STOCK PURCHASE AGREEMENT
BY AND BETWEEN
XXXXXXXX BRANDS INTERNATIONAL, INC.
AND
PERFORMANCE FOOD GROUP COMPANY
FEBRUARY 22, 2005
TABLE OF CONTENTS
Page
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ARTICLE 1. PURCHASE AND SALE OF SHARES........................................1
1.1 Transfer of Shares......................................1
ARTICLE 2. CONSIDERATION......................................................1
2.1 Purchase Price..........................................1
2.2 Other Payments..........................................1
2.3 EBITDA Adjustment.......................................4
ARTICLE 3. CLOSING; OBLIGATIONS OF THE PARTIES................................5
3.1 Closing Date............................................5
3.2 Obligations of the Parties at the Closing...............5
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF SELLER...........................6
4.1 Corporate Status........................................6
4.2 Authority...............................................7
4.3 No Conflict.............................................7
4.4 Capitalization..........................................7
4.5 Financial Statements....................................9
4.6 Real Property..........................................10
4.7 Assets.................................................11
4.8 Material Contracts.....................................11
4.9 Intellectual Property..................................13
4.10 Litigation, Claims and Proceedings.....................14
4.11 Environmental and Safety and Health Matters............14
4.12 Compliance with Law....................................16
4.13 Employee Matters and Benefit Plans.....................17
4.14 Taxes18
4.15 Absence of Undisclosed Liabilities.....................20
4.16 Absence of Certain Changes.............................20
4.17 Labor Matters..........................................20
4.18 Customers and Suppliers................................21
4.19 Accounts Receivable....................................22
4.20 Affiliated Transactions................................22
4.21 Insurance..............................................22
4.22 Payments...............................................22
4.23 Finder's Fee...........................................23
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF PURCHASER.......................23
5.1 Corporate Status.......................................23
5.2 Authority..............................................23
5.3 No Conflict............................................23
5.4 Compliance with Law....................................24
5.5 Sufficient Funds.......................................24
5.6 Finder's Fee...........................................24
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5.7 No Reliance............................................24
5.8 Investment Intent......................................25
ARTICLE 6. COVENANTS 25
6.1 Interim Operations of the Companies....................25
6.2 Consents...............................................26
6.3 Publicity..............................................27
6.4 Access to Records and Properties.......................28
6.5 Further Action.........................................30
6.6 Expenses...............................................31
6.7 Notification of Certain Matters........................31
6.8 Employee Benefit Plans.................................31
6.9 Non-Competition, Non-Solicitation and Non-Disclosure...34
6.10 Intercompany Indebtedness..............................35
6.11 Debt and Guarantees....................................36
6.12 Supplements to Disclosure Schedule.....................36
6.13 Non-Solicitation.......................................36
6.14 Obligations with Respect to Certain Insurance Claims...37
6.15 Obligation with Respect to Fresh Advantage.............38
ARTICLE 7. CLOSING CONDITIONS................................................38
7.1 Conditions to Obligations of Seller and
Purchaser to Consummate the Transaction................38
7.2 Additional Conditions to Obligations of Purchaser......38
7.3 Additional Conditions to Obligations of Seller.........40
ARTICLE 8. CERTAIN TAX MATTERS...............................................41
8.1 Responsibility for Filing Tax Returns..................41
8.2 Cooperation on Tax Matters.............................41
8.3 Tax Sharing Agreements.................................42
8.4 Tax Indemnifications...................................42
8.5 Certain Non-income Taxes...............................43
8.6 Section 338(h)(10) Election............................44
ARTICLE 9. ADDITIONAL INDEMNIFICATION........................................44
9.1 Survival...............................................44
9.2 Additional Indemnification.............................44
9.3 Indemnification Procedures.............................46
9.4 Indemnification Limitations............................47
ARTICLE 10. TERMINATION......................................................48
10.1 Termination............................................48
10.2 Effect of Termination and Abandonment..................49
ARTICLE 11. MISCELLANEOUS....................................................49
11.1 Intentionally Deleted..................................49
11.2 Notices................................................49
11.3 Certain Definitions; Interpretation....................50
11.4 Severability...........................................55
11.5 Entire Agreement; No Third-Party Beneficiaries.........55
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11.6 Amendment; Waiver......................................55
11.7 Binding Effect; Assignment.............................55
11.8 Disclosure Schedule....................................55
11.9 Governing Law; Jurisdiction............................56
11.10 Enforcement............................................56
11.11 Construction...........................................56
11.12 Counterparts...........................................56
[The Disclosure Schedule is not included herewith. A copy of the Disclosure
Schedule will be furnished supplementally to the Securities and Exchange
Commission upon request.]
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INDEX OF DEFINED TERMS
Term Section
338(h)(10) Entity.........................................................8.6
Accountants.......................................................2.2(d)(iii)
Accounts Receivable......................................................4.19
Acquisition Proposal.....................................................6.13
Action.............................................................11.3(a)(i)
Actual Payment Amount..................................................2.2(a)
Adjustment Amount......................................................2.2(c)
affiliate.........................................................11.3(a)(ii)
Affiliated Group.................................................11.3(a)(iii)
Agreement............................................................Recitals
Assets....................................................................4.7
Audited Statements.....................................................6.4(b)
Average Working Capital................................................2.2(b)
Business...............................................................4.4(d)
Cause..................................................................6.8(d)
CBAs..................................................................4.17(a)
Xxxxxxx County Arrangements........................................11.3(a)(v)
Cleanup............................................................11.3(a)(v)
Closing...................................................................3.1
Closing Date..............................................................3.1
Closing Date Financial Statements...................................2.2(d)(i)
Closing Date Working Capital........................................2.2(d)(i)
Code..............................................................11.3(a)(vi)
Commitment Letter.........................................................5.5
Companies............................................................Recitals
Companies Covered Employees............................................6.8(b)
Companies Owned Intellectual Property..................................4.9(b)
Companies Used Intellectual Property...................................4.9(b)
Company Plans.........................................................4.13(a)
Company Release..................................................11.3(a)(vii)
Confidential Material..................................................6.9(c)
Confidentiality Agreement..............................................6.4(a)
Contract............................................................4.8(a)(i)
control.........................................................11.3(a)(viii)
DOJ....................................................................6.2(a)
EBITDA............................................................11.3(a)(ix)
Effective Time............................................................3.1
Encumbrances..............................................................4.3
Environmental Claim................................................11.3(a)(x)
Environmental Law.....................................................4.11(a)
ERISA.............................................................11.3(a)(xi)
ERISA Affiliate.......................................................4.13(f)
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Estimated Payment......................................................2.2(a)
Estimated Payment Adjustment Amount....................................2.2(a)
Financial Statements...................................................4.5(a)
FTC....................................................................6.2(a)
GAAP...................................................................4.5(b)
Xxxxxxx Fee..............................................................4.23
Governmental Authority...........................................11.3(a)(xii)
Governmental Order..............................................11.3(a)(xiii)
Guarantees...............................................................6.11
Hazardous Substance...................................................4.11(a)
HSR Act...................................................................4.3
Indemnified Party......................................................9.3(a)
Indemnifying Party.....................................................9.3(a)
Intercompany Notes...............................................11.3(a)(xiv)
Key Customers and Suppliers..............................................4.18
Key Employees.........................................................4.13(h)
knowledge.........................................................11.3(a)(xv)
Law..............................................................11.3(a)(xvi)
Leased Real Property...................................................4.6(c)
Losses.................................................................9.2(a)
Material Contracts.....................................................4.8(a)
Xxxxxxx Xxxxx Fee........................................................4.23
Monthly Statements..................................................2.2(d)(i)
Owned Real Property....................................................4.6(b)
Permit..........................................................11.3(a)(xvii)
Permitted Encumbrances.................................................4.6(b)
Person.........................................................11.3(a)(xviii)
PICL.....................................................................6.14
Pre-Closing Claims.......................................................6.14
Preliminary EBITDA Statement...........................................2.3(a)
Purchase Price............................................................2.1
Purchaser............................................................Recitals
Purchaser Indemnified Parties..........................................9.2(a)
Purchaser Material Adverse Effect................................11.3(a)(xix)
Purchaser's 401(k) Plan................................................6.8(e)
Real Property..........................................................4.6(c)
Real Property Leases...............................................4.6(a)(ii)
Reference Balance Sheet................................................4.5(a)
Related Parties..........................................................4.20
Representatives........................................................6.9(c)
Seller...............................................................Recitals
Seller Indemnified Parties.............................................9.2(b)
Seller Material Adverse Effect...................................11.3(a)(xxi)
Seller Plans..........................................................4.13(a)
Seller Release....................................................11.3(a)(xx)
Shares....................................................................1.1
v
Straddle Period...................................................8.4(a)(iii)
Subsidiary......................................................11.3(a)(xxii)
Survival Period...........................................................9.1
Tax Return.......................................................11.3(a)(xxv)
Taxes..........................................................11.3(a)(xxiii)
Taxing Authority................................................11.3(a)(xxiv)
Termination Date......................................................10.1(b)
Third-Party Claim......................................................9.3(a)
Threshold Amount..........................................................9.4
WC Adjustment Amount...................................................2.2(b)
Working Capital........................................................2.2(b)
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made this 22nd day of
February, 2005, by and between Xxxxxxxx Brands International, Inc., a New
Jersey corporation ("Purchaser"), and Performance Food Group Company, a
Tennessee corporation ("Seller").
WHEREAS, Seller owns all of the issued and outstanding shares of the
capital stock of Fresh International Corp., a Delaware corporation, Fresh
Advantage, Inc., a Virginia corporation, Redi-Cut Foods, Inc., an Illinois
corporation, and K.C. Salad Holdings, Inc., a Missouri corporation
(collectively, the "Companies"); and
WHEREAS, Purchaser desires to acquire from Seller, and Seller desires
to sell to Purchaser, all of the issued and outstanding shares of the capital
stock of the Companies upon and subject to the terms and conditions contained
in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements herein contained, the parties agree as follows:
ARTICLE 1.
PURCHASE AND SALE OF SHARES
1.1 TRANSFER OF SHARES. Subject to all of the terms and conditions of
this Agreement, at the Closing, Seller hereby agrees to sell, transfer and
convey to Purchaser, and Purchaser agrees to purchase and acquire from Seller,
free and clear of all Encumbrances (as defined in Section 4.3), 100 shares of
common stock, no par value, of Fresh International Corp., 1,000 shares of
common stock, par value $0.01 per share, of Fresh Advantage, Inc., 1,000 shares
of Class A common stock, no par value, of Redi-Cut Foods, Inc., and 1,000
shares of common stock, par value $0.01 per share, of K.C. Salad Holdings,
Inc., which constitute all of the issued and outstanding shares of capital
stock of the Companies (collectively, the "Shares").
ARTICLE 2.
CONSIDERATION
2.1 PURCHASE PRICE. The purchase price (the "Purchase Price") for the
Shares shall be $855,000,000, subject to adjustment pursuant to Section 2.3, if
applicable. At the Closing (as defined below), Purchaser shall deliver the
Purchase Price to Seller by wire transfer of immediately available funds
pursuant to the wire transfer instructions provided by Seller.
2.2 OTHER PAYMENTS.
(a) Payment of Cash and Outstanding Checks in Excess of Deposits.
Purchaser agrees that it will pay to Seller at Closing an amount equal
to the estimated amount of the following balance sheet line items (i)
cash; and (ii) "outstanding checks (issued by Seller in payment of
obligations of the Companies
and Subsidiaries) in excess of deposits" as of the most recently
completed four or five-week fiscal period prior to the Closing Date
for which financial statements of the Companies and their Subsidiaries
prepared in accordance with GAAP consistently applied with the
Financial Statements are available (the "Estimated Payment"). The
"Estimated Payment Adjustment Amount" (which may be a positive or
negative number) will be equal to the amount determined by subtracting
the actual amount of (i) cash; and (ii) "outstanding checks (issued by
Seller in payment of obligations of the Companies and Subsidiaries) in
excess of deposits" as of the Closing Date as set forth in the
applicable line items in the Closing Date Financial Statements (the
"Actual Payment Amount") from the Estimated Payment.
(b) Working Capital Adjustment Amount. "Working Capital" as of a
given date shall mean the amount calculated by subtracting the current
liabilities of the Companies and their Subsidiaries (including
"outstanding checks (issued by Seller in payment of obligations of the
Companies and Subsidiaries) in excess of deposits," but excluding (i)
liabilities for income taxes, (ii) capital lease obligations, (iii)
interest payable, (iv) the current portion of long-term debt, (v)
intercompany payables owing to Seller or its Subsidiaries and (vi) any
Seller insurance allocation accrual), as of that date from the current
assets of the Companies and their Subsidiaries (other than (i) cash,
(ii) current deferred income tax assets, (iii) any other income Tax
assets and (iv) intercompany receivables owed by Seller or its
Subsidiaries) as of that date; provided, that, for the avoidance of
doubt, calculations of inventory and accounts receivable shall be net
of the applicable reserve. The "Average Working Capital" of the
Companies and their Subsidiaries shall be equal to the average of the
Working Capital as of the last day of each of the 12 most recently
completed four or five-week fiscal periods prior to the Closing Date
for which internally prepared financial statements of the Companies
and their Subsidiaries prepared in accordance with GAAP consistently
applied with the Financial Statements are available. The "WC
Adjustment Amount" (which may be a positive or negative number) will
be equal to the amount determined by subtracting the Closing Date
Working Capital (as defined below) from the Average Working Capital.
For the avoidance of doubt, Seller shall be fully responsible for the
payment of, and shall make payment when due on, any "outstanding
checks in excess of deposits" as of the Closing Date to the extent
such amount has been included in the Estimated Payment and the Actual
Payment Amount. An example of the internally prepared financial
statements and calculation of Working Capital as of January 1, 2005 is
attached as Section 2.2(b) of the Disclosure Schedule.
(c) Post-Closing Payment. The Estimated Payment Adjustment Amount
and the WC Adjustment Amount when added together (which may be a
positive or negative number) shall collectively be referred to as the
"Adjustment Amount." If the Adjustment Amount is positive, the
Adjustment Amount shall be paid by wire transfer by Seller to an
account specified by Purchaser. If the Adjustment Amount is negative,
the Adjustment Amount (treated as if it were a positive number) shall
be paid by wire transfer by Purchaser to an account
2
specified by Seller. All payments shall be made together with interest
at a rate of 3% per annum, which interest shall begin accruing on the
Closing Date and end on the date that the payment is made. Within
three business days after the calculation of the Actual Payment Amount
and Closing Date Working Capital becomes binding and conclusive on the
parties pursuant to Section 2.2(d), Seller or Purchaser, as the case
may be, shall make the wire transfer payment provided for in this
Section 2.2(c).
(d) Adjustment Procedure.
(i) Seller shall prepare financial statements (including a
combined balance sheet as of the Closing Date and a combined
statement of operations from January 2, 2005 through the Closing
Date) (the "Closing Date Financial Statements") of the Companies
and their Subsidiaries as of the Closing Date in accordance with
GAAP consistently applied with the Financial Statements. Seller
shall then determine (A) the Actual Payment Amount and the
Working Capital as of the Closing Date (the "Closing Date Working
Capital") based upon the Closing Date Financial Statements and
(B) the Average Working Capital based on the financial statements
of the Companies and their Subsidiaries prepared in accordance
with GAAP consistently applied with the Financial Statements for
each of the 12 most recently completed four or five-week fiscal
periods prior to the Closing Date for which internally prepared
financial statements of the Companies and their Subsidiaries
prepared in accordance with GAAP consistently applied with the
Financial Statements are available (the "Monthly Statements").
Seller shall deliver the Closing Date Financial Statements, the
Monthly Statements and its determination of the Actual Payment
Amount, the Average Working Capital and the Closing Date Working
Capital (which shall include a description in reasonable detail
of the components and amounts thereof) to Purchaser within thirty
(30) days following the Closing Date.
(ii) If within thirty (30) days following delivery of the
Closing Date Financial Statements, the Monthly Statements and the
calculation of the Actual Payment Amount, the Average Working
Capital and the Closing Date Working Capital, Purchaser has not
given Seller written notice of its objection as to the Actual
Payment Amount, the Average Working Capital and/or the Closing
Date Working Capital calculation (which notice shall state in
reasonable detail the basis of Purchaser's objection), then the
Actual Payment Amount, the Average Working Capital and Closing
Date Working Capital calculated by Seller shall be binding and
conclusive on the parties and be used in computing the Estimated
Payment Adjustment Amount and the WC Adjustment Amount,
respectively.
(iii) If Purchaser duly gives Seller such notice of
objection, and if Seller and Purchaser fail to resolve the
issues outstanding with respect to
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the Closing Date Financial Statements and the calculation of the
Actual Payment Amount, the Average Working Capital and/or the
Closing Date Working Capital within thirty (30) days of Seller's
receipt of Purchaser's objection notice, Seller and Purchaser
shall submit the issues remaining in dispute to Deloitte & Touche
LLP, independent public accountants (the "Accountants"), for
resolution in accordance with the terms of the Agreement and in
compliance with GAAP consistently applied with the Financial
Statements. If issues are submitted to the Accountants for
resolution, (i) Seller and Purchaser shall furnish or cause to be
furnished to the Accountants such work papers and other documents
and information relating to the disputed issues as the
Accountants may request and are available to that party or its
agents and shall be afforded the opportunity to present to the
Accountants any material relating to the disputed issues and to
discuss the issues with the Accountants; (ii) the determination
by the Accountants, as set forth in a notice to be delivered to
both Seller and Purchaser within sixty (60) days of the
submission to the Accountants of the issues remaining in dispute,
shall be final, binding and conclusive on the parties and shall
be used in the calculation of the Actual Payment Amount, the
Average Working Capital and/or the Closing Date Working Capital,
as applicable; and (iii) Seller and Purchaser will each bear
fifty percent (50%) of the fees and costs of the Accountants for
such determination.
2.3 EBITDA ADJUSTMENT.
(a) Concurrently with the delivery to Purchaser of the Audited
Statements, Seller shall deliver to Purchaser a preliminary statement
("Preliminary EBITDA Statement") of the EBITDA based on the Audited
Statements (which shall include a description in reasonable detail of
the components and amounts thereof).
(b) If within ten (10) days following delivery of the Preliminary
EBITDA Statement, Purchaser has not given Seller written notice of its
objection as to the calculation of EBITDA (which notice shall state in
reasonable detail the basis of Purchaser's objection), then the EBITDA
calculated by Seller shall be binding and conclusive on the parties
and be used in computing any adjustment of the Purchase Price pursuant
to this Section 2.3.
(c) If Purchaser duly gives Seller such notice of objection,
and if Seller and Purchaser fail to resolve the issues outstanding
with respect to the Preliminary EBITDA Statement and the calculation
of the EBITDA within ten (10) days of Seller's receipt of
Purchaser's objection notice, Seller and Purchaser shall submit the
issues remaining in dispute to the Accountants for resolution in
accordance with the terms of the Agreement and consistent with the
definition of EBITDA set forth herein. If issues are submitted to
the Accountants for resolution: (i) Seller and Purchaser shall
furnish or cause to be furnished to the Accountants such work papers
and other documents and information relating to the disputed issues
as the Accountants may request and are available to that party or
its agents and shall be afforded the opportunity to present to the
Accountants any material relating to
4
the disputed issues and to discuss the issues with the Accountants;
(ii) the determination by the Accountants, as set forth in a notice to
be delivered to both Seller and Purchaser within ten (10) days of the
submission to the Accountants of the issues remaining in dispute,
shall be final, binding and conclusive on the parties and shall be
used in the calculation of any adjustment of the Purchase Price
pursuant to this Section 2.3; and (iii) Seller and Purchaser will each
bear fifty percent (50%) of the fees and costs of the Accountants for
such determination.
(d) In the event the amount of EBITDA set forth in Section 2.3(d)
of the Disclosure Schedule (which shall include a description in
reasonable detail of the components and amounts thereof, including the
amount of any corporate allocation charge and any insurance allocation
charge) exceeds by more than $4,000,000 the amount of EBITDA based on
the Audited Statements as finally determined pursuant to this Section
2.3, the Purchase Price shall be reduced by an amount equal to the
product of (i) the difference between the amount of EBITDA set forth
in Section 2.3(d) of the Disclosure Schedule and the amount of EBITDA
based on the Audited Statements as finally determined pursuant to this
Section 2.3 and (ii) 8.65. For the avoidance of doubt, an example of
the calculation of EBITDA for the year ended January 1, 2005 is set
forth in Section 2.3(d) of the Disclosure Schedule.
ARTICLE 3
CLOSING; OBLIGATIONS OF THE PARTIES
3.1 CLOSING DATE. The closing (the "Closing") shall take place at
10:00 a.m., local time, at the offices of Bass, Xxxxx & Xxxx PLC, Nashville,
Tennessee, on the later of (i) five (5) business days following satisfaction or
waiver of all conditions to Closing set forth in Article 7 hereof (other than
those conditions that by their nature have to be satisfied at Closing (but
subject to the satisfaction or waiver of those conditions)) or (ii) 45 days
after the date of Purchaser's receipt of the Audited Statements (as defined in
Section 6.4(b)) (the "Closing Date"). The transfer shall be deemed to have
become effective at 12:01 a.m., California time on the Closing Date (the
"Effective Time").
3.2 OBLIGATIONS OF THE PARTIES AT THE CLOSING.
(a) At the Closing, Purchaser shall deliver to Seller:
(i) the Purchase Price as specified in Section 2.1,
plus the Estimated Payment;
(ii) a copy of resolutions of the Board of Directors
of Purchaser, certified by Purchaser's Secretary,
authorizing the execution, delivery and performance of this
Agreement and the other documents
5
referred to herein to be executed by Purchaser, and the
consummation of the transactions contemplated hereby; and
(iii) a duly executed copy of the Company Release.
(b) At the Closing, Seller will deliver to Purchaser:
(i) stock certificates for the Shares, which certificates
shall be duly endorsed to Purchaser or accompanied by duly
executed stock powers;
(ii) a copy of resolutions of the Board of Directors of
Seller, certified by Seller's Secretary, authorizing the
execution, delivery and performance of this Agreement and the
other documents referred to herein to be executed by Seller, and
the consummation of the transactions contemplated hereby;
(iii) a duly executed copy of the Seller Release;
(iv) written resignations, effective as of the Closing
Date, from any directors, officers or managing members of the
Companies and the Subsidiaries requested by Purchaser to resign
as of the Closing;
(v) an opinion of Bass, Xxxxx & Xxxx PLC in form and
substance reasonably satisfactory to Purchaser, or, with respect
to certain matters, opinions of local counsel reasonably
satisfactory to Purchaser or of the general counsel of the Seller
or the Companies; and
(vi) such other certificates, documents and instruments as
Purchaser may reasonably request in connection with the
consummation of the transactions contemplated hereby.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as follows:
4.1 CORPORATE STATUS. Each of the Companies and each Subsidiary of the
Companies is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization and each (a) has
all requisite corporate or limited liability company power and authority to
own, operate or lease its properties and assets and to carry on its business as
it is now being conducted, and (b) is duly qualified to do business and is in
good standing in each of the jurisdictions listed on Section 4.1 of the
Disclosure Schedule, which includes each jurisdiction in which the ownership,
operation or leasing of its properties and assets and the conduct of its
business requires it to be so qualified, licensed or authorized, except where
the failures to have such power and authority or to be so qualified, licensed
or authorized would not have a Seller Material Adverse Effect. Seller has made
available to Purchaser a copy of the certificate
6
of incorporation and bylaws (or similar organization documents), as amended, of
the Companies and each of their Subsidiaries, each as in effect on the date
hereof.
4.2 AUTHORITY. Seller has all requisite corporate power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by Seller and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Seller and no other corporate
proceedings are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Seller, and (assuming due authorization and delivery by Purchaser)
this Agreement constitutes a legal, valid and binding obligation of Seller
enforceable against it in accordance with its terms, subject to general
principles of equity and except as the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws of
general application relating to creditors' rights.
4.3 NO CONFLICT. Except as set forth in Section 4.3 of the Disclosure
Schedule and except for the notification requirements of the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR Act"), the execution, delivery and performance
of this Agreement by Seller and the consummation by Seller of the transactions
contemplated hereby will not (a) violate, conflict with or result in the breach
of any term or provision of the charter or bylaws (or similar organizational
documents) of Seller, any of the Companies or any of the Subsidiaries, (b)
conflict with or violate any Law applicable to Seller, the Companies or any
Subsidiary or any of their respective assets, properties or businesses, (c)
result in the creation of any Encumbrance (as defined below) on the Shares, (d)
require any action, consent, approval or authorization by, or any other order
of, filing with or notification to, any Governmental Authority or (e) conflict
with or violate, result in the breach of any term or provision of, or
constitute a default (or event which with the giving of notice or lapse of
time, or both, would become a default) under, or give to others any rights of
termination, amendment, acceleration, suspension, revocation or cancellation
of, or result in the creation of any mortgage, pledge, hypothecation, claim,
security interest, encumbrance, interest, option, lien or other restriction
(collectively, "Encumbrances") on any of the assets or properties of Seller,
the Companies or any Subsidiary pursuant to, in the case of clause (e), any
material agreement or arrangement to which Seller is a party or by which it is
bound or any Material Contract, except for immaterial violations, conflicts,
breaches or defaults or violations, conflicts, breaches or defaults which would
occur as a result of the business or activities in which Purchaser is or
proposes to be engaged or as a result of any acts or omissions by, or the
status of any facts pertaining to, Purchaser.
4.4 CAPITALIZATION.
(a) The authorized and outstanding capital stock of the
Companies is set forth in Section 4.4(a) of the Disclosure Schedule.
All of the Companies' issued and outstanding stock is duly
authorized, validly issued, fully paid, nonassessable, free of any
preemptive rights, have been issued in compliance with
7
applicable Law and is held of record and beneficially by Seller, free
and clear of any Encumbrance. The Shares constitute all of the issued
and outstanding capital stock of the Companies.
(b) Except as set forth in Section 4.4(b) of the Disclosure
Schedule, there are (i) no outstanding obligations, options, warrants,
convertible securities or other rights, agreements, arrangements or
commitments of any kind relating to the capital stock of the Companies
or obligating the Companies to issue or sell or otherwise transfer any
shares of capital stock of, or any other interest in, the Companies,
(ii) no outstanding obligations of the Companies to repurchase, redeem
or otherwise acquire any shares of their respective capital stock or
to provide funds to, or make any investment (in the form of a loan,
capital contribution or otherwise) in, any other Person or (iii) no
voting trusts, stockholder agreements, proxies or other agreements or
understandings in effect with respect to the voting or transfer of any
of their respective capital stock.
(c) Section 4.4(c) of the Disclosure Schedule sets forth a true
and complete list of all Subsidiaries of the Companies, listing for
each Subsidiary its name, its jurisdiction of organization, the
percentage of stock or other equity interest of each subsidiary owned
by the Companies or a Subsidiary and the authorized and outstanding
capital stock of each such Subsidiary. Other than the Subsidiaries or
as otherwise set forth in Section 4.4(c) of the Disclosure Schedule,
there are no other corporations, partnerships, joint ventures,
associations or other similar entities in which the Companies own, of
record or beneficially, any direct or indirect equity or other similar
interest or any right (contingent or otherwise) to acquire the same.
All of the issued and outstanding shares (or voting securities) of
each of the Subsidiaries are validly issued, fully paid,
nonassessable, and free of any preemptive rights. Except as set forth
in Section 4.4(c) of the Disclosure Schedule, (i) the Companies own
beneficially and of record all of the outstanding shares of capital
stock (or voting securities) of each Subsidiary free and clear of any
Encumbrances, (ii) there are no outstanding obligations, options,
warrants, convertible securities or other rights, agreements or
commitments of any kind relating to the capital stock of any
Subsidiary or obligating the Companies or any Subsidiary to issue or
sell or otherwise transfer any shares of capital stock of, or any
other interest in, any Subsidiary, (iii) there are no outstanding
obligations of the Subsidiaries to repurchase, redeem or otherwise
acquire any shares of their respective capital stock or to provide
funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any other Person, and (iv) there are no
voting trusts, stockholder agreements, proxies or other agreements or
understandings in effect with respect to the voting or transfer of any
of their respective capital stock.
(d) Except as set forth on Section 4.4(d) of the Disclosure
Schedule, the "Fresh Cut" business of Seller as such business is
described in Seller's public filings with the United States Securities
and Exchange Commission (the "Business") is conducted exclusively by
the Companies and the Subsidiaries. At Closing, the assets and
properties of the Companies and the Subsidiaries will
8
constitute substantially all of the tangible and intangible property
historically used by them.
4.5 FINANCIAL STATEMENTS.
(a) Seller has made available to Purchaser true and complete
copies of (i) the audited combined balance sheets as of January 3,
2004 and December 28, 2002 and related audited combined statements of
earnings, cash flows and Seller's net investment for the Companies and
their Subsidiaries for the fiscal years then ended, and (ii) the
unaudited combined balance sheet as of January 1, 2005 and related
unaudited combined statements of earnings and statement of cash flows
for the Companies and their Subsidiaries for the year ended January 1,
2005 (collectively, the "Financial Statements"). The January 1, 2005
balance sheet is referred to herein as the "Reference Balance Sheet."
(b) The Financial Statements (i) have been prepared based on the
books and records of the Companies and their Subsidiaries in
accordance with United States generally accepted accounting principles
("GAAP") and the Companies' normal accounting practices, consistent
with past practice (except as may be indicated therein or in the notes
or schedules thereto), (ii) except with respect to the unaudited
Financial Statements described under Section 4.5(a)(ii), are in
accordance with Regulation S-X of the Securities Exchange Act of 1934,
as amended, and (iii) present fairly, in all material respects, the
combined financial condition, combined results of operations and
combined statements of cash flow of the Companies and their
Subsidiaries as of the dates indicated or for the periods indicated.
(c) Seller's internal control over financial reporting is
sufficient in all material respects to provide reasonable assurance
(i) that transactions of the Companies and the Subsidiaries are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP, (ii) that receipts and expenditures of the
Companies and the Subsidiaries are being made only in accordance with
the authorization of management, and (iii) regarding prevention or
timely detection of the unauthorized acquisition, use or disposition
of the Assets that could materially affect the combined financial
statements of the Companies and the Subsidiaries. Based on information
available and Seller's internal control review conducted through the
date hereof, Seller has no knowledge of any significant deficiencies
or material weaknesses in the design or operation of Seller's internal
control over financial reporting with respect to the Companies, the
Subsidiaries or the Business. The books and records of the Companies
and the Subsidiaries, all of which have been made available to
Purchaser, are complete and accurate in all material respects and at
the Closing will be in their possession.
(d) The matters relating to Seller and certain of its
Subsidiaries subject to an informal inquiry by the Securities and
Exchange Commission and under investigation by Seller's Audit
Committee do not involve or affect the financial
9
reporting, financial statements or internal controls relating to the
Business or any of the Companies or Subsidiaries.
(e) Section 4.5(e) of the Disclosure Schedule sets forth Seller's
good faith calculation of excess raw product costs, fruit start-up
costs, excess insurance allocation costs, executive severance costs
and bonus costs, in each case, of the Companies and the Subsidiaries
for the fiscal year ended January 1, 2005.
4.6 REAL PROPERTY.
(a) Section 4.6(a) of the Disclosure Schedule sets forth a true
and complete list of all of the real property owned or leased by the
Companies or any Subsidiary, including any on which one of the
Companies' or their Subsidiaries' operating facilities is located, as
delineated therein, including:
(i) with respect to the owned real property, (a) if
available, the street address of each parcel of owned real
property, and (b) the current owner of each such parcel of owned
real property, and
(ii) with respect to the leased real property, (a) if
available, the street address of each parcel of leased real
property, (b) the identity of the lessor and lessee of each such
parcel of leased real property, (c) the term of the lease
pertaining to each such parcel of leased real property and (d) a
list of all leases, as amended (the "Real Property Leases").
(b) Except as otherwise set forth in Section 4.6(b) of the
Disclosure Schedule, (i) the Companies or one of their Subsidiaries
have good and marketable fee simple title to all of the real property
owned by them (the "Owned Real Property"), free and clear of all
Encumbrances, except (x) to the extent of liens reserved against in
the Financial Statements for the applicable property, (y) liens for
taxes not yet due and payable or which are being contested in good
faith, or (z) liens that individually or in the aggregate would not
have a Seller Material Adverse Effect (collectively, "Permitted
Encumbrances"), (ii) there are no leases, subleases, licenses,
concessions or other agreements granting to any Person the right to
use or occupy the Owned Real Property, and (iii) there are no
outstanding options, rights of first offer or rights of first refusal
to purchase the Owned Real Property or any portion thereof or interest
therein.
(c) The Companies and/or the Subsidiaries have a valid and
subsisting leasehold estate in and the right to quiet enjoyment of the
material real properties leased by it as lessee (the "Leased Real
Property" and, together with the Owned Real Property, the "Real
Property") under the Real Property Leases related to such Leased Real
Property. The improvements on the Real Property listed in Section
4.6(c) of the Disclosure Schedule are in all material respects in good
operating condition and in a state of good maintenance and repair,
ordinary wear and tear excepted, are adequate and suitable for the
purposes for which they are presently being used and there are no
condemnation or appropriation proceedings
10
pending or threatened against any of such real property or the
improvements thereon.
4.7 ASSETS. Except as disclosed in Section 4.7 of the Disclosure
Schedule, either one of the Companies or a Subsidiary, as the case may be, owns
or leases all the properties and assets, including, without limitation, the
Companies Intellectual Property (defined in Section 4.9) and the assets
reflected in the Reference Balance Sheet (except for inventory or other assets
disposed of in the ordinary course of business consistent with past practice),
but excluding the Real Property, used or held for use by the Companies or a
Subsidiary in the conduct of the Business (all such properties and assets being
the "Assets"), except where the failures to own or lease such Assets would not
have a Seller Material Adverse Effect. Either one of the Companies or a
Subsidiary, as the case may be, has good and valid title to, or in the case of
leased or subleased Assets, valid and subsisting leasehold interests in, all
the Assets, free and clear of all Encumbrances, except (a) as disclosed in
Section 4.7 of the Disclosure Schedule, (b) for Permitted Encumbrances and (c)
where the failure to have good and valid title to or valid or subsisting
leasehold interests in the Assets would not have a Seller Material Adverse
Effect. Except as set forth in Section 4.7 of the Disclosure Schedule, the
Assets, together with the Real Property, are sufficient for the conduct of the
Business as currently conducted by the Companies and Subsidiaries. The
equipment used or held for use by the Companies and Subsidiaries is in all
material respects in good operating condition and in all material respects in a
state of good maintenance and repair, ordinary wear and tear excepted.
4.8 MATERIAL CONTRACTS.
(a) Section 4.8(a) of the Disclosure Schedule sets forth a true
and complete list of all the Material Contracts to which any of the
Companies or their Subsidiaries is a party or by which it is expressly
bound. As used herein, "Material Contracts" means all of the
following:
(i) each agreement or arrangement to which any of the
Companies or any Subsidiary is party or by which it is bound (a
"Contract") that was not entered into in the ordinary course of
business consistent with past practice;
(ii) each agreement with any Key Customer or Key Supplier;
(iii) each agreement, indenture or other instrument
relating to the borrowing of money, or guaranteeing, or providing
security for, indebtedness, in an amount in excess of One Million
Dollars ($1,000,000) or otherwise restricting, in any material
respect, the ability of the Companies or Subsidiaries to incur
indebtedness or provide security for indebtedness;
11
(iv) each partnership, material joint venture or material
other similar agreement to which any of the Companies or any
Subsidiary is a party or by which any of them is otherwise
expressly bound;
(v) each agreement, arrangement, contract or commitment
restricting or otherwise affecting the ability of the Companies
or Subsidiaries to engage in any business or compete in any
jurisdiction or otherwise solicit customers;
(vi) each material Real Property Lease, each agreement
covering Companies Used Intellectual Property and each lease of
material equipment or other material Assets;
(vii) each agreement, arrangement, contract or commitment
with a third party for the benefit of any of the Companies or
Subsidiaries or the Business restricting or otherwise affecting
the ability of the third party to engage in the Business or
compete or solicit customers of the Business in any jurisdiction;
(viii) each Contract with exclusive supply or requirements
obligations;
(ix) each employment agreement of any of the Companies or
any of their Subsidiaries pursuant to which any employee is
entitled to receive base salary in excess of $100,000 in any one
year and each material consulting Contract;
(x) each agreement for the sale or other transfer of a
material Asset or Owned Real Property that has not yet been
consummated and was not entered into in the ordinary course of
business consistent with past practice;
(xi) each Contract with Seller or any other affiliate of
Seller;
(xii) each Contract providing for any "earn out" type
arrangements to any Person;
(xiii) each other existing agreement, not otherwise
covered by clauses (i) through (xii), that requires payments by
or to any of the Companies or any Subsidiary in excess of One
Million Dollars ($1,000,000) during any one year and has not been
entered into in the ordinary course of business consistent with
past practice;
(b) Except as disclosed in Section 4.8(b) of the Disclosure
Schedule:
(i) neither any of the Companies nor any Subsidiary
party to any Material Contract, nor, to the knowledge of
Seller, any other party thereto, is in breach thereof or
default thereunder except where such
12
breach or default would not have a Seller Material Adverse
Effect, or has given notice of breach or default to any other
party thereunder; and
(ii) each Material Contract is valid and binding on each
of the relevant Companies and their relevant Subsidiaries and, to
the knowledge of Seller, each respective counterparty thereto,
and each Material Contract is in full force and effect and is
enforceable in accordance with its terms, subject to general
principles of equity and except as the enforceability thereof may
be limited by applicable bankruptcy, insolvency, reorganization
or other similar laws of general application relating to
creditors' rights. No third party to any Material Contract has
notified Seller or any of the Companies or Subsidiaries that it
intends to terminate or otherwise alter any Material Contract.
(c) Except as required by Law or as set forth on Section 4.8(c)
of the Disclosure Schedule, there are no outstanding material
warranties, other than those made in the ordinary course of business
consistent with past practices, made by the Companies or Subsidiaries
and there have been no material warranty claims within the past two
(2) years and there are no material unresolved claims thereunder.
(d) Seller has made available to Purchaser each Material
Contract, other than as indicated on Section 4.8(a) of the Disclosure
Schedule.
4.9 INTELLECTUAL PROPERTY.
(a) Section 4.9 of the Disclosure Schedule sets forth a true and
complete list of all (i) intellectual property registrations and
applications, Internet domain names and material unregistered
intellectual property owned by the Companies or any Subsidiary and (ii)
material intellectual property licensed by the Companies or any
Subsidiary (whether as licensee or licensor) (excluding "clickwrap" or
"shrinkwrap" agreements, agreements contained in or pertaining to
"off-the-shelf" software, and the terms of use or service for any
website, to the extent each is commercially available to consumers on
nondiscriminatory pricing terms). There are no pending actions against
any of the Companies or any Subsidiary of which the Companies or any
Subsidiary have been given written notice that assert that the
Companies or any Subsidiary violate or infringe or unlawfully use the
intellectual property rights of others or challenging the Companies' or
any Subsidiary's ownership or use of, or the validity, enforceability
or registrability of any intellectual property. To the knowledge of
Seller, neither any of the Companies nor any Subsidiary violates,
infringes upon or unlawfully uses any intellectual property owned by
another Person. Neither any of the Companies nor any Subsidiary has
received any written notice alleging any violation, infringement upon
or unlawful use of any intellectual property rights of others or
challenging the Companies' or any Subsidiary's ownership or use of, or
13
the validity, enforceability or registrability of any intellectual
property that remains unresolved on the date hereof. Except as set
forth in Section 4.9(a) of the Disclosure Schedule, neither the
Companies nor any Subsidiary has brought or threatened any Action
against another Person involving intellectual property, and to the
knowledge of Seller, there is no basis for any Action regarding the
foregoing.
(b) Except as set forth in Section 4.9(b) of the Disclosure
Schedule, the Companies or a Subsidiary solely and exclusively owns
all intellectual property owned by the Companies or a Subsidiary
("Companies Owned Intellectual Property") and has the valid and
enforceable right to use all other material intellectual property used
or held for use by the Companies or any Subsidiary ("Companies Used
Intellectual Property"), free and clear of all material Encumbrances.
(c) The Companies Owned Intellectual Property and, to the
knowledge of Seller, any Companies Used Intellectual Property, (i) has
been duly maintained, (ii) is subsisting, in full force and effect and
(iii) has not been cancelled, expired or abandoned.
4.10 LITIGATION, CLAIMS AND PROCEEDINGS. Except as set forth in
Section 4.10 of the Disclosure Schedule, there are no Actions that have been
brought by or against any Governmental Authority or any other Person pending
or, to the knowledge of Seller, threatened against or by the Companies, any
Subsidiary of the Companies, the Business, any Assets, or any of their Owned
Real Property or Leased Real Property, which, if adversely determined, would
result in liabilities in excess of Three Million Dollars ($3,000,000) or
material injunctive or equitable relief, or would have a Seller Material
Adverse Effect. There are no existing Governmental Orders naming the Companies
or any Subsidiary as an affected party. Seller makes no representation in this
Section 4.10 as to any matter the subject matter of which is specifically
covered by Sections 4.9, 4.11, 4.13 or 4.14 of this Agreement.
4.11 ENVIRONMENTAL AND SAFETY AND HEALTH MATTERS. Except as disclosed
in Section 4.11 of the Disclosure Schedule:
(a) The Companies and their Subsidiaries have obtained all
material Permits that are required under any Environmental Law for
the operation of their businesses as currently being conducted. To
Seller's knowledge, all such Permits are valid and in full force
and effect, and will survive the Closing without material
modification. "Environmental Law" means any applicable Law
relating to (i) the protection, investigation or restoration of
the environment or natural resources, (ii) the protection of human
health and safety as it pertains to exposure to Hazardous
Substances, or (iii) the handling, use, presence, disposal,
treatment, storage, release or threatened release of any Hazardous
Substance, and includes, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act, the Federal
Water Pollution Control Act, the Clean Air Act, the Resource
Conservation and Recovery Act, the Occupational Safety and Health
14
Act, the Hazardous Materials Transportation Act, the Safe Drinking
Water Act, the Federal Insecticide, Fungicide & Rodenticide Act, the
National Environmental Policy Act, the Emergency Planning & Community
Right-to Know Act, and any similar or analogous state statutes.
"Hazardous Substance" means any substance that is (i) listed,
classified or regulated pursuant to any Environmental Law, (ii) any
petroleum product or by-product, (iii) any asbestos-containing material
and (iv) any other substance which is the subject of regulatory action
by any Governmental Authority pursuant to any Environmental Law or
which may result in liability pursuant to any Environmental Law.
(b) The Companies and their Subsidiaries are in material
compliance with all material Permits required under all Environmental
Laws that are used in the operation of their businesses as currently
being conducted. The Companies and their Subsidiaries have
historically been in compliance with all Permits required under all
Environmental Laws, except where the failures to comply would not have
a Seller Material Adverse Effect. To the knowledge of Seller, no
circumstances exist which could cause any material Permit to be
revoked, modified or rendered non-renewable upon payment of the permit
fee.
(c) The Companies, their Subsidiaries and their Real Property are
in material compliance with all Environmental Laws. The Companies,
their Subsidiaries and the Real Property have historically been in
material compliance with all Environmental Laws, except where the
failure to comply would not, individually or in the aggregate, have a
Seller Material Adverse Effect. To Seller's knowledge, no Hazardous
Substance is located on any of the Real Property, except in material
compliance with all Environmental Laws. To Seller's knowledge, no
facts or circumstances exist which would reasonably be expected to
involve any of the Companies or any Subsidiary in any environmental
litigation, or impose upon the Purchaser or the Companies or their
Subsidiaries any environmental liability which would have a Seller
Material Adverse Effect.
(d) To Seller's knowledge, neither any of the Companies nor any
Subsidiary, nor, any other Person, has had a material disposal or
release of any Hazardous Substances on, under, in, from, adjacent to
or about the Real Property.
(e) None of the Companies nor any Subsidiary has disposed or
arranged for the disposal of Hazardous Substances on any third party
property that has subjected or, to the knowledge of Seller, may
subject the Companies or their Subsidiaries to material liability
under any Environmental Law.
(f) To Seller's knowledge, there has been no discharge or
release at any property formerly owned, used, leased or occupied
by the Companies or any Subsidiary which has subjected or is
expected to subject the Companies or their Subsidiaries to
material liability under any Environmental Law.
(g) None of the Companies nor their Subsidiaries have
received any written notice, demand, letter, claim or request
for information alleging violation
15
of or liability under any Environmental Law and neither the
Companies nor their Subsidiaries are party to any written
proceedings, actions, orders, decrees or injunctions alleging
material liability under any Environmental Law.
(h) None of the Companies or their Subsidiaries have entered
into any agreement that may require them to pay to, reimburse,
guarantee, pledge, defend, indemnify or hold harmless any person
from or against any liabilities or costs arising in connection
with or relating to Environmental Laws.
(i) Seller has delivered or made available to Purchaser
copies of all environmental assessments, audits, studies and other
environmental reports in its possession relating to the Companies,
their Subsidiaries and the Real Property.
(j) Except for such expenditures that have been included in the
projected budgets for the Companies or its Subsidiaries, which have
been provided to Purchaser, to Seller's knowledge, none of the
Companies nor their Subsidiaries is required to make any capital or
other expenditures to comply with applicable Environmental Law
exceeding $500,000.
4.12 COMPLIANCE WITH LAW. Except as disclosed in Section 4.12 of the
Disclosure Schedule, to the knowledge of Seller, the Companies and the
Subsidiaries have conducted and are currently conducting their business in
accordance with all Laws and Governmental Orders applicable to the Companies or
any Subsidiary or any of the Assets, the Real Property or their business,
except where the violation of such Laws or Governmental Orders would not have a
Seller Material Adverse Effect. Neither the Companies nor any Subsidiary has
received any outstanding or uncured written notice alleging any default or
violation of any Law or Governmental Order nor to Seller's knowledge is there
any reasonable basis for any such allegation, which, if true, would have a
Seller Material Adverse Effect. The Companies and the Subsidiaries have each
Permit required by Law for the operation of the Business, except where the
failure to have any such Permit would not have a Seller Material Adverse
Effect. Each Permit is valid, binding and in full force and effect and none of
the Companies or Subsidiaries is in default thereunder (or would be with the
giving of notice or lapse of time or both) except for such defaults as would
not have a Seller Material Adverse Effect. Seller makes no representation in
this Section 4.12 as to any matter the subject matter of which is specifically
covered by Section 4.9, 4.11, 4.13 or 4.14 of this Agreement.
16
4.13 EMPLOYEE MATTERS AND BENEFIT PLANS.
(a) Section 4.13(a)(i) of the Disclosure Schedule identifies each
employment, bonus, deferred compensation, pension, stock option, stock
appreciation right, profit-sharing or retirement plan, arrangement or
practice, each medical, vacation, retiree medical, severance pay plan,
and each other agreement or fringe benefit plan, arrangement or
practice, of the Seller which affects or covers any current employee
of the Companies or a Subsidiary, including all "employee benefit
plans" as defined by Section 3(3) of ERISA (collectively, the "Seller
Plans"). Purchaser will have no liabilities or obligations under any
Seller Plan, except as specifically provided in this Agreement.
Section 4.13(a)(ii) of the Disclosure Schedule identifies each
employment, bonus, deferred compensation, pension, stock option, stock
appreciation right, profit-sharing or retirement plan, arrangement or
practice, each medical, vacation, retiree medical, severance pay plan,
and each other agreement or fringe benefit plan, arrangement or
practice, of the Seller, the Companies or any Subsidiary which affects
or covers any current employee of the Companies or a Subsidiary,
including all "employee benefit plans" as defined by Section 3(3) of
ERISA (collectively, the "Company Plans").
(b) Except as set forth on Section 4.13(b) of the Disclosure
Schedule, for each Company Plan, correct and complete copies of the
plan documents and summary plan descriptions, the most recent Form
5500 annual report, the most recent favorable determination letter (if
applicable), and all related trust agreements, insurance contracts and
funding agreements which implement each such Company Plan, have been
made available to Purchaser.
(c) Neither the Companies nor any Subsidiary has any commitment,
whether formal or informal, (i) to create any additional such Company
Plan; (ii) to modify or change any such Company Plan; or (iii) to
maintain for any period of time any such Company Plan, except as
described in Section 4.13 of the Disclosure Schedule.
(d) Except as disclosed in Section 4.13 of the Disclosure
Schedule, (i) neither the Companies, any Subsidiary, nor, to the
knowledge of Seller, any Company Plan or any trustee, administrator,
fiduciary or sponsor of any Company Plan has engaged in any prohibited
transactions as defined in Section 406 of ERISA or Section 4975 of the
Code for which there is no statutory exemption under Section 408 of
ERISA or Section 4975 of the Code; (ii) all material filings, reports
and descriptions as to all Company Plans (including Form 5500 annual
reports, summary plan descriptions, and summary annual reports)
required to have been made or distributed to participants, the
Internal Revenue Service, the United States Department of Labor and
other governmental agencies have been made in a timely manner or will
be made in a timely manner on or prior to the Closing Date; (iii)
there is no material litigation, disputed claim, governmental
proceeding or investigation pending or, to the knowledge of Seller,
threatened with respect to any Company Plan, the related trusts, or
any fiduciary, trustee, administrator or sponsor of any Company Plan;
and (iv) all Company Plans have been established,
17
maintained and administered in all material respects in accordance
with their governing documents and applicable provisions of ERISA and
the Code.
(e) Except as disclosed in Section 4.13 of the Disclosure
Schedule, none of the Company Plans provide for continuing benefits or
coverage after termination or retirement from employment, except for
COBRA rights under a "group health plan" as defined in Section
4980B(g) of the Code and Section 607 of ERISA.
(f) Except for the Midwest Pension Plan (contributed to pursuant
to the collective bargaining agreement between Redi-Cut Foods, Inc.
and Manufacturing, Production and Service Workers Union, Local 24),
neither the Companies, any Subsidiary, nor any entity required to be
aggregated with the Companies or any Subsidiary under Section 414(b),
(c), (m) or (o) of the Code ("ERISA Affiliate") has ever sponsored,
participated in, or contributed to (or been required to contribute to)
either a plan subject to Title IV of ERISA, or a multiemployer plan as
defined in Section 4001(a)(3) of ERISA. Neither the Companies, any
Subsidiary nor any ERISA Affiliate has ever withdrawn from such a
multiemployer plan nor incurred any liability as a result of any
partial or complete withdrawal by any employer from a multiemployer
plan as described under Sections 4201, 4203, or 4205 of ERISA. No
event has occurred that presents a material risk of a partial
withdrawal from the Midwest Pension Plan. The aggregate withdrawal
liability of the Companies, Subsidiaries and ERISA Affiliates,
computed as if a complete withdrawal by the Companies, Subsidiaries
and ERISA Affiliates had occurred under the Midwest Pension Plan on
the date hereof, would not exceed $50,000.
(g) Each Company Plan that is intended to be qualified within the
meaning of Section 401(a) of the Code has received a determination
letter from the Internal Revenue Service that it is so qualified, and
no fact or event has occurred since the date of such determination
letter that could adversely affect the qualified status of any such
Company Plan.
(h) As of the date hereof, Seller has not received any
notification or other direct indication from any employee listed in
Section 4.8(h) of the Disclosure Schedule (collectively, "Key
Employees") that such employee intends to terminate his or employment
with any of the Companies.
4.14 TAXES. Except as set forth in Section 4.14 of the Disclosure
Schedule:
(a) Each of the Companies and the Subsidiaries has filed, or
Seller has filed on behalf of each of them, all Tax Returns required to
be filed on or before the date of this Agreement, except where the
failure to file such Tax Returns or to pay such Taxes shown thereon as
owing would not have a Seller Material Adverse Effect, all such Tax
Returns are true, correct and complete in all material respects and all
Taxes shown due with respect to the periods covered by such Tax Returns
have been paid. True and correct copies of all federal, state and local
18
income Tax Returns filed by or on behalf of each of the Companies and
the Subsidiaries for all periods since December 31, 2001, have been
heretofore made available to Purchaser except for such returns where
Seller files a consolidated return that includes any Company or any
Subsidiary. Except as set forth in Section 4.14 of the Disclosure
Schedule, all Taxes not yet due and payable by the Companies and the
Subsidiaries have been properly accrued on the books of account of the
Companies in accordance with GAAP.
(b) There are no (i) examinations, audits, actions, proceedings,
investigations or disputes pending of which Seller or any of the
Companies or their Subsidiaries have been notified in writing, (ii)
claims asserted in writing for Taxes, (iii) waivers or extensions of
statutes of limitation with respect to Taxes currently in effect, or
(iv) closing agreements, or similar agreements entered into or issued
by any Taxing Authority, in each case with respect to any Company or
Subsidiary, that may, in each case, increase any Taxes of such Company
or Subsidiary by a material amount.
(c) No Taxing Authority has asserted that any of the Companies or
any Subsidiary is subject to Tax or obligated to file a Tax Return in
a jurisdiction in which such Company or Subsidiary does not pay Tax or
file a Tax Return.
(d) None of the Companies nor any Subsidiary is a party to any
Tax allocation or sharing agreement.
(e) There are no liens for Taxes upon the Assets or properties of
the Companies or any Subsidiary (whether real, personal or mixed,
tangible or intangible) except for statutory liens for Taxes not yet
due or payable.
(f) None of the Seller, any of the Companies nor any of their
Subsidiaries is a "foreign person" within the meaning of Section 1445
of the Code.
(g) None of the Companies nor any Subsidiary has been a United
States real property holding corporation within the meaning of Code
Section 897(c)(2) during the applicable period specified in Code
Section 897(c)(1)(A)(ii).
(h) Except with respect to any Affiliated Group of which the
Seller, the Companies or a Subsidiary is the common parent, none of
the Companies nor any Subsidiary (i) has been a member of an
Affiliated Group or (ii) has any liability to pay, reimburse,
indemnify, or otherwise bear the Taxes of any Person under Treas. Reg.
Section 1.1502-6 (or any similar provision of state, local or foreign
law), as a transferee or successor, by contract or otherwise.
(i) Each Affiliated Group has filed all Tax Returns that it was
required to file for each taxable period during which any of the
Companies or any Subsidiary was a member of that Affiliated Group, and
has paid all Taxes shown thereon as owing, except where the failure to
file such Tax Returns or pay such Taxes would not have a Seller
Material Adverse Effect.
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(j) Each of the Companies and their Subsidiaries has withheld
and/or paid all Taxes required to have been withheld and/or paid in
connection with amounts paid or owed to any employee, independent
contractor, creditor, stockholder, member or other third party.
(k) No Company or Subsidiary has reported, and Seller has not
reported with respect to any Company or Subsidiary, any "reportable
transaction" as defined in Treasury Regulation Section 1.6011-4 or any
transaction that is required to be reported to any Taxing Authority
pursuant to any corresponding or similar provision of state, local or
foreign Law.
4.15 ABSENCE OF UNDISCLOSED LIABILITIES. Except for liabilities or
obligations which are accrued or reserved against in the Reference Balance Sheet
(or reflected in the notes thereto) or in connection with the transactions
contemplated by this Agreement, the Companies and their Subsidiaries do not have
any liabilities or obligations (contingent or absolute) which would constitute a
Seller Material Adverse Effect. Seller makes no representation in this Section
4.15 as to any matter the subject matter of which is specifically covered by
Sections 4.9, 4.11, 4.13 or 4.14 of this Agreement.
4.16 ABSENCE OF CERTAIN CHANGES. Except as (a) disclosed on the
Reference Balance Sheet; (b) disclosed in Section 4.16 of the Disclosure
Schedule; or (c) expressly contemplated by this Agreement, since the date of
the Reference Balance Sheet, neither the Companies nor their Subsidiaries have:
(i) suffered any change constituting a Seller Material Adverse Effect; (ii)
split, combined or reclassified their capital stock; (iii) materially changed
their accounting principles, practices or methods, except as required by GAAP
or applicable Law; (iv) declared or paid any dividend or other distribution of
cash or other assets or made any payments to Seller or its affiliates (in each
case, on a net basis), or released any claims against Seller or its affiliates,
except for (A) participation in Seller's cash management program pursuant to
which cash collected by the Companies and their Subsidiaries is swept by Seller
to reduce amounts outstanding under the Intercompany Notes and expenditures
made by the Companies and the Subsidiaries are paid with funds provided by
Seller increasing the balances of the Intercompany Notes, consistent with past
practice, and (B) the payment of any accounts payable to Seller or its
affiliates arising from the sale in the ordinary course of business of food or
other products or services to the Companies and the Subsidiaries by Seller or
such affiliates consistent with past practice; (v) materially increased any
compensation or expanded any perquisites of employees; (vi) paid any
liabilities or collected any receivables other than in the ordinary course of
business based on the normal terms thereof and consistent with past practice;
(vii) sold or otherwise transferred any material asset of the Companies or the
Subsidiaries; or (viii) otherwise operated the business other than in the
ordinary course consistent with past practices.
4.17 LABOR MATTERS.
(a) Section 4.17(a) of the Disclosure Schedule lists each
collective bargaining agreement, work rule or practice, or other
labor-related Contract (collectively, "CBAs") to which any of the
Companies or one of their Subsidiaries
20
is a party or by which it is bound, or which pertain to any of the
employees of the Companies or the Subsidiaries. There is no material
arbitration, material grievance, labor dispute, strike, slowdown or
stoppage in progress or pending or, to the knowledge of Seller,
threatened, against or involving the Companies or any Subsidiary. Since
December 28, 2002, neither the Companies nor any Subsidiary has
experienced any material arbitration, material grievance, labor
dispute, strike, lockout, slowdown or stoppage. Seller has no knowledge
of any labor union organizing activities or proceedings with respect to
any employees of the Companies or their Subsidiaries. Since December
28, 2002, there has been no request for collective bargaining or for a
representation election from, or any demand for recognition or
certification by, any employee, union, labor organization, works
council or the National Labor Relations Board or any other labor
relations tribunal or authority, and there are no representation or
certification proceedings or petitions seeking a representation
proceeding presently pending or threatened in writing to be brought or
filed with the National Labor Relations Board or any other labor
relations tribunal or authority.
(b) Since December 28, 2002 and except as set forth in Section
4.17(b) of the Disclosure Schedule, the Companies and the Subsidiaries
have not received notice of (i) any unfair labor practice charge or
complaint pending or threatened before the National Labor Relations
Board or any other Governmental Authority, (ii) any complaints,
grievances or arbitrations arising out of any CBAs or otherwise, (iii)
any charge or complaint with respect to or relating to them pending
before the Equal Employment Opportunity Commission or any other
Governmental Authority responsible for the prevention of unlawful
employment practices, (iv) the intent of any Governmental Authority
responsible for the enforcement of labor, employment, child labor,
immigration, or occupational safety and health Laws to conduct an
investigation with respect to or relating to them or notice that such
investigation is in progress, or (v) any complaint, lawsuit or other
proceeding pending or threatened in any forum by or on behalf of any
present or former employee of such entities, any applicant for
employment or classes of the foregoing alleging breach of any express
or implied contract of employment, any applicable Law governing
employment or the termination thereof or other discriminatory,
wrongful or tortuous conduct in connection with the employment
relationship, except, in each case under clauses (i) through (v)
above, for such charges, complaints, investigations, complaints,
lawsuits or other proceedings (as the case may be) that would not have
a Seller Material Adverse Effect.
(c) No private agreement restricts the Companies or the
Subsidiaries from relocating, closing or terminating any of its
operations or facilities.
4.18 CUSTOMERS AND SUPPLIERS. Section 4.18 of the Disclosure Schedule
contains a complete and accurate list of (i) the top ten (10) retail and the
top five (5) foodservice customers of the Business based on 2004 fiscal year
sales and (ii) the top ten (10) suppliers of the Business based on amounts paid
by the Companies or their Subsidiaries for raw product purchased by the
Companies or the Subsidiaries during 2004
21
(collectively, "Key Customers and Suppliers"). As of the date hereof, no listed
customer or supplier has notified Seller that it intends to terminate or
otherwise materially alter its business relationship with the Companies or
Subsidiaries.
4.19 ACCOUNTS RECEIVABLE. All accounts receivable of the Companies and
Subsidiaries that are reflected on the Reference Balance Sheet or that will be
reflected on the Closing Date Financial Statements (collectively, the "Accounts
Receivable") represent or will represent valid obligations arising from sales
actually made or services actually performed in the ordinary course of business
consistent with past practice. To Seller's knowledge, there is no contest,
claim or right of set-off, other than returns in the ordinary course of
business consistent with past practice, of any obligor of an Accounts
Receivable relating to the amount or validity of such Accounts Receivable.
4.20 AFFILIATED TRANSACTIONS. Except as set forth in Section 4.20 of
the Disclosure Schedule, (a) there is no indebtedness between Seller or any
affiliate (excluding the Companies and Subsidiaries) (collectively "Related
Parties") and any of the Companies or Subsidiaries, (b) no Related Party has,
or since December 28, 2002 has had, any interest in any asset or property
(whether real, personal, tangible or intangible) used in the operation of the
Business, (c) no Related Party is, or since December 28, 2002 has owned an
equity interest or any other financial or profit interest in, a Person that has
(i) had business dealings or a material financial interest in any transaction
with any of the Companies or Subsidiaries or (ii) engaged in competition with
any of the Companies or Subsidiaries. Except as set forth in Section 4.20 of
the Disclosure Schedule, no Related Party is a party to any contract with, or
otherwise provides services to, or has any claim or right against, any of the
Companies or Subsidiaries.
4.21 INSURANCE. Seller has provided to Purchaser a complete and
accurate list of all policies of insurance to which any of the Companies or
Subsidiaries is a party or under which any of such companies or any employee,
officer or director thereof is or has been covered at any time within the year
preceding the date of this Agreement. Section 4.21 of the Disclosure Schedule
also describes (a) any self-insurance arrangement by or affecting any of the
Companies or Subsidiaries, including any reserves established thereunder, and
(b) any contract or arrangement, other than a policy of insurance, for the
transfer or sharing of any risk by any of the Companies or Subsidiaries. Seller
maintains self-insurance programs pursuant to which Seller or PICL (as defined
in Section 6.14) provides general and vehicle liability, workers' compensation
and group medical insurance for claims that do not on an individual basis
exceed $500,000, and individual Pre-Closing Claims (as defined in Section 6.14)
in excess of such amount are fully insured by independent third party insurers,
subject to applicable limitations and exclusions.
4.22 PAYMENTS. None of the Companies or Subsidiaries nor, to Seller's
knowledge, any director, officer or employee thereof or any other individual
acting for or on behalf of any of the Companies or Subsidiaries, has made any
illegal contribution, gift, rebate, payoff, influence payment, kickback or
other payment to any Person, regardless of form, whether in money, property or
services (a) to obtain favorable treatment in securing business for the
Companies or any of the Subsidiaries, (b) to pay for
22
favorable treatment for business secured by the Companies or any of
the Subsidiaries, or (c) to obtain special concessions or for special
concessions already obtained for the benefit of the Companies or any of the
Subsidiaries.
4.23 FINDER'S FEE. Except for fees and expenses payable to Xxxxxxx
Xxxxx & Co. (the "Goldman Fee"), and the fee payable to Xxxxxxx Xxxxx & Co. in
connection with its rendering of a fairness opinion with respect to the
transaction contemplated by this Agreement (the "Xxxxxxx Xxxxx Fee") neither
Seller, the Companies nor any Subsidiary has incurred any liability to any
party for any brokerage or finder's fee or agent's commission, or the like, in
connection with the transaction contemplated by this Agreement based upon
arrangements made by or on behalf of Seller, the Companies or any Subsidiary.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
5.1 CORPORATE STATUS. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and (a) has all requisite corporate power and authority to own,
operate or lease all of its properties and assets and to carry on its business
as it is now being conducted, and (b) is duly qualified to do business and is
in good standing in each of the jurisdictions in which the ownership, operation
or leasing of its properties and assets and the conduct of its business
requires it to be so qualified, licensed or authorized, except where the
failure to have such power and authority or to be so qualified, licensed or
authorized would not have a Purchaser Material Adverse Effect.
5.2 AUTHORITY. Purchaser has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Purchaser
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the board of directors of Purchaser and no other
corporate proceedings are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by Purchaser, and (assuming due authorization and
delivery by Seller) this Agreement constitutes a legal, valid and binding
obligation of Purchaser, enforceable against it in accordance with its terms,
subject to general principles of equity and except as the enforceability
thereof may be limited by applicable bankruptcy, insolvency, reorganization or
other similar laws of general application relating to creditors' rights.
5.3 NO CONFLICT. Except for the notification requirements of the HSR
Act, the execution, delivery and performance of this Agreement by Purchaser
and the consummation by Purchaser of the transactions contemplated hereby
will not (a) violate, conflict with or result in the breach of any term or
provision of the certificate of incorporation or bylaws of Purchaser, (b)
conflict with or violate, in any material respect, any Law applicable to
Purchaser or any of its assets, properties or business, (c) require
23
any action, consent, approval or authorization by, or any other order
of, filing with or notification to, any Governmental Authority or (d) conflict
with or violate, result in the breach of any term or provision of, or
constitute a default (or event which with the giving of notice or lapse of
time, or both, would become a default) under, or give to others any rights of
termination, amendment, acceleration, suspension, revocation or cancellation
of, or result in the creation of any Encumbrances on any of the assets or
properties of Purchaser pursuant to, any material note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or
obligation to which Purchaser is a party or by which its properties or assets
may be bound, except, in each case for such conflicts, violations, breaches,
defaults, rights of termination, amendment, acceleration, suspension,
revocation or cancellation or creation of any Encumbrance which would not have
a Purchaser Material Adverse Effect.
5.4 COMPLIANCE WITH LAW. Purchaser is not in material violation of
applicable Laws or Governmental Orders which would affect its ability to
perform its obligations hereunder. There is no Action pending, or to the
knowledge of Purchaser, threatened against Purchaser, affecting its ability to
perform its obligations hereunder.
5.5 SUFFICIENT FUNDS. As of the date hereof, Purchaser has received a
commitment letter (and has delivered a copy thereof to Seller) with respect to
financing the Purchase Price (the "Commitment Letter"), and, as of the Closing
and, subject to the terms of the Commitment Letter, Purchaser will have
sufficient funds available (pursuant to the debt financing or otherwise) to pay
the Purchase Price.
5.6 FINDER'S FEE. Purchaser has not done anything to cause Seller, the
Companies, their Subsidiaries or any of their respective stockholders, option
holders, directors, officers or other Affiliates to incur any liability to any
party for any brokerage or finder's fee or agent's commission, or the like, in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Purchaser.
5.7 NO RELIANCE. Purchaser acknowledges that neither Seller, the
Companies, the Subsidiaries of the Companies nor any other Person has made any
representation or warranty, express or implied, as to the accuracy or
completeness of any information regarding the Companies, their Subsidiaries,
the Assets, the Real Property or their business or other matters that is not
included in this Agreement or the Disclosure Schedule hereto. Without limiting
the generality of the foregoing, neither Seller, the Companies, their
Subsidiaries nor any other Person has made a representation or warranty to
Purchaser with respect to (i) any projections, estimates or budgets for the
Companies' or their Subsidiaries' business, (ii) any material, documents or
information relating to the Companies and their Subsidiaries made available to
Purchaser or its counsel, accountants or advisors in Seller's data room or
otherwise, except as expressly covered by a representation or warranty set
forth in Article 4, or (iii) the information contained in Seller's Confidential
Memorandum dated November 2004, in each case, other than to the extent
expressly included herein.
24
5.8 INVESTMENT INTENT. Purchaser has such knowledge and experience in
financial and business matters that it is capable of evaluating the risks and
merits associated with the acquisition of the Shares and is acquiring the
Shares for its own account for investment, with no present intention of making
a public distribution thereof. Purchaser will not sell or otherwise dispose of
the Shares in violation of the Securities Act of 1933, as amended, or any state
securities laws.
ARTICLE 6.
COVENANTS
6.1 INTERIM OPERATIONS OF THE COMPANIES. Seller covenants and agrees
that, after the date hereof and prior to the Effective Time or earlier
termination of this Agreement pursuant to its terms (unless Purchaser shall
otherwise approve in writing, which approval shall not be unreasonably
withheld, conditioned or delayed, or unless as otherwise expressly contemplated
by this Agreement or explicitly disclosed in the Disclosure Schedule):
(a) the business of the Companies and their Subsidiaries shall be
conducted in all material respects in the ordinary and usual course
consistent with past practice;
(b) the Companies and their Subsidiaries shall not (A) amend
their Articles of Incorporation or bylaws (or similar organization
documents) or any Material Contract, (B) split, combine, subdivide or
reclassify their outstanding shares of capital stock; (C) repurchase,
redeem or otherwise acquire any shares of their capital stock or any
securities convertible into their capital stock; (D) release any
claims against Seller or its affiliates; or (E) engage in any
transaction outside the ordinary course of business other than on an
arm's-length basis, with Seller, or any affiliate, officer, director
or employee of Seller;
(c) except as required by applicable Law, the Companies shall
not, and shall not permit their Subsidiaries to, (A) enter into, adopt
or amend any agreement or arrangement relating to severance, (B)
except as set forth on Section 6.1(c) of the Disclosure Schedule,
enter into, adopt or amend any employee benefit plan or employment,
CBA or consulting agreement, (C) grant any stock options or other
equity related awards, or (D) increase any compensation except in the
ordinary course of business consistent with past practice or expand
any perquisites of its employees;
(d) neither the Companies nor any of their Subsidiaries shall
(i) incur or assume any long-term or short-term debt or issue any
debt securities except for borrowings under existing lines of
credit or from Seller in the ordinary course of business
consistent with past practice (including participation in Seller's
cash management program); (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently
or otherwise) for the material obligations of any other person
except in the ordinary and usual course of business consistent
with past practice in an amount not material to the Companies
25
and their Subsidiaries taken as a whole; (iii) make any material
loans, advances or capital contributions to, or investments in, any
other person; (iv) pledge or otherwise encumber the Shares; or (v)
mortgage or pledge any of its material Assets or create any material
Encumbrance of any kind with respect to any such material Asset;
(e) neither the Companies nor any of their Subsidiaries shall
issue, deliver, sell or encumber shares of any class of their capital
stock or any securities convertible into, or any rights, warrants or
options to acquire, any such shares;
(f) neither the Companies nor any of their Subsidiaries shall
acquire any business, including any plants or other facilities,
whether by merger, consolidation, purchase of property or assets or
otherwise, or sell or otherwise transfer any material asset of the
Companies or the Subsidiaries;
(g) the Companies shall not materially change their accounting
policies, practices or methods except as required by GAAP or by the
rules and regulations of the United States Securities and Exchange
Commission;
(h) neither the Companies nor the Subsidiaries shall pay
liabilities or collect receivables other than in the ordinary course
of business based on the normal terms thereof and consistent with past
practice;
(i) neither the Companies nor the Subsidiaries shall fail to
maintain their books and records in their usual manner consistent with
prior practice;
(j) neither the Companies nor the Subsidiaries shall fail to
maintain and manage inventories consistent in all material respects
with past practice or fail to use reasonable efforts to maintain the
Real Property or tangible personal property used or held for use in
the Business in good repair and condition, subject to reasonable wear
and tear;
(k) neither the Companies nor the Subsidiaries shall fail to use
reasonable efforts to retain key employees and consultants and to
preserve the goodwill of customers, suppliers and other business
relations; and
(l) the Companies shall not enter into, or permit any of their
Subsidiaries to enter into, any commitments or agreements to do any of
the foregoing.
6.2 CONSENTS.
(a) Each of Seller and Purchaser shall, in no event later than
seven (7) business days following the date hereof, file with the
United States Federal Trade Commission (the "FTC") and the United
States Department of Justice (the "DOJ") the notification and report
form pursuant to the HSR Act, required for the transactions
contemplated hereby. Each of Seller and Purchaser shall, as promptly
as practicable, comply with any request for additional information and
26
documents pursuant to the HSR Act. Each of Seller and Purchaser shall
inform the other promptly of any communication made by or on behalf of
such party to (including permitting the other party to review such
communication in advance), or received from, the FTC or the DOJ and
shall furnish to the other such information and assistance as the
other may reasonably request in connection with its preparation of any
filing, submission or other act that is necessary or advisable under
the HSR Act. Seller and Purchaser shall keep each other timely
apprised of the status of any communications with, and any inquiries
or requests for additional information from, the FTC or the DOJ, and
shall comply promptly with any such inquiry or request. Neither party
shall agree to participate in any meeting with any Governmental
Authority in respect of any filings, investigation or other inquiry
unless it consults with the other party in advance, and to the extent
permitted by such Governmental Authority, gives the other party the
opportunity to attend and participate thereat. Purchaser agrees to
take as promptly as reasonably practicable any and all steps necessary
to avoid or eliminate each and every impediment under any antitrust or
competition law that may be asserted by any U.S. federal, state or
local antitrust or competition authority so as to enable the parties
to expeditiously close the transactions contemplated by this
Agreement, including committing to or effecting, by consent decree,
hold separate orders, or otherwise, the sale, divestiture or
disposition of such of its assets or businesses, or of the business to
be acquired by it pursuant to this Agreement, as is required to be
divested in order to avoid the entry of, or to effect the dissolution
of, any decree, order, judgment, injunction, temporary restraining
order or other order in any suit or proceeding, that would otherwise
have the effect of delaying or preventing the consummation of the
transactions contemplated by this Agreement. In addition, without
limiting the generality of the foregoing regarding Governmental
Authorities, Purchaser agrees to take promptly any and all steps
necessary to attempt to vacate or lift any order or other restraint
relating to antitrust matters that would have the effect of making the
transaction contemplated by this Agreement illegal or otherwise
prohibiting its consummation.
(b) The parties hereto shall cooperate with one another in
determining whether any action by or in respect of, or filing with,
any Governmental Authority (excluding the actions and filings
described in clause (a) above) is required or reasonably appropriate,
or any action, consent, approval or waiver from any party to any
Material Contract is required or reasonably appropriate, in connection
with the consummation of the transactions contemplated by this
Agreement. Subject to the terms and conditions of this Agreement and
the Confidentiality Agreement (as defined in Section 6.4), in taking
such actions or making any such filings, the parties hereto shall
furnish information required in connection therewith and timely seek
to obtain any such actions, consents, approvals or waivers.
6.3 PUBLICITY. Subject to their respective legal obligations
(including requirements of stock exchanges, national stock markets and other
similar regulatory bodies), Seller and Purchaser shall consult with each
other, and use reasonable best efforts to agree upon the text of any press
release, before issuing any such press release or
27
otherwise making public statements with respect to the transactions
contemplated hereby and in making any filings with any federal or state
governmental or regulatory agency or with any national securities exchange
or national stock market with respect thereto. Seller and Purchaser shall
mutually agree on the timing and content of providing notification of the
transactions contemplated hereby to customers and key suppliers.
6.4 ACCESS TO RECORDS AND PROPERTIES.
(a) From the date hereof until the Closing Date or earlier
termination of this Agreement, Seller will, and will cause the
Companies and their Subsidiaries to:
(i) provide Purchaser and its officers, counsel and other
representatives with reasonable access during normal business
hours to the facilities of the Companies and Subsidiaries, their
principal personnel and representatives, and such books and
records pertaining to the Companies and Subsidiaries as Purchaser
may reasonably request, including access to all auditor work
papers and opinions with respect to the Financial Statements and
access to conduct non-intrusive Phase I environmental
investigations of the Real Property, provided that (i) Purchaser
agrees that such access will give due regard to minimizing
interference with the operations, activities and employees of the
Companies and their Subsidiaries, (ii) such access and disclosure
would not violate the terms of any agreement to which the
Companies or any Subsidiary is bound (provided that, promptly
following the date hereof, Seller shall disclose the existence of
any such agreement and the nature and scope of the applicable
restrictions thereunder to Purchaser and provided further that
Seller shall use its commercially reasonable efforts to obtain
any consents necessary to provide such access or disclosure under
such agreements) or any applicable Law, and (iii) all
arrangements for access shall be made solely through Seller; and
(ii) furnish to Purchaser or its representatives (A)
within 20 days of the close of each fiscal month, monthly
combined financial statements (including a combined balance sheet
and a combined statement of operations) of the Companies and the
Subsidiaries, prepared in accordance with GAAP consistently
applied with the Financial Statements and in accordance with past
practice, (B) within 40 days of the close of each fiscal quarter,
quarterly combined financial statements (including a combined
balance sheet and a combined statement of operations) of the
Companies and the Subsidiaries, prepared in accordance with GAAP
consistently applied with the Financial Statements and in
accordance with Regulation S-X under the Securities Exchange Act
of 1934, as amended, and (C) such additional financial and
operating data and other information relating to the Companies
and each of their Subsidiaries as may be reasonably requested, to
the extent access to and disclosure of such additional financial
and operating data would not violate the terms of any
28
agreement to which the Companies or any Subsidiary is bound
(provided that, promptly following the date hereof, Seller shall
disclose the existence of any such agreement and the nature and
scope of the applicable restrictions thereunder (to the extent
permissible under such agreement) to Purchaser and provided
further that Seller shall use its commercially reasonable efforts
to obtain any consents necessary to provide such access or
disclosure under such agreements) or any applicable Law.
Without limiting the foregoing, as promptly as practicable
following the date hereof, Seller shall furnish to Purchaser
copies of any Material Contracts not previously made available to
Purchaser; provided that, in the case of Material Contracts that
by their terms do not permit Seller to provide copies to
Purchaser, Seller shall disclose the existence of any such
agreement and the nature and scope of the applicable restrictions
thereunder (to the extent permissible under such agreement) to
Purchaser and shall use its commercially reasonable efforts to
obtain any consents necessary to provide Purchaser with a copy of
such Material Contract.
Each of Seller and Purchaser agrees that all information so
received from the other party hereto shall be deemed received
pursuant to the Confidentiality Agreement dated October 5, 2004
between the parties (the "Confidentiality Agreement") and that
each shall, and shall cause its affiliates and each of its and
their representatives to, comply with the provisions of the
Confidentiality Agreement with respect to such information, and
the provisions of the Confidentiality Agreement are hereby
incorporated herein by reference with the same effect as if fully
set forth in this Agreement; provided, however, that Purchaser
may disclose confidential information relating to the Company,
the Subsidiaries or the Business in connection with Purchaser's
communications with investors and analysts with the prior consent
of Seller (which consent shall not be unreasonably withheld or
delayed).
(b) Seller shall prepare, and deliver to Purchaser as promptly as
practicable, the audited combined balance sheet as of January 1, 2005
and related combined statements of earnings, cash flows and Seller's
net investment for the Companies and their Subsidiaries for the year
ended January 1, 2005, together with footnotes and a report thereon of
KPMG LLP, or any other independent certified public accountants of
recognized national standing (the "Audited Statements"). The Audited
Financial Statements shall be prepared in accordance with GAAP
consistently applied with the Financial Statements and in accordance
with Regulation S-X of the Securities Exchange Act of 1934, as
amended. Seller shall make available to Purchaser the work papers of
Seller's accountants relating to the Audited Statements.
(c) The Companies and their Subsidiaries currently maintain
their backup data center at Seller's facility in Richmond, Virginia,
and the Seller currently maintains its backup data center with
respect to the balance of its
29
business at the Companies' facility in Grand Prairie, Texas. Seller
shall provide Purchaser with access to its Richmond, Virginia facility
and equipment, and Purchaser shall provide Seller with access to its
Grand Prairie, Texas facility and equipment, for a period of one (1)
year following the Closing solely to permit the other party to
maintain the backup data and move the backup data of such party to its
own facility and equipment.
6.5 FURTHER ACTION. Each of Seller and Purchaser shall, subject to
the fulfillment at or before the Effective Time of each of the conditions of
performance set forth herein or the waiver thereof, use its reasonable best
efforts to perform such further acts and execute such documents as may be
reasonably required to effect the transactions contemplated hereby. Each of
Seller and Purchaser will comply in all material respects with all applicable
laws and with all applicable rules and regulations of any Governmental
Authority in connection with its execution, delivery and performance of this
Agreement and the transactions contemplated hereby. Each of Seller and
Purchaser agrees to use its reasonable best efforts to obtain in a timely
manner all necessary waivers, consents, approvals and opinions and to effect
all necessary registrations and filings, and to use its reasonable best
efforts to take, or cause to be taken, all other actions and to do, or cause
to be done, all other things necessary, proper or advisable to consummate and
make effective as promptly as practicable the transactions contemplated
hereby. This Section 6.5 shall in no way limit Purchaser's obligations set
forth in the last two sentences of Section 6.2(a). In the event that any or
all of the borrowings or amounts provided pursuant to the Commitment Letter
are unavailable for any reason in the amount specified therein, Purchaser
shall use its reasonable efforts to obtain replacement financing from
alternative sources, provided, however, that if Purchaser is unable to obtain
financing from alternative sources within a reasonable period of time after
Purchaser is notified that the financing under the Commitment Letter is not
available, then financing may be arranged by Seller or Seller's advisor with
third party institutions (including Seller's advisors). Notwithstanding the
foregoing, Purchaser shall be under no obligation to enter into any
replacement financing if the terms and conditions of such replacement
financing are materially less favorable to Purchaser than the terms and
conditions of the Commitment Letter. Without limiting the foregoing, in
connection with Purchaser's efforts to obtain high-yield bond financing and
any other financings undertaken by Purchaser or its affiliates in connection
with the transactions contemplated hereby, Seller shall cause members of
management of the Seller, the Companies or the Subsidiaries, and shall request
their respective accountants and other experts, in each case to the extent
practicable, to (a) aid in the preparation of written offering materials used
to complete such financings, to the extent information contained therein
relates to the Business, the Companies or the Subsidiaries, (b) provide
Purchaser and its representatives with financial information and data
(including projections) and other information and data reasonably requested in
connection with due diligence relating to such financings and, in the case of
its accountants, assist in the preparation of auditors reports, comfort
letters and other documentation prepared in connection therewith and (c)
participate in presentations, road shows, due diligence sessions, drafting
sessions and other meetings customarily involved in financing efforts;
provided, that the foregoing activities would not unreasonably interfere with
the performance of such Person's duties in connection with the Business; and
provided that the foregoing shall be at the sole cost
30
and expense of the Purchaser. Seller shall, and shall cause each of the
applicable Companies and Subsidiaries to, use its reasonable commercial
efforts to obtain, at Purchaser's expense, opinions of its local counsel
(which may be in-house counsel) addressing the matters reasonably requested
by, and addressed to, Purchaser's lenders and placement agents and, in an
offering under Rule 144A under the Securities Act of 1933, as amended, the
initial purchasers. Purchaser shall promptly upon request reimburse Seller
for any costs or expenses incurred by Seller which are to be borne by
Purchaser pursuant to this Section 6.5.
6.6 EXPENSES. Whether or not the transactions contemplated hereby are
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party hereto
incurring such expenses except as expressly provided herein; provided that any
such fees and expenses of the Company or the Subsidiaries shall be borne by
Seller. Without limiting the foregoing, Seller shall not pay or cause to be
paid any such costs and expenses, including the Goldman Fee, the Xxxxxxx Xxxxx
Fee and legal fees and expenses, from funds of any Company or Subsidiary.
Purchaser and Seller shall each pay 50% of any fees required to be paid under
the HSR Act.
6.7 NOTIFICATION OF CERTAIN MATTERS. Each party shall give prompt
notice to the other of the following:
(a) the occurrence or nonoccurrence of any event whose occurrence
or nonoccurrence is reasonably expected to cause any of the conditions
precedent to the other party's obligations set forth in Article 7 not
to be satisfied; and
(b) the status of matters relating to completion of the
transactions contemplated hereby, including promptly furnishing the
other with copies of notices or other communications received by any
party or any of its respective Subsidiaries from any Governmental
Authority or other third party with respect to this Agreement or the
transactions contemplated hereby.
Subject to Section 6.12 hereof, any such notification shall not be
given effect for purposes of the representations, warranties and covenants
contained herein.
6.8 EMPLOYEE BENEFIT PLANS.
(a) From and after the Effective Time, Purchaser will cause the
Companies and their Subsidiaries to continue and perform, in
accordance with their terms, all employment agreements listed in Items
1-6 of Section 4.13 of the Disclosure Schedule between the Companies
and their Subsidiaries and any officer, director or employee of the
Companies or any of their Subsidiaries and all obligations of the
Companies under the Plans. Nothing in this Section 6.8 shall be
interpreted to prohibit Purchaser, the Companies or any of their
Subsidiaries, from and after the Effective Time, from establishing new
plans or amending or terminating any Plan sponsored by any of the
Companies or a Subsidiary in accordance with the terms thereof.
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(b) Purchaser shall cause the Companies and their Subsidiaries to
continue to employ, immediately following the Effective Time, each
individual employed by any of the Companies or any Subsidiary on the
Closing Date (other than any person who is subject to a collective
bargaining agreement or employment agreement), including employees
absent from work due to short-term or long-term disability, sick
leave, military leave or other employer-approved absences of short
duration ("Companies Covered Employees"); provided, however, that
nothing in this Agreement is intended to limit Purchaser's right to
terminate, or cause to be terminated, or otherwise deal with, any
Companies Covered Employee after the Effective Time. Purchaser shall,
for a period of one year after the Effective Time, cause to be
provided to each Companies Covered Employee who continues to be
employed during that time a base salary not less than his or her base
salary in effect immediately prior to the date hereof and an annual
cash bonus opportunity substantially comparable to that provided to
him or her immediately prior to the date hereof, and cause to be
provided to Companies Covered Employees employee benefits, including,
but not limited to, welfare, retirement and savings benefits
substantially comparable, in the aggregate, to those provided to
Companies Covered Employees immediately prior to the Effective Time
(excluding for these purposes any equity-based plan or arrangement).
For purposes of determining eligibility and vesting (but not for
benefits accrual) under any Purchaser benefit plan in which a
Companies Covered Employee participates after the Effective Time, such
employee shall be credited with his or her years of service with the
Companies or their Subsidiaries, to the extent such credit was given
under any corresponding Plan (as defined in Section 4.13(a)). To the
extent that any Purchaser benefit plan in which a Companies Covered
Employee participates after the Effective Time provides medical,
dental or vision benefits, Purchaser shall cause all pre-existing
condition exclusions and actively at work requirements of such plan to
be waived for such employee and his or her covered dependents except
to the extent such employee and his or her covered dependents were
subject to such exclusions and requirements under the corresponding
Plan, and Purchaser shall cause any eligible expenses incurred by such
employee on or before the Effective Time to be taken into account
under such Purchaser benefit plan for purposes of satisfying all
deductible, coinsurance and maximum out-of-pocket requirements
applicable to such employee and his or her covered dependents for the
applicable plan year. Purchaser shall not provide any specific
incentive or inducement to any Companies Covered Employees to choose
to be covered under the health care continuation provisions of the
Plans, including, without limitation, the payment of all or a portion
of a Companies Covered Employee's COBRA premium.
(c) The parties hereto agree that the consummation of the
transaction contemplated in this Agreement (i) shall constitute a
"corporate sale" within the meaning of Article VI of Seller's Senior
Management Severance Plan and (ii) shall not constitute a "Change in
Control" within the meaning of any "Agreement for Key Executive"
entered into by Seller.
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(d) Purchaser covenants that it will, or will cause the Companies
and their Subsidiaries to, employ those managers set forth on Section
6.8(c) of the Disclosure Schedule for a period of no less than nine
months from the Closing Date; provided, however, Purchaser shall be
entitled to terminate such managers for Cause during such period;
provided, further, however, that Purchaser may also terminate such
managers at any time without Cause, provided that Purchaser shall make
a severance payment no less than the amount of salary to which such
manager is otherwise entitled to receive for the period beginning on
the date of termination and ending on the first anniversary of the
Closing. If the employment of any of these managers is terminated for
any reason other than with Cause following the nine-month period and
prior to the first anniversary of the Closing Date, Purchaser agrees
to provide such terminated employee at least 90 days' prior notice of
such termination. "Cause" shall mean (1) any act of employee which is
demonstrably injurious to his or her employer that constitutes
dishonesty, willful misconduct, gross insubordination, breach of
fiduciary duty, or breach of the duty of loyalty; (2) gross negligence
in the performance of the employee's duties that continues for 10 days
following written notice thereof from the employer, (3) willful
violation of any law, governmental rule or regulation (other than
traffic violations or similar minor offenses), or court order that is
demonstrably injurious to the employer; (4) the death of employee; (5)
employee's inability to perform the essential functions of his or her
job due to physical or mental disability causing employee to be absent
from his or her duties on a full-time basis for ninety consecutive
days, the determination of such mental or physical disability to be
made by a licensed physician satisfactory to employee and employer; or
(6) material breach by employee of the written policies of the
Companies and the Subsidiaries determined on a reasonable basis.
(e) As of the Closing Date, Purchaser shall cause to be
maintained for the benefit of Companies Covered Employees (and to the
extent required by, and in accordance with, any applicable collective
bargaining agreement, other employees of the Companies and their
Subsidiaries) a defined contribution plan intended to be qualified
under Section 401(a) of the Code ("Purchaser's 401(k) Plan"). Upon the
Closing, or as soon as practicable thereafter, Seller shall direct the
trustee of Seller's tax-qualified 401(k) plan to transfer to the
trustee of Purchaser's 401(k) Plan the aggregate individual account
balances of the above-described employees (whether or not vested) who
are then employed by Purchaser, the Companies or the Subsidiaries, or
any of their affiliates.
(f) Seller will, and will cause the Companies and their
Subsidiaries to, (i) provide Purchaser and its officers, counsel
and other representatives with reasonable access to the Key
Employees for the purposes of negotiating employment arrangements
with such employees and (ii) reasonably cooperate with Purchaser to
facilitate and assist with such negotiations. Seller shall not take
any action or fail to take any action, directly or indirectly,
which would enable any of the Key Employees to terminate their
employment for "Good Reason" (as defined in the Employment
Agreements set forth in Section 4.8(a)(x) of the Disclosure
Schedule). Seller shall promptly advise Purchaser of any written
33
notification from any Key Employee of his or her resignation from the
Companies or the Subsidiaries.
6.9 NON-COMPETITION, NON-SOLICITATION AND NON-DISCLOSURE.
(a) For a period of five (5) years from the Closing Date, except
as permitted in this Section 6.9, neither Seller nor any of its
affiliates shall directly or indirectly (i) process, produce or
manufacture (in each case, whether directly or indirectly or through
co-packers and whether independently or with co-packers) value-added
produce items, including packaged salads, salad kits, specialty
salads, fresh-cut vegetables and fresh-cut fruit for sale through any
outlets, including grocery stores, supercenters or other outlets in
the retail distribution channel and quick-service restaurant and other
food service outlets, (ii) sell or provide equipment, processes or
material for freshness extending atmosphere systems or (iii) own any
interest in any business or Person engaged in any of the foregoing
activities under clauses (i) or (ii) above. The restrictions set forth
in this Section 6.9 shall not be construed to prohibit or restrict:
(A) any minority equity investment by Seller or any of its affiliates
in any person or entity in which Seller or its affiliates do not have
the right to designate a controlling number of members of the board of
directors (or similar governing body) of such entity, or in which
Seller or its affiliates collectively hold not more than 10% of the
outstanding voting securities; (B) the sale of produce items purchased
by Seller from third parties on an arm's-length basis (including
produce which has been processed) exclusively for resale (and not
subject to further processing) to its foodservice customers; (C) any
business activity that would otherwise violate this Section 6.9 that
is carried on by an entity or business that is acquired by Seller or
otherwise becomes an affiliate thereof, but only if, at the time of
such acquisition, the revenues derived from such business by such
entity or business constitute less than 10% of the gross revenues of
such person or business; or (D) Seller's engaging in its foodservice
distribution business as currently conducted. For a period of three
(3) years from the Closing Date, neither Seller nor any of its
affiliates will, without the prior written consent of Purchaser,
solicit any Person listed in Section 6.9(a) of the Disclosure Schedule
to terminate such Person's customer relationship with the Companies or
the Subsidiaries or enter into a relationship or arrangement with a
different company or business engaged in the produce processing
business with respect to any value-added produce item currently
supplied, or contemplated to be supplied (as set forth in Section
6.9(a) of the Disclosure Schedule), by the Companies or the
Subsidiaries.
(b) Except as set forth in Section 6.9(b) of the Disclosure
Schedule, for a period of two (2) years from the Closing Date,
neither Seller nor any of its affiliates will, without the prior
written consent of Purchaser, employ any officer or managerial
employee of the Companies or their Subsidiaries, unless such person
has ceased to be an officer or managerial employee for at least six
(6) months; provided, however, that the foregoing shall not
prohibit any general solicitations of employment not directed to
employees of the Companies or their Subsidiaries (including the
placing of an advertisement or solicitation through an
34
employment agency or executive search firm (provided that such
employment agency or executive search firm is not directed,
encouraged or advised by Seller or its affiliates to approach such
officer or managerial employee) or prevent Seller or its affiliates
from hiring any such person or any person who contacts Seller on
his or her own initiative.
(c) Seller agrees to treat any information in its possession
concerning the Companies and their Subsidiaries (whether prepared by
the Seller, its advisors or otherwise) based on, containing or
otherwise reflecting such information, including any notes, memoranda,
analyses, compilations, studies or other documents (herein
collectively referred to as the "Confidential Material") in accordance
with the provisions of this clause (c) and to take or abstain from
taking certain other actions herein set forth. The term "Confidential
Material" does not include information which (i) is or becomes
generally available to the public other than as a result of a
disclosure by Seller or its directors, officers, employees, agents,
advisors, affiliates or representatives (including, without
limitation, accountants, investment bankers and attorneys (such
persons being collectively called "Representatives") in violation of
this Agreement or (ii) becomes available to Seller on a
non-confidential basis from a source other than Purchaser or its
advisors, provided that such source is not, to Seller's knowledge
after reasonable inquiry, bound by a confidentiality agreement with or
other obligation of secrecy to Purchaser or another party. Seller
hereby agrees that, except for such disclosures thereof as may be
required by Law, the Confidential Material will be kept confidential
by Seller and its Representatives and not disclosed to any other
person and that it will not use any Confidential Material to benefit
or further its own business activities; provided, however, that any
disclosure of such information may be made to which Purchaser
consents, in advance, in writing. Seller shall, as and when requested
by Purchaser and at Purchaser's expense, use commercially reasonable
efforts to enforce any confidentiality or non-disclosure agreement
entered into with bidders and their representatives in connection with
the auction process with respect to the Shares, including enforcing
Purchaser's demands for the return or destruction of any material
covered by such agreements in accordance with the terms thereof.
6.10 INTERCOMPANY INDEBTEDNESS. Immediately prior to the Closing,
Seller shall contribute to the Companies as a capital contribution in respect
of the Shares, all indebtedness and other payables owed by the Companies or
their Subsidiaries to Seller that has not been repaid by the Companies or their
Subsidiaries prior to the Closing, if any (the amount of which totaled
$368,164,000 as of the date of the Reference Balance Sheet) and shall cause the
Companies to cancel, distribute or forgive all receivables owed by the Seller
or its affiliates to the Company or the Subsidiaries (the amount of which
totaled $618,000 as of the date of the Reference Balance Sheet). In addition,
immediately prior to the Closing, K.C. Salad Holdings, Inc. and its
Subsidiaries shall, at the election of Seller, either cancel that certain
Revolving Credit Note dated October 15, 2004 by and between K.C. Salad
Holdings, Inc. and its Subsidiaries and the Seller and forgive any amounts owed
by Seller thereunder as of the Closing, or distribute that note to Seller.
Immediately prior to the Closing, Seller shall cause the termination or
35
cancellation of any intercompany agreements or arrangements between Seller or
any affiliate thereof, on the one hand, and the Companies or any of the
Subsidiaries, on the other hand.
6.11 DEBT AND GUARANTEES. At the Closing, except for trade payables,
Seller shall, solely out of Seller's funds, pay, or irrevocably deposit for the
purpose of defeasing or paying, all outstanding indebtedness of the Companies
and the Subsidiaries (excluding, for the avoidance of doubt, the Xxxxxxx County
Arrangements), including the indebtedness listed on Section 6.11 of the
Disclosure Schedule, together with any associated interest, prepayment amounts
or other penalties, provided that Seller shall not be required to give notice
of repayment until Closing, and Seller shall concurrently obtain full and
unconditional releases of any Encumbrances associated therewith. At the
election of Purchaser not less than five (5) business days prior to the
Closing, Seller shall use its reasonable efforts to cause any and all of the
Xxxxxxx County Arrangements to be terminated and of no further force and effect
as of the Closing. Section 6.11 of the Disclosure Schedule also sets forth all
guarantees, financial accommodations and security arrangements by Seller in
favor of the Companies and Subsidiaries with respect to obligations of the
Companies or Subsidiaries, excluding the foregoing indebtedness to be satisfied
by Seller (collectively, "Guarantees"). Purchaser and Seller shall reasonably
cooperate, to cause Purchaser or one of its affiliates to be substituted for
Seller and all of its affiliates other than the Companies and the Subsidiaries
as of the Closing, without recourse to Seller or any such affiliates, with
respect to all such Guarantees. In the event that Purchaser and Seller are
unable to obtain the release of any Guarantee, Purchaser shall indemnify and
hold harmless Seller from any and all obligations or liabilities incurred by
Seller with respect to such Guarantee.
6.12 SUPPLEMENTS TO DISCLOSURE SCHEDULE. If Seller becomes aware of,
or there occurs after the date of this Agreement, any fact or condition that
constitutes a breach of any representation or warranty made by Seller in
Article 4 above that is qualified by materiality or a material breach of any
representation or warranty made by Seller in Article 4 above that is not so
qualified, or if any fact or condition, either currently existing or hereafter
occurring, requires any change in the Disclosure Schedule delivered to
Purchaser at the time of execution of this Agreement, Seller will deliver to
Purchaser at or before the Closing a supplement to the Disclosure Schedule
specifying any needed change. Any such supplement to the Disclosure Schedule
shall not be given effect for purposes of the representations and warranties
contained herein; provided, however, that if the disclosures made in such
supplement would give rise to the Purchaser's right not to close under Section
7.2(a) hereof (as so notified by Seller) and Purchaser nonetheless proceeds
with the Closing, such supplement to the Disclosure Schedule shall be given
effect for purposes of determining whether there has been a breach of a
representation and warranty for purposes of the indemnification provisions
under Section 9.2 hereof.
6.13 NON-SOLICITATION. Prior to the Closing Date, Seller agrees (i)
that it shall not, and shall direct its directors, officers, employees,
advisors, accountants and attorneys not to, initiate, solicit or encourage,
directly or indirectly, any inquiries or the making or implementation of any
proposal or offer with respect to a merger, acquisition,
36
consolidation or similar transaction involving any of the Companies, the
Subsidiaries, the Business or any significant portion of the assets or any
equity securities of any of the Companies or the Subsidiaries (any such
proposal or offer being an "Acquisition Proposal") or engage in any
negotiations concerning, or provide any confidential information or data to, or
have any discussions with, any Person relating to an Acquisition Proposal, or
otherwise facilitate any effort to attempt to make or implement an Acquisition
Proposal, (ii) that it will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties other than
Purchaser conducted heretofore with respect to any of the foregoing and (iii)
that it will notify Purchaser immediately if any such inquiries or proposals
are received by, any such information is requested from, or any such
negotiations or discussions are sought to be initiated or continued with, it.
6.14 OBLIGATIONS WITH RESPECT TO CERTAIN INSURANCE CLAIMS. Except as
expressly set forth in this Section 6.14 or elsewhere in this Agreement
(including the indemnity provisions of Section 9.2), from and after the
Closing, Purchaser shall assume and pay when due all liabilities, including any
claims handling expense, arising out of, or related to, events, acts or
occurrences prior to the Closing which give rise to a claim against the
Companies or the Subsidiaries or otherwise relating to the Business
("Pre-Closing Claims"), regardless of when the claim is brought, but only to
the extent such claims would be required to be paid by Seller, including any
Pre-Closing Claims funded by Performance Insurance Company Ltd. ("PICL"), or
PICL under any workers compensation, general liability, automobile liability or
health insurance policy issued in favor of the Companies or the Subsidiaries,
notwithstanding anything to the contrary in any policies issued by PICL to the
Companies or the Subsidiaries. All insurance policies issued by PICL in favor
of the Companies or the Subsidiaries shall be terminated as of Closing and
neither Seller nor PICL shall have any obligation to pay any claims which would
otherwise be payable thereunder; provided, that Seller shall reasonably
cooperate with Purchaser and keep Purchaser reasonably informed of all material
events with respect to Pre-Closing Claims thereunder and not settle or
compromise any such Pre-Closing Claims without the prior written consent of
Purchaser. The accrued liabilities of the Companies and the Subsidiaries with
respect thereto was $12,800,000 as of the Reference Balance Sheet.
Notwithstanding the foregoing, Purchaser shall have no liability for any
Pre-Closing Claim to the extent that coverage is provided under an insurance
policy written by a third party not affiliated with Seller which covers
Pre-Closing Claims. Prior to the Closing and, at the request of Purchaser,
following the Closing, Seller shall cause any Pre-Closing Claims to be made on
behalf of the Companies or the Subsidiaries that are covered within the terms
and conditions of any such policies, whether or not collectable and whether or
not subject to deductibles, co-insurance or retrospectively-rated premium
adjustments, and Purchaser and Seller shall reasonably cooperate and keep the
other party reasonably informed of all material events with respect to such
Pre-Closing Claims. Seller shall not cancel, release or otherwise terminate any
of Seller's policies with third-party insurance carriers with respect to
Pre-Closing Claims without the prior written consent of Purchaser; provided
that Seller shall not be required to make any additional payments after the
Closing in order to keep such policies in place; provided, further, that Seller
shall provide Purchaser with notice of any notice that Seller receives that any
such additional payments may be required. Seller shall promptly pay to
37
Purchaser any insurance proceeds received by Seller or its affiliates under
policies with third-party insurance carriers in respect of such Pre-Closing
Claims. From and after the Closing, Seller shall cause each of the Companies
and the Subsidiaries to be a named insured, and have all the rights of a named
insured, under Seller's policies with third-party insurance carriers with
respect to Pre-Closing Claims.
6.15 OBLIGATION WITH RESPECT TO FRESH ADVANTAGE. Prior to the Closing,
Seller shall take all action necessary or reasonably requested by Purchaser, at
Seller's expense, to cause all of its and its affiliates' right, title and
interest in and to the Fresh Advantage trademark and name (and all goodwill
associated therewith) to be assigned to the Companies, free and clear of any
Encumbrances, and shall make all necessary filings in connection therewith. At
Closing, the Companies shall grant Seller and its affiliates the right to use
the Fresh Advantage xxxx for a period of two (2) years following the Closing at
no cost to Seller or its affiliates on terms reasonably satisfactory to Seller
and Purchaser. During such two-year period, neither Purchaser nor Seller shall
license or sublicense such xxxx to any third party. This trademark license
shall be on an "as is" basis, without representations or warranties, or
recourse by Seller of any kind against Purchaser.
ARTICLE 7.
CLOSING CONDITIONS
7.1 CONDITIONS TO OBLIGATIONS OF SELLER AND PURCHASER TO CONSUMMATE
THE TRANSACTION. The respective obligation of each of Seller and Purchaser to
consummate the transactions contemplated hereby shall be subject to the
satisfaction of each of the following conditions:
(a) Legality. No order, decree or injunction shall have been
entered or issued by any Governmental Authority which is in effect and
has the effect of making the transactions contemplated hereby illegal
or otherwise prohibiting consummation of the transactions contemplated
hereby. Each of Seller and Purchaser agrees that, in the event that
any such order, decree or injunction shall be entered or issued, it
shall use its reasonable best efforts to cause any such order, decree
or injunction to be lifted or vacated. The immediately preceding
sentence shall in no way limit or expand Purchaser's obligations under
Section 6.2(a).
(b) HSR Act. The waiting period (or extension thereof) under the
HSR Act applicable to the transactions contemplated hereby shall have
expired or been terminated.
7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligations
of Purchaser to consummate the transactions contemplated hereby shall also be
subject to the satisfaction or waiver of each of the following conditions:
(a) Representations and Warranties. (i) The representations
and warranties of Seller contained in this Agreement that are
qualified by materiality
38
or Seller Material Adverse Effect and the representations and
warranties of Seller contained in Sections 4.4(a) and (b) hereof shall
be true and correct on and as of the Closing Date (except to the
extent such representations and warranties shall have been expressly
made as of an earlier date, in which case such representations and
warranties shall have been true and correct as of such earlier date)
with the same force and effect as if made on and as of the Closing
Date and (ii) the representations and warranties of Seller contained
in this Agreement that are not qualified as to materiality or Seller
Material Adverse Effect or contained in Sections 4.4(a) and (b) hereof
shall be true and correct on and as of the Closing Date (except to the
extent such representations and warranties shall have been expressly
made as of an earlier date, in which case such representations and
warranties shall have been true and correct as of such earlier date)
with the same force and effect as if made on and as of the Closing
Date, except to the extent that any failures of such representations
and warranties in this clause (ii) to be so true and correct,
individually or in the aggregate, would not reasonably be expected to
have resulted in a Seller Material Adverse Effect.
(b) Agreements and Covenants. Seller shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on
or before the Effective Time.
(c) Certificate. Purchaser shall have received a certificate of
an executive officer of Seller that the conditions set forth in this
Section 7.2 have been satisfied.
(d) Documents. Purchaser shall have received the documents and
instruments set forth in Section 3.2(b).
(e) Audited Financial Statements. Purchaser shall have received
the Audited Statements (together with an unqualified auditor's
opinion), and the Audited Statements (including the notes thereto)
shall not reflect or disclose any information that is adverse, in any
material respect, to the Business, the Companies or their
Subsidiaries, taken as a whole, that was not reflected or disclosed in
the Financial Statements (including the notes thereto) previously
provided to Purchaser.
(f) Financing. The financing institutions party to the Commitment
Letter (or any agreements relating to alternative sources of financing
that may be entered into by Purchaser under Section 6.5) shall have
funded the portion of the Purchase Price in the amount specified in
the Commitment Letter; provided that the foregoing shall not be a
condition under this Agreement in the event that (i) a breach by
Purchaser of its obligations under the Commitment Letter (or any
agreements relating to alternative sources of financing that may be
entered into by Purchaser under Section 6.5) has caused the funding
thereunder not to occur, or (ii) all conditions precedent to the
closing and extension of credit of the amount specified in the
Commitment Letter have been satisfied other than the conditions
39
contained in clause (vi) and clause (viii) (other than, in the case of
clause (viii), a default, or failure of the representations and
warranties to be true, under any of the loan documentation for the
Senior Credit Facilities (as defined in the Commitment Letter) which
relates to the Companies or the Subsidiaries) of Annex II of the
Commitment Letter.
(g) Material Adverse Change. There shall have been no Seller
Material Adverse Effect after the date hereof that has not been cured
by the Closing Date.
7.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF SELLER. The obligations of
Seller to consummate the transactions contemplated hereby shall also be subject
to the satisfaction or waiver of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Purchaser contained in this Agreement that are qualified
by materiality or Purchaser Material Adverse Effect shall be true and
correct on and as of the Closing Date (except to the extent such
representations and warranties shall have been expressly made as of an
earlier date, in which case such representations and warranties shall
have been true and correct as of such earlier date) with the same
force and effect as if made on and as of the Closing Date, and (ii)
the representations and warranties of Purchaser contained in this
Agreement that are not qualified as to materiality or Purchaser
Material Adverse Effect shall be true and correct on and as of the
Closing Date (except to the extent such representations and warranties
shall have been expressly made as of an earlier date, in which case
such representations and warranties shall have been true and correct
as of such earlier date) with the same force and effect as if made on
and as of the Closing Date, except to the extent that any failures of
such representations and warranties in this clause (ii) to be so true
and correct, individually or in the aggregate, would not reasonably be
expected to have resulted in a Purchaser Material Adverse Effect.
(b) Agreements and Covenants. Purchaser shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on
or before the Effective Time.
(c) Certificate. Seller shall have received a certificate of an
executive officer of Purchaser that the conditions set forth in
paragraphs (a) and (b) above have been satisfied.
(d) Resolutions. Seller shall have received the resolutions
set forth in Section 3.2(a).
(e) Solvency Opinion. The Seller shall have received a
solvency opinion, addressed to the Board of Directors of the
Seller, rendered by an independent valuation firm, at Seller's
expense, setting forth their conclusion that,
40
after giving effect to the transactions contemplated by this Agreement
and the incurrence of any financings in connection therewith, the
Purchaser, Companies and Subsidiaries taken as a whole, are not
insolvent and will not be rendered insolvent by the indebtedness
incurred in connection therewith, and will not be left with
unreasonably small capital with which to engage in their business and
will not have incurred debts beyond their ability to pay such debts as
they mature.
ARTICLE 8.
CERTAIN TAX MATTERS
8.1 RESPONSIBILITY FOR FILING TAX RETURNS.
(a) Seller shall include the income of the Companies and the
Subsidiaries on Seller's consolidated federal income Tax Returns (and
any state consolidated, unitary or combined Tax Returns) for all
periods through the end of the Closing Date and pay any income Taxes
attributable to such income. The Companies and the Subsidiaries shall
furnish Tax information to Seller for inclusion in Seller's federal
consolidated income Tax Return (or such state Tax Return described in
the preceding sentence) for the period that includes the Closing Date
in accordance with the Companies' and the Subsidiaries past custom and
practice. The income of the Companies and the Subsidiaries shall be
apportioned to the period up to the Closing Date and the period after
the Closing Date by closing the books of the Companies and the
Subsidiaries as of the Closing Date. Seller shall prepare or cause to
be prepared and file or cause to be filed all other Tax Returns for
the Companies and their Subsidiaries for all periods ending on or
prior to the Closing Date that are due after the Closing Date.
(b) Purchaser shall prepare or cause to be prepared and file or
cause to be filed all other Tax Returns for the Companies and the
Subsidiaries that are due after the Closing Date (other than Tax
Returns with respect to periods for which a consolidated, unitary or
combined Tax Return of Seller will include the operations of the
Companies). Purchaser shall permit Seller to review and comment on
each such Tax Return described in the preceding sentence prior to
filing and shall make such revisions to such Tax Returns as are
reasonably requested by Seller but only to the extent that such Tax
Returns relate to Taxes for which Seller has an obligation to
indemnify or has indemnified Purchaser pursuant to Section 8.4.
8.2 COOPERATION ON TAX MATTERS.
(a) Purchaser and Seller shall cooperate fully, as and to the
extent reasonably requested by the other party, in connection with the
filing of Tax Returns pursuant to this Article 8 and any audit,
litigation or other proceeding with respect to Taxes. Such cooperation
shall include the retention and (upon the other party's request) the
provision of records and information which are reasonably relevant to
any such Tax Return preparation, audit, litigation or other proceeding
and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
41
hereunder. Seller agrees (A) to retain all books and records with
respect to Tax matters pertinent to the Companies and their
Subsidiaries relating to any taxable period beginning before the
Closing Date until the expiration of the statute of limitations (and,
to the extent notified by Purchaser, any extensions thereof) of the
respective taxable periods, and to abide by all record retention
agreements entered into with any Taxing Authority, and (B) to give
Purchaser reasonable written notice prior to transferring, destroying
or discarding any such books and records and, if Purchaser so
requests, Seller shall allow Purchaser to take possession of such
books and records.
(b) Purchaser and Seller further agree, upon request, to use
commercially reasonable efforts to obtain any certificate or other
document from any Governmental Authority or any other Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be
imposed (including, but not limited to, with respect to the
transactions contemplated hereby).
8.3 TAX SHARING AGREEMENTS. All Tax sharing agreements or similar
agreements with respect to or involving the Companies and their Subsidiaries
shall be terminated as of the Closing Date and, after the Closing Date, the
Companies and their Subsidiaries shall not be bound thereby or have any
liability thereunder.
8.4 TAX INDEMNIFICATIONS.
(a) Seller shall be liable for, and shall indemnify and hold
Purchaser harmless against:
(i) all Taxes of the Companies and the Subsidiaries
payable for any taxable year or taxable period ending on or
before the Closing Date, including, but not limited to, any Taxes
with respect to the deemed sale of assets resulting from the
Section 338(h)(10) elections pursuant to Section 8.6 of this
Agreement; provided, however, that no indemnity shall be provided
under this Agreement for Taxes resulting from any transaction
undertaken by the Purchaser, any Company or Subsidiary on the
Closing Date, but after the Closing, occurring outside of the
ordinary course of business;
(ii) all Taxes imposed on any member of any Affiliated
Group with which any Company or Subsidiary files or filed a Tax
Return on a consolidated, combined or unitary basis for a taxable
year (of a Company or any Subsidiary) beginning before the
Closing Date and for which any Company or Subsidiary is liable as
a result of filing or being included in such a Tax Return on a
consolidated, combined or unitary basis; and
(iii) with respect to any taxable year or taxable period
beginning before the Closing Date and ending after the Closing
Date (a "Straddle Period"), the portion of the Taxes of the
Companies and the Subsidiaries attributable to the portion of
such taxable year or taxable period ending on
42
the Closing Date; provided, however, that no indemnity shall be
provided under this Agreement for any Taxes resulting from any
transaction undertaken by the Purchaser, any Company or
Subsidiary on the Closing Date, but after the Closing, occurring
outside of the ordinary course of business.
(b) Purchaser shall be liable for, and shall indemnify and hold
Seller harmless against, (i) any and all Taxes imposed on any Company
or Subsidiary for any taxable year or portion thereof beginning on or
after the Closing Date, including the portion commencing on the
Closing Date of any Straddle Period, and (ii) any additional Tax owed
by Seller (including Tax owed by Seller due to this indemnification
payment) resulting from any transaction engaged in by any Company or
any Subsidiary not in the ordinary course of business occurring on the
Closing Date after Purchaser's purchase of the Companies' stock.
(c) Whenever any Taxing Authority asserts a claim, makes an
assessment, or otherwise disputes the amount of Taxes for which Seller
is liable under this Agreement, Purchaser shall upon receipt of such
assertion, promptly inform Seller in writing and Seller shall have the
sole right to control any resulting proceedings and to determine
whether and when to settle any such claim, assessment or dispute to
the extent such proceedings or determinations affect the amount of
Taxes for which Seller may be liable under this Agreement. Whenever
any Taxing Authority asserts a claim, makes an assessment or otherwise
disputes the amount of Taxes for which Purchaser is liable under this
Agreement, Purchaser shall have the right to control any resulting
proceedings and to determine whether and when to settle any such
claim, assessment or dispute, except to the extent such proceedings
affect the amount of Taxes for which Seller is liable under this
Agreement. Whenever any Taxing Authority asserts a claim, makes an
assessment or otherwise disputes the amount of Taxes for which both
Seller and Purchaser may be liable, (i) each party may participate in
any resulting proceedings, and (ii) that portion of the proceedings
shall be controlled by that party which would bear the burden of the
greater portion of the sum of the adjustment and any corresponding
adjustments that may reasonably be anticipated for other taxable
periods. The party not controlling such proceedings may, with the
written consent of the other party and at its sole expense, assume
control of such proceeding.
(d) The obligations of the parties set forth in this Section 8.4
shall be unconditional and absolute. Except as expressly provided in
Article 9, the rights and obligations of the parties with respect to
indemnification for any and all matters relating to Taxes shall be
governed by this Section 8.4.
8.5 CERTAIN NON-INCOME TAXES. All transfer, documentary, sales, use,
stamp, registration and other similar Taxes and fees (including any penalties
and interest), but not including income taxes incurred in connection with
this Agreement (including any such Tax imposed indirectly as a result of the
sale of the Shares), shall be borne by Purchaser. Purchaser will, at its own
expense, file all necessary Tax Returns and other
43
documentation with respect to all such transfer, documentary, sales, use,
stamp, registration and other Taxes and fees.
8.6 SECTION 338(H)(10) ELECTION. Purchaser and Seller agree to join in
making elections under section 338(h)(10) of the Code (and any corresponding or
similar provision of state and local Law) with respect to Redi-Cut Foods, Inc.,
an Illinois corporation, and K.C. Salad Holdings, Inc., a Missouri corporation,
and, if Seller so timely requests, with respect to Fresh Advantage, Inc., a
Virginia corporation (any of such companies with respect to which an election
is to be made, a "338(h)(10) Entity"), and shall cooperate in the preparation
and filing of IRS Form 8023 and any other Tax forms or filings necessary to
effect such elections. Prior to Closing, Seller and Purchaser shall agree upon
an allocation of a portion of the Purchase Price to each of the 338(h)(10)
Entities, and if Seller and Purchaser are unable to agree on such allocation
they shall submit the matter to the Accountants for a determination, which
shall be final and binding on both Seller and Purchaser.
ARTICLE 9.
ADDITIONAL INDEMNIFICATION
9.1 SURVIVAL. The representations and warranties of the parties
contained in Articles 4 and 5 hereof shall survive the Closing; provided, that,
subject to the last sentence of this Section 9.1, such representations and
warranties shall terminate on the date that is one (1) year after the Closing
Date, except that (i) the representations and warranties contained in Sections
4.2 (Authority) and 4.4(a), (b) and (c) (Capitalization) shall survive
indefinitely following the Closing, (ii) the representations and warranties
contained in Section 4.11 (Environmental and Safety and Health Matters) shall
survive for five (5) years following the Closing and (iii) the representations
and warranties contained in Section 4.14 (Taxes) shall survive the Closing
until the statute of limitations for the applicable representation and warranty
ends. All covenants and agreements contained herein which by their terms
contemplate actions or impose obligations following the Closing shall survive
the Closing and remain in full force and effect in accordance with their terms.
All covenants and agreements contained herein which by their terms contemplate
full performance at or prior to Closing shall terminate upon Closing, except
that claims for indemnification in respect of any breach thereof shall survive
until the first anniversary of the Closing. The period of time a representation
or warranty or covenant or agreement survives the Closing pursuant to this
Section 9.1 shall be the "Survival Period" with respect to such representation
or warranty or covenant or agreement. In the event notice of any claim for
indemnification under this Article 9 shall have been given within the
applicable Survival Period and such claim has not been finally resolved by the
expiration of such Survival Period, the representations or warranties or
covenants or agreements that are the subject of such claim shall survive, but
only to the extent of and in the amount of the claim as made prior to the
expiration of the Survival Period, until such claim is finally resolved.
9.2 ADDITIONAL INDEMNIFICATION. Subject to the terms, conditions and
limitations set forth in this Article 9, from and after the Closing Date:
44
(a) Seller shall defend, indemnify and hold harmless Purchaser
and its Affiliates and each of their respective officers, directors,
members, partners, managers and employees (collectively, the
"Purchaser Indemnified Parties") from and against any costs or
expenses (including reasonable attorneys' fees and expenses),
judgments, fines, claims, damages (including consequential damages in
the form of lost profits) and assessments (collectively, "Losses")
that are imposed on or incurred by Purchaser Indemnified Parties which
result from (i) any breach of any representation or warranty made by
Seller in Section 4.1, 4.3, 4.4(d) or (e), 4.5. 4.6, 4.7, 4.8 through
4.10 and 4.12 through 4.23 (disregarding for purposes of measuring
damages under this Section 9.2(a) any qualification by materiality or
Seller Material Adverse Effect) on the Closing Date (except to the
extent such representations and warranties shall have been expressly
made as of an earlier date, in which case as of such earlier date),
(ii) any breach of any representation or warranty made by Seller in
Section 4.2 or 4.4(a), (b) or (c) hereof (disregarding for purposes of
measuring damages under this Section 9.2(a) any qualification by
materiality or Seller Material Adverse Effect) on the Closing Date
(except to the extent such representations and warranties shall have
been expressly made as of an earlier date, in which case as of such
earlier date), (iii) the failure of Seller to perform any covenant or
agreement of Seller set forth in this Agreement, and (iv) (A) any
Environmental Claim arising out of or relating to actions, conditions,
occurrences, incidents, events or omissions involving the Companies,
the Subsidiaries or the Real Property on or prior to the Closing Date,
(B) any violation of or noncompliance with applicable Environmental
Law by the Companies or any of their Subsidiaries prior to the Closing
Date, including the continuation of such violation or noncompliance
within three (3) months after the Closing Date, whether or not a third
party claim has arisen in connection with such violation or
noncompliance, (C) any Cleanup required by Environmental Law at the
Real Property, as a result of a release or discharge of Hazardous
Substances at such Real Property prior to the Closing Date, and (D)
any breach of any representation or warranty made by Seller in Section
4.11 on the Closing Date (except to the extent such representations
and warranties shall have been expressly made as of an earlier date,
in which case as of such earlier date). Notwithstanding the foregoing,
Seller shall not indemnify the Purchaser Indemnified Parties under
this Section 9.2(a) with respect to matters relating to Taxes to the
extent indemnification is available with respect to such matters under
Section 8.4(a).
(b) Purchaser shall defend, indemnify and hold harmless Seller
and its Affiliates and each of their respective directors, officers,
equityholders, partners and employees (collectively, the "Seller
Indemnified Parties") from and against any Losses that are imposed on
or incurred by Seller Indemnified Parties which result from (i) any
breach of any representation or warranty made by Purchaser in Article
5 hereof (disregarding for purposes of this Section 9.2(b) any
qualification by materiality or Purchaser Material Adverse Effect) on
the date hereof or on and as of the Closing Date with the same force
and effect as if made on and as of the Closing Date, (ii) the failure
to perform any covenant or agreement of Purchaser set forth in this
Agreement and (iii) any Environmental Claim relating to the
45
Company or its Subsidiaries other than those matters that are subject
to the indemnification provided by Seller pursuant to Section
9.2(a)(iv). Notwithstanding the foregoing, Purchaser shall not
indemnify the Seller Indemnified Parties under this Section 9.2(b)
with respect to matters relating to Taxes to the extent
indemnification is available with respect to such matters under
Section 8.4(b).
9.3 INDEMNIFICATION PROCEDURES. The following procedures shall govern
claims for indemnification under this Article 9:
(a) In order for a party (the "Indemnified Party") to be entitled
to any indemnification provided for under this Article 9 in respect of
a claim made against the Indemnified Party by any Person who is not a
party to this Agreement (a "Third-Party Claim"), such Indemnified
Party must notify the indemnifying party hereunder (the "Indemnifying
Party") in writing of the Third-Party Claim promptly following receipt
by such Indemnified Party of notice of the Third-Party Claim;
provided, however, that failure to give such notification shall not
affect the indemnification provided hereunder except to the extent the
Indemnifying Party shall have been actually prejudiced as a result of
such failure. Thereafter, the Indemnified Party shall deliver to the
Indemnifying Party, promptly following the Indemnified Party's receipt
thereof, copies of all notices and documents (including court papers)
received by the Indemnified Party relating to the Third-Party Claim,
other than those notices and documents separately addressed to the
Indemnifying Party.
(b) If a Third-Party Claim is made against an Indemnified Party,
the Indemnifying Party shall be entitled to participate in the defense
thereof and if it so chooses, to assume the defense thereof with
counsel selected by the Indemnifying Party; provided, however, that if
the defendants in any such Third-Party Claim include both the
Indemnified Party and the Indemnifying Party and the Indemnified Party
shall have reasonably concluded that there exists any actual conflict
of interest between the Indemnifying Party and the Indemnified Party,
the Indemnifying Party shall not have the right to direct the defense
of such action on behalf of such Indemnified Party and such
Indemnified Party shall have the right to retain, at the Indemnifying
Party's expense, one separate counsel reasonably satisfactory to the
Indemnifying Party to defend such action on behalf of such Indemnified
Party. Subject to the immediately preceding proviso, should the
Indemnifying Party so elect to assume the defense of a Third-Party
Claim, (i) the Indemnifying Party shall not be liable to the
Indemnified Party for any legal expenses incurred by the Indemnified
Party in connection with the defense thereof and (ii) the Indemnified
Party shall have the right to participate in the defense thereof and
to employ counsel, in each case at its own expense, separate from the
counsel employed by the Indemnifying Party, it being understood that
the Indemnifying Party shall control such defense. The Indemnifying
Party shall be liable for the reasonable fees and expenses of counsel
employed by the Indemnified Party for any period during which the
Indemnifying Party has not assumed such defense.
46
(c) If the Indemnifying Party chooses to defend or prosecute a
Third-Party Claim, the Indemnified Parties shall cooperate in the
defense or prosecution thereof. If the Indemnifying Party assumes the
defense of a Third-Party Claim, the Indemnified Party shall not admit
any liability with respect to, or settle, compromise or discharge,
such Third-Party Claim without the Indemnifying Party's prior written
consent. If the Indemnifying Party assumes the defense of a
Third-Party Claim, the Indemnified Party shall agree to any
settlement, compromise or discharge of a Third-Party Claim that the
Indemnifying Party may recommend and that (i) by its terms obligates
the Indemnifying Party to pay the full amount of the liability in
connection with such Third-Party Claim, (ii) does not require any
payment or other action by, or limitation on, the Indemnified Party
which is materially adverse to the continuing business interests of
the Indemnified Party and (iii) releases the Indemnified Party in
connection with such Third-Party Claim.
(d) In the event any Indemnified Party should have a claim
against any Indemnifying Party under this Article 9 that does not
involve a Third-Party Claim, the Indemnified Party shall deliver
notice of such claim to the Indemnifying Party promptly following the
Indemnified Party becoming aware of the same. The failure by any
Indemnified Party so to notify the Indemnifying Party shall not
relieve the Indemnifying Party from any liability that it may have to
such Indemnified Party under this Article 9, except to the extent that
the Indemnifying Party has been actually prejudiced by such failure.
(e) With respect to any indemnified matter subject to Section
9.2(a)(iv) that relates to a Cleanup of Hazardous Substances
discharged at any Real Property, Purchaser and its affiliates agree
that, to the extent allowed by applicable Environmental Law and the
relevant Governmental Authority (if a Governmental Authority is
involved in the matter), Purchaser or said affiliate shall agree to
accept a deed restriction that would: (i) allow it to continue to use
the Real Property for the same purposes as such property is being used
as of the date of this Agreement; (ii) not impose limitations on the
use of the Real Property related to its productive capacity or output;
(iii) not cause more than de minimis interference with Purchaser's or
its affiliates' operation of the Real Property; and (iv) not impose
any operations and maintenance costs on the Purchaser (other than
costs that would be less than $2,000) per year). If with respect to a
particular matter, Purchaser or its affiliate does not agree to such a
restriction, Seller will only be responsible (except as limited by
other terms in this Agreement) for the Losses that would have been
incurred had Purchaser or its affiliates accepted such restriction.
9.4 INDEMNIFICATION LIMITATIONS. In no event shall Seller be
liable for indemnification pursuant to Section 9.2(a)(i) and 9.2(a)(ii),
unless and until the aggregate of all Losses with respect to Section
9.2(a)(i) and 9.2(a)(ii) that are imposed on or incurred by the Purchaser
Indemnified Parties thereunder exceeds $5,000,000 (the "Threshold Amount"),
in which case the Purchaser Indemnified Parties shall be entitled to
indemnification for all Losses in excess of the Threshold Amount.
47
Notwithstanding the foregoing, the Seller shall not be required to make
payments for indemnification pursuant to Section 9.2(a)(i) and 9.2(a)(iv) in an
aggregate amount in excess of $85,000,000. In no event shall Seller be liable
for indemnification pursuant to Section 9.2(a)(iv) unless and until the
aggregate of all Losses with respect thereto that are imposed on or incurred by
the Purchaser Indemnified Parties thereunder exceeds $2,000,000, in which case
the Purchaser Indemnified Parties shall be entitled to indemnification for all
such Losses that are in excess of $2,000,000. Purchaser shall not be required
to make payments for indemnification pursuant to Section 9.2(b)(i) in an
aggregate amount in excess of $85,000,000. In calculating amounts payable to an
Indemnified Party, the amount of the indemnified Losses shall not be
duplicative of any other Loss for which an indemnification claim has been made,
and shall be computed net of (i) payments recovered by the Indemnified Party
under any insurance policy with respect to such Losses, (ii) any prior or
subsequent recovery by the Indemnified Party from any Person (other than an
Indemnifying Party) with respect to such Losses and (iii) any Tax benefit that
may be available to the Indemnified Party arising from the incurrence or
payment of any such Loss. In the event the Closing occurs, the indemnification
provisions of Section 8.4 and this Article 9 shall be the sole and exclusive
remedy of Seller (and the other Seller Indemnified Parties) and Purchaser (and
the other Purchaser Indemnified Parties) and each other party to this Agreement
for any breach of any representation, warranty, covenant or agreement made in
this Agreement (other than for specific performance or injunctive relief) and
each party to this Agreement hereby waives all statutory, common Law and other
claims with respect to this Agreement, other than claims for indemnification
with respect to this Agreement pursuant to (and in accordance with the terms
of) Section 8.4 and this Article 9 and other than claims for specific
performance or injunctive relief; provided, however, that nothing contained in
this Agreement shall limit any party's remedies for fraud or intentional
misrepresentation. Notwithstanding anything herein to the contrary, in no event
shall Seller or Purchaser be liable for any special or punitive damages,
consequential damages (other than lost profits) or damages measured on the
basis of a multiple of earnings or similar financial measure, and Purchaser
shall not be entitled to recover or seek any remedy under this Agreement (i)
with respect to any claim or liability to any employee employed by any of the
Companies or any of their Subsidiaries arising as a result of the termination
of such employee's employment after the Closing Date (except to the extent
arising out of a breach of any representation or warranty of Seller hereunder
relating to severance or other payments or obligations in connection with such
termination) or (ii) to the extent that such amount is included in the Working
Capital Adjustment Amount.
ARTICLE 10.
TERMINATION
10.1 TERMINATION. This Agreement may be terminated at any time before
the Effective Time as follows;
(a) by mutual written consent of each of Seller and Purchaser;
(b) by either Seller or Purchaser, if the Effective Time
shall not have occurred on or before June 30, 2005 (the
"Termination Date"); provided,
48
however, that in the event the FTC or DOJ issues a "second request" in
connection with any review of the transactions contemplated by this
Agreement under the HSR Act, such date shall be extended to September
30, 2005; provided further, however, that the right to terminate this
Agreement under this Section 10.1(b) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has
been the cause of, or resulted in, the failure of the Effective Time
to occur on or before the Termination Date;
(c) by either Seller or Purchaser, if a Governmental Authority
shall have issued an order, decree or injunction having the effect of
making the transactions contemplated hereby illegal or permanently
prohibiting the consummation of the transactions contemplated hereby,
and such order, decree or injunction shall have become final and
nonappealable (but only if such party shall have used its best efforts
to cause such order, decree or injunction to be lifted or vacated and
shall have otherwise complied with its obligations under this
Agreement, including Purchaser's obligations under Section 6.2(a));
(d) by either Seller or Purchaser, if (x) there shall have been a
material breach by the other of any of its representations,
warranties, covenants or agreements contained in this Agreement, which
breach would result in the failure to satisfy one or more of the
conditions set forth in Section 7.2 (in the case of a breach by
Seller) or Section 7.3 (in the case of a breach by Purchaser), and
such breach shall be incapable of being cured or, if capable of being
cured, shall not have been cured within 30 days after written notice
thereof shall have been received by the party alleged to be in breach.
10.2 EFFECT OF TERMINATION AND ABANDONMENT. In the event of
termination of this Agreement pursuant to this Article 10, this Agreement
(other than as set forth in Sections 6.4(c) and 6.6) shall become void and of
no effect with no liability on the part of any party hereto (or of any of its
Representatives); provided, however, no such termination shall relieve any
party hereto from any liability for damages (including fees and out-of-pocket
expenses) resulting from any knowing or intentional breach of this Agreement by
such party or any liability for fees and out-of-pocket expenses incurred as a
result of any breach of this Agreement by such party.
ARTICLE 11.
MISCELLANEOUS
11.1 INTENTIONALLY DELETED.
11.2 NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date of receipt and shall be delivered personally or mailed
by registered or certified mail (postage prepaid, return receipt requested),
sent by overnight courier or sent by telecopy, to the applicable party at the
following addresses or telecopy numbers (or at such other address or telecopy
number for a party as shall be specified by like notice):
49
(a) if to Seller: Performance Food Group Company
00000 Xxxx Xxxxx Xxxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxxx
Vice President, General Counsel
Telecopy No.: (000) 000-0000
with a copy to: Bass, Xxxxx & Xxxx PLC
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: F. Xxxxxxxx Xxxxxx, Xx.
Telecopy No.: (000) 000-0000
(b) if to Purchaser: Xxxxxxxx Brands International, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxx
Senior Vice President and General Counsel
Telecopy No.: (000) 000-0000
with a copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx X. Xxxxxxxx
Attention: Xxxxxx X. Xxxxxxxxx
Telecopy: (000) 000-0000
11.3 CERTAIN DEFINITIONS; INTERPRETATION.
(a) For purposes of this Agreement, the following terms shall
have the following meanings:
(i) "Action" means any written claim, action, suit,
investigation or proceeding by or before any Governmental
Authority.
(ii) "affiliate" of a Person means a Person that directly
or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the first
mentioned Person.
(iii) "Affiliated Group" means any affiliated group within
the meaning of Section 1504(a) of the Code or any group defined
under a similar provision of state, local or foreign law.
(iv) "Xxxxxxx County Arrangements" shall mean any
agreements or arrangements among any of the Companies or the
Subsidiaries and the Development Authority of Xxxxxxx County,
including, without limitation, the Bond Purchase Loan
Agreement, dated for purposes of reference as of April 1,
2004, by and between the
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Development Authority of Xxxxxxx County and Fresh-Cuts
Incorporated, the Taxable Industrial Development Revenue Bond
(Fresh-Cuts Incorporated Project), Series 2004, the Limited
Warranty Deed, dated as of July 23, 2004, between Fresh Express
Incorporated and the Development Authority of Xxxxxxx County, the
Lease Agreement, dated as of April 1, 2004, between the
Development Authority of Xxxxxxx County, as lessor, and
Fresh-Cuts Incorporated, as lessee, the Tax Agreement, dated for
purposes of reference as of April 1, 2004, by and among the
Development Authority of Xxxxxxx County, Fresh-Cuts Incorporated
and the Board of Tax Assessors of Xxxxxxx County and the Xxxx of
Sale, dated as of July 23, 2004, from Fresh-Cuts Incorporated to
the Development Authority of Xxxxxxx County.
(v) "Cleanup" means all actions reasonably required to (A)
cleanup, remove, treat or remediate Hazardous Substances in the
indoor or outdoor environment, including implementation of
engineering studies, preparation of cleanup program documents or
risk assessments or implementation of engineering controls, (B)
perform investigations and post-remedial monitoring and care, or
(C) respond to any requests by a Governmental Authority for
information or documents relating to cleanup, removal, treatment
or remediation or potential cleanup, removal, treatment or
remediation of Hazardous Substances in the indoor or outdoor
environment.
(vi) "Code" means the Internal Revenue Code of 1986, as
amended.
(vii) "Company Release" shall mean the release, dated as
of the Closing Date, pursuant to which the Companies, on behalf
of themselves and the Subsidiaries, irrevocably and
unconditionally release the Seller and its affiliates (other than
the Company and the Subsidiaries) from any claims that the
Companies and the Subsidiaries may have had in the past, may now
have or may have in the future against any of the Seller and its
affiliates (or their respective successors and past, present and
future assigns, directors, officers, agents, attorneys and
representatives) (other than the Company and the Subsidiaries),
relating to any events, matters, causes, things, acts, omissions
or conduct, occurring or existing, at any time at or prior to the
Closing (and other than as otherwise specifically provided
herein).
(viii) "control" (including the terms "controlled by" and
"under common control with") means the possession, direct or
indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through the
ownership of stock, as trustee or executor, by contract or credit
arrangement or otherwise.
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(ix) "EBITDA" shall mean the net income of the Companies
and the Subsidiaries before interest, taxes, depreciation and
amortization for the fiscal year ended January 1, 2005; provided,
that, any corporate allocation charge and any insurance
allocation charge included in the calculation of EBITDA shall
equal the corporate allocation charge and insurance allocation
charge, respectively, included in the calculation of EBITDA set
forth in Section 2.3(d) of the Disclosure Schedule.
(x) "Environmental Claim" means any actual or threatened
notice, directive, Action, abatement order or other Governmental
Order by a Governmental Authority or by any third party demanding
or alleging liability, including potential liability, for
investigatory costs or Cleanup costs, by a Governmental Authority
demanding a response to any requests for information or
documents, or by a Governmental Authority or any third party
seeking recovery of costs associated with natural resource
damages, property damages or personal injuries; in all cases
arising out of, based on, or resulting from (A) the presence,
release or threatened release of any Hazardous Substances at any
property, or (B) any violation or non-compliance or alleged
violation or alleged non-compliance of any applicable
Environmental Law by the Companies or their Subsidiaries.
(xi) "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended and the rules and regulations promulgated
thereunder.
(xii) "Governmental Authority" means any foreign, United
States federal, state or local governmental, regulatory or
administrative agency, commission, board or any court or arbitral
tribunal.
(xiii) "Governmental Order" means any order, writ,
judgment, injunction, decree, stipulation, binding agreement,
determination or award entered by or with any Governmental
Authority; provided, that with respect to the indemnification
provided by Seller in Section 9.2(a)(iv) (other than with respect
to claims for breach of representation in Section 9.2(a)(iv)(D))
and indemnification provided by Purchaser in Section 9.2(b)(iii),
the term "Governmental Order" shall not include any voluntary
agreement or order entered into by Seller or Purchaser, other
than such agreements or orders that are entered into in order to
resolve an Environmental Claim or violation of or non-compliance
with applicable Environmental Law (it being understood that any
such agreements or orders, if voluntarily entered into, are
subject to the provisions of Section 9.3(c) if applicable).
(xiv) "Intercompany Notes" shall mean those Revolving
Credit Notes dated as of October 15, 2004 by and between the
Seller and the Companies.
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(xv) "knowledge" of any Party shall mean the actual
knowledge of the executive officers of that Party, after due
inquiry, and shall, for purposes of Seller's knowledge, include
knowledge of the Persons listed on Section 11.3(a)(xiii) of the
Disclosure Schedule.
(xvi) "Law" means any Governmental Order or any law
(including applicable common law), statute, ordinance, rule or
regulation of any Governmental Authority, or any binding
agreement with any Government Authority.
(xvii) "Permit" means any permit, franchise,
authorization, or other license or approval issued or granted by
any Governmental Authority.
(xviii) "Person" means an individual, corporation,
partnership, limited liability company, association, trust,
unincorporated organization, entity or group.
(xix) "Purchaser Material Adverse Effect" means any
material adverse change in or material adverse effect on the
business, results of operations or financial condition of
Purchaser.
(xx) "Seller Release" shall mean the Release, dated as of
the Closing Date, pursuant to which Seller, on behalf of itself
and its affiliates (other than the Company and the Subsidiaries),
irrevocably and unconditionally releases the Companies and the
Subsidiaries from any claims that Seller and its affiliates
(other than the Company and the Subsidiaries) may have had in the
past, may now have or may have in the future against any of the
Company and the Subsidiaries (or their respective successors and
past, present and future assigns, directors, officers, agents,
attorneys and representatives), relating to any events, matters,
causes, things, acts, omissions or conduct, occurring or
existing, at any time at or prior to the Closing (other than as
otherwise specifically provided herein).
(xxi) "Seller Material Adverse Effect" means any
material adverse change in or material adverse effect on, or
any event, circumstance or development that, individually or in
the aggregate, has had or would reasonably be expected to have
a material adverse change in or material adverse effect on, the
business, results of operations or financial condition of the
Business, the Companies and their Subsidiaries, taken as a
whole; provided, however, that changes or effects (1) resulting
primarily from or relating to changes in economic conditions or
financial or securities markets in general or the industries
and markets in which the Companies and their Subsidiaries
operate, including changes resulting from weather or natural
conditions, commodity prices, or changes in laws, rules and
regulations, (2) resulting primarily from the voluntary
termination of employment by employees of the Companies and their
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Subsidiaries between the date hereof and the Closing Date, (3)
resulting primarily from the execution and performance of this
Agreement and the announcement of this Agreement and the
transactions contemplated hereby, or (4) resulting primarily from
actions taken to obtain any approval or authorization under
applicable antitrust or competition laws for consummation of the
transaction contemplated by this Agreement, shall be excluded
from the determination of Seller Material Adverse Effect.
(xxii) "Subsidiary," of a Person means any corporation or
other legal entity of which such Person (either alone or through
or together with any other Subsidiary or Subsidiaries) is the
general partner or managing entity or of which at least a
majority of the stock or other equity interests the holders of
which are generally entitled to vote for the election of the
board of directors or others performing similar functions of such
corporation or other legal entity is directly or indirectly owned
or controlled by such Person (either alone or through or together
with any other Subsidiary or Subsidiaries). Unless otherwise
stated herein, "Subsidiary" shall refer to a Subsidiary of the
Companies.
(xxiii) "Taxes" shall mean any and all taxes, fees, levies
or other assessments, including, without limitation, federal,
state, local or foreign income, gross receipts, excise, real or
personal property, sales, withholding, social security,
occupation, use, service, service use, value added, license, net
worth, payroll franchise or similar taxes, imposed by any Taxing
Authority, together with any interest, penalties or additions to
Tax and additional amounts imposed with respect thereto.
(xxiv) "Taxing Authority" shall mean any Governmental
Authority responsible for the imposition or collection of any
Taxes.
(xxv) "Tax Return" shall mean any report, return,
document, declaration or other information or filing required to
be supplied to any Taxing Authority or jurisdiction (foreign or
domestic) with respect to Taxes.
(b) When a reference is made in this Agreement to Articles,
Sections, or Disclosure Schedule, such reference is to an Article or a
Section of, or Disclosure Schedule to, this Agreement, unless
otherwise indicated. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement. Whenever the
words "include," "includes" or "including" are used in this Agreement,
they shall be understood to be followed by the words "without
limitation." When a reference is made in this Agreement to notice
having been received by any of the Companies or Subsidiaries, it shall
be deemed to include notices received by Seller and vice versa.
Whenever reference is made in this Agreement to "preparation in
accordance with GAAP," it shall mean in
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accordance with generally accepted accounting principles in the
U.S. consistently applied with the Financial Statements.
11.4 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon a determination that any term or other
provision is invalid, illegal or incapable of being enforced, Seller and
Purchaser shall negotiate in good faith to modify this Agreement so as to
effect their original intent as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the maximum
extent possible.
11.5 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This Agreement,
including all exhibits and schedules attached hereto, and the Confidentiality
Agreement constitute the entire agreement and supersede any and all other prior
agreements and undertakings, both written and oral, among the parties hereto,
or any of them, with respect to the subject matter hereof and does not, and is
not intended to, confer upon any Person other than the parties hereto and those
Persons identified in Section 6.8 any rights or remedies hereunder. Purchaser's
confidentiality obligations under the Confidentiality Agreement shall terminate
upon the Closing.
11.6 AMENDMENT; WAIVER. This Agreement maybe amended only in a writing
signed by all parties hereto. Any waiver of rights hereunder must be set forth
in writing. A waiver of any breach or failure to enforce any of the terms or
conditions of this Agreement shall not in any way affect, limit or waive either
party's rights at any time to enforce strict compliance thereafter with every
term or condition of this Agreement.
11.7 BINDING EFFECT; ASSIGNMENT. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective legal
representatives and successors. Notwithstanding the foregoing, this Agreement
shall not be assigned by any party hereto by operation of law or otherwise
without the express written consent of each of the other parties; provided,
however, that Purchaser may (a) assign its rights (but not its obligations)
under this Agreement to any wholly-owned Affiliates of Purchaser and (b) at or
following the Closing, collaterally assign its rights, interests and remedies
in and under this Agreement to the lenders and other secured parties (including
any agent, trustee or other representative acting for their benefit) in
connection with the financing effected to fund the purchase price payable
hereunder (or any refinancing thereof).
11.8 DISCLOSURE SCHEDULE. The Disclosure Schedule shall be construed
with and as an integral part of this Agreement to the same extent as if the
same had been set forth verbatim herein. Any matter disclosed pursuant to the
Disclosure Schedule shall be deemed to be disclosed for all purposes under this
Agreement to the extent a matter is disclosed in such a way as to make its
relevance to such other purpose reasonably apparent on its face but shall not
be deemed to be an admission or representation as to the materiality of the
item so disclosed.
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11.9 GOVERNING LAW; JURISDICTION. This Agreement shall be governed by
and construed in accordance with, the laws of the State of Tennessee without
regard to the conflicts of laws provisions thereof. Each of the parties hereby
irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the courts of the State of Tennessee and the courts of the
United States of America located in the State of Tennessee for any litigation
arising out of or relating to this Agreement or the transactions contemplated
hereby or any of the other transactions contemplated hereby (and agrees not to
commence any litigation relating hereto except in such courts), and further
agrees that service of any process, summons, notice or document by U.S.
registered mail to its respective address set forth in Section 10.2, shall be
effective service of process for any litigation brought against it in any such
court. Each of the parties hereby irrevocably and unconditionally waives any
objection to the laying of venue of any litigation arising out of this
Agreement or the transactions contemplated hereby or any of the other
transactions contemplated hereby in the courts of the State of Tennessee or the
courts of the United States of America located in the State of Tennessee and
hereby further irrevocably and unconditionally waives and agrees not to plead
or claim in any such court that any such litigation brought in any such court
has been brought in an inconvenient forum. Each of the parties hereto hereby
irrevocably and unconditionally waives any right it may have to trial by jury
in connection with any litigation arising out of or relating to this agreement,
the transactions contemplated hereby or any of the other transactions
contemplated hereby.
11.10 ENFORCEMENT. The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties hereto shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement, this being in addition
to any other remedy to which they are entitled at Law or in equity.
11.11 CONSTRUCTION. The headings of Articles and Sections in this
Agreement are provided for convenience only and will not affect its
construction or interpretation. The language used in this Agreement is the
language chosen by the parties to express their mutual intent, and no rule of
strict construction shall be applied against any party.
11.12 COUNTERPARTS. This Agreement may be executed simultaneously in
one or more counterparts (including by facsimile or electronic .pdf
submission), and by the different parties in separate counterparts, each of
which when executed shall be deemed to be an original, but all of which shall
constitute one and the same agreement.
[Signature Page Follows.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
XXXXXXXX BRANDS INTERNATIONAL, INC.
By: /s/ Xxxxxxxx Xxxxxxx
--------------------------------
Name: Xxxxxxxx Xxxxxxx
Title: Chairman of the Board, President and CEO
PERFORMANCE FOOD GROUP COMPANY
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chairman and Chief Executive Officer
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