceding sentence shall be payable in shares of SLC Common Stock
valued at the time of payment in accordance with the "Market Price"
definition in Section 8R. An "SLC Default" will occur if the Closing does
not occur on or prior to May 15, 1995 notwithstanding the fact that (1) all
of the conditions contained in Section 7A have been satisfied on or prior
to such date and (2) the representations and warranties of the LMS Parties
are true and correct in all material respects on such date, the LMS Parties
have complied in all material respects with all of their pre-Closing
covenants and agreements contained herein and the LMS Parties are ready,
willing and able to consummate the Closing on such date.
10M. NO IMPACT ON OTHER CLAIMS.
(i) Neither this Agreement nor the consummation of the
transactions contemplated hereby shall in any way (except as otherwise
provided in Section 8X) extinguish or limit the rights of PYA GP or PYA LP
(or the Partnership) to pursue any claims, actions or causes of action that
they may have against Xxxxxx Xxxxxxx or Xxxxxx Xxxxxxx, whether in their
capacities as officers or members of the Management Committee of the
Partnership, officers or directors of LMS GP or LMS LP, stockholders of LMS
or otherwise. In addition, Xxxxxx Xxxxxxx and Xxxxxx Xxxxxxx agree that
(except as otherwise provided in Section 8X), in addition to any other
claims, actions or causes of action that PYA GP or PYA LP (or the
Partnership) may have against them personally, PYA GP and PYA LP (and the
Partnership) shall be entitled to assert against Xxxxxx Xxxxxxx and Xxxxxx
Xxxxxxx personally any claims, actions or causes of action that they may
have against LMS relating to the Partnership or the formation, ownership,
management or affairs of the Partnership resulting from, arising out of or
caused directly or indirectly by facts, conditions or circumstances
existing prior to the Closing (and which PYA GP or PYA LP (or the
Partnership) would have been entitled to assert if this Agreement had not
been in effect and SLC had not acquired LMS) and PYA GP and PYA LP (and the
Partnership) agree that Xxxxxx Xxxxxxx and Xxxxxx Xxxxxxx may assert any
defenses or counterclaims that would have been available to LMS in
connection therewith; provided that Xxxxxx Xxxxxxx and Xxxxxx Xxxxxxx shall
not be liable pursuant to this Section 10M for any such claims, actions or
causes of action against LMS in an aggregate amount in excess of the net
worth (on a fair market value basis) of LMS immediately prior to the
Disposition.
- 40 -
45
(ii) Neither this Agreement nor the consummation of the
transactions contemplated hereby shall in any way extinguish or limit the
rights of Xxxxxx Xxxxxxx or Xxxxxx Xxxxxxx to pursue any claims, actions or
causes of action that they may have against PYA GP or PYA LP.
(iii) Neither this Agreement nor the consummation of the
transactions contemplated hereby shall in any way extinguish or limit the
rights of the SLC Parties or the Partnership to challenge, dispute or
otherwise question the enforceability of the Leases (including, without
limitation, on the basis that such Leases were not approved in accordance
with the terms of the Partnership Agreement).
10N. NO THIRD-PARTY BENEFICIARIES. Except as otherwise expressly
provided in this Agreement, no Person which is not a Party will have any right
or obligation pursuant to this Agreement.
10O. HEADINGS. The headings used in this Agreement are for the
purpose of reference only and will not affect the meaning or interpretation of
any provision of this Agreement.
10P. MERGER AND INTEGRATION. Except as otherwise provided in this
Agreement, this Agreement sets forth the entire understanding of the Parties
relating to the Acquisition and the other transactions contemplated by this
Agreement, and all prior understandings relating to the subject matter hereof,
whether written or oral are superseded by this Agreement, and all prior
understandings related to the subject matter hereof, including the letter of
intent dated August 25, 1994, are hereby terminated.
* * * * *
- 41 -
46
IN WITNESS WHEREOF, the Parties have executed this Agreement and Plan
of Reorganization as of the date first written above.
XXXX XXX CORPORATION
By: /s/ Xxxx XxXxxxxxxx
-----------------------------
Its:
-----------------------------
PYA/MONARCH, INC.
By: /s/ Xxx X. Xxxxxxx
-----------------------------
Its:
-----------------------------
FRIGID FREEZE FOODS, INC.
By: /s/ Xxx X. Xxxxxxx
-----------------------------
Its:
-----------------------------
PYA GENERAL PARTNER CORP.
By: /s/ Xxx X. Xxxxxxx
-----------------------------
Its:
-----------------------------
PYA LIMITED PARTNER CORP.
By: /s/ Xxx X. Xxxxxxx
------------------------------
Its:
-----------------------------
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47
[CONTINUATION OF AGREEMENT AND PLAN OF REORGANIZATION SIGNATURE PAGE]
/s/ Xxxxxx X. Xxxxxxx
--------------------------
XXXXXX X. XXXXXXX
/s/ Xxxxxx X. Xxxxxxx
--------------------------
XXXXXX X. XXXXXXX
/s/ Xxxxx X. Xxxxxxx
--------------------------
XXXXX X. XXXXXXX
X.X. XXXXXXX & SONS, INCORPORATED
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------
Its: President
----------------------
SANDLER LIMITED PARTNER CORP.
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------
Its: Secretary/Treasurer
----------------------
SANDLER GENERAL PARTNER CORP.
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------
Its: Secretary/Treasurer
----------------------
CONSOLIDATED FOODSERVICE COMPANIES
LIMITED PARTNERSHIP
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------
Its: Chairman
-----------------------
- 43 -
48
The exhibits and schedules referenced in the foregoing Agreement and
Plan of Reorganization (the "Agreement"), which are identified on page (iii) of
the Agreement, have not been included in accordance with paragraph (b)(2) of
Item 601 of Regulation S-K. The Registrant hereby agrees to furnish
supplementally a copy of any omitted exhibit or schedule to the Commission upon
request.
