Exhibit 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
DATED AS OF JUNE 12, 2002,
AMONG
X. X. XXXXX COMPANY
SKF FOODS INC.
DEL MONTE CORPORATION
AND
DEL MONTE FOODS COMPANY
TABLE OF CONTENTS
PAGE
----
ARTICLE 1 DEFINITIONS....................................................... 2
ARTICLE 2 THE MERGER........................................................ 15
2.1 Distribution and Merger.......................................... 15
2.2 Effect on Capital Stock.......................................... 16
2.3 Cancellation of Stock............................................ 17
2.4 Closing.......................................................... 17
2.5 Effective Time................................................... 17
2.6 Effects of the Merger............................................ 18
2.7 Closing of Transfer Books........................................ 18
2.8 Exchange of Certificates......................................... 18
2.9 Employee Stock Options and Other Equity Awards................... 19
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF HEINZ........................... 21
3.1 Organization, Qualification, Etc................................. 21
3.2 Capital Stock and Other Matters.................................. 21
3.3 Corporate Authority; No Violation, Etc........................... 22
3.4 Brokers or Finders............................................... 23
3.5 Heinz Reports and Financial Statements........................... 23
3.6 No Other Representations and Warranties.......................... 23
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF HEINZ AND SPINCO................ 24
4.1 Organization, Qualification, Etc................................. 24
4.2 Capital Stock and Other Matters.................................. 24
4.3 Corporate Authority; No Violation, Etc........................... 25
4.4 Affiliate Transactions........................................... 26
4.5 Spinco Financial Statements...................................... 26
4.6 Absence of Certain Changes or Events............................. 27
4.7 Actions; Litigation.............................................. 27
4.8 Licenses; Compliance with Laws................................... 27
4.9 Proxy Statement/Prospectus; Registration Statement............... 28
4.10 Environmental Matters............................................ 28
4.11 Tax Matters...................................................... 29
4.12 Benefit Plans.................................................... 30
4.13 Labor Matters.................................................... 31
4.14 Intellectual Property Matters.................................... 32
4.15 Material Contracts............................................... 32
4.16 Board Approval................................................... 32
4.17 Vote Required.................................................... 32
4.18 Assets........................................................... 33
4.19 Certain Payments................................................. 33
PAGE
----
4.20 No Other Representations and Warranties.......................... 33
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF DEL MONTE....................... 34
5.1 Organization, Qualification, Etc................................. 34
5.2 Capital Stock and Other Matters.................................. 35
5.3 Corporate Authority; No Violation, Etc........................... 36
5.4 Affiliate Transactions........................................... 37
5.5 Del Monte Reports and Financial Statements....................... 37
5.6 Absence of Certain Changes or Events............................. 38
5.7 Actions; Litigation.............................................. 39
5.8 Licenses; Compliance with Laws................................... 39
5.9 Proxy Statement/Prospectus; Registration Statement............... 39
5.10 Environmental Matters............................................ 39
5.11 Tax Matters...................................................... 40
5.12 Benefit Plans.................................................... 41
5.13 Labor Matters.................................................... 42
5.14 Intellectual Property Matters.................................... 43
5.15 Material Contracts............................................... 43
5.16 Brokers or Finders............................................... 44
5.17 Board Approval................................................... 44
5.18 Vote Required.................................................... 44
5.19 Certain Payments................................................. 44
5.20 Opinion of Del Monte Financial Advisor........................... 45
5.21 Rights Agreement................................................. 45
5.22 Takeover Statute................................................. 45
5.23 Title to Assets.................................................. 45
5.24 No Other Representations and Warranties.......................... 46
ARTICLE 6 COVENANTS AND AGREEMENTS.......................................... 46
6.1 Conduct of Business by Spinco and Heinz Pending the Merger....... 46
6.2 Conduct of Business by Del Monte Pending the Merger.............. 51
6.3 Preparation of Form S-4 and the Proxy Statement/Prospectus;
Stockholders Meetings............................................ 55
6.4 No Solicitation.................................................. 55
6.5 Reasonable Best Efforts.......................................... 57
6.6 Cooperation of Third Parties..................................... 58
6.7 Consummation of the Distribution................................. 58
6.8 Interim Financial Information.................................... 58
ARTICLE 7 ADDITIONAL AGREEMENTS............................................. 58
7.1 WARN............................................................. 58
7.2 Cooperation...................................................... 58
7.3 Proxy Statement/Prospectus....................................... 60
7.4 Tax-Free Reorganization Treatment; Section 355 Ruling............ 60
7.5 2002 Audited Financial Statements................................ 60
7.6 Employee Matters and Employee Benefit Plans...................... 61
ii
PAGE
----
7.7 Investigation.................................................... 66
7.8 Reasonable Best Efforts; Further Assurances, Etc................. 66
7.9 Director and Officer Indemnification; Insurance.................. 68
7.10 Rule 145 Affiliates.............................................. 68
7.11 Public Announcements............................................. 68
7.12 Defense of Litigation............................................ 68
7.13 Notification..................................................... 68
7.14 Accounting Matters............................................... 69
7.15 Non-Disclosure................................................... 69
7.16 Control of Other Party's Business................................ 70
7.17 Debt Instruments................................................. 70
7.18 Nonsolicitation of Employees..................................... 71
7.19 Trade Accounts Receivable; Trade Accounts Payable................ 71
7.20 Spinco By-Laws................................................... 75
7.21 Del Monte's Amended and Restated Certificate of Incorporation.... 75
7.22 Board of Directors of Del Monte; Officers........................ 75
7.23 Covenant Not To Compete; Restriction on Use of Intellectual
Property......................................................... 76
7.24 Post Closing Cooperation......................................... 77
7.25 Sole Stockholder Approvals....................................... 77
7.26 Amendments to Transaction Documents.............................. 77
7.27 Closing Balance Sheet............................................ 77
ARTICLE 8 Conditions to the merger.......................................... 78
8.1 Conditions to the Obligations of Spinco, Heinz and Del Monte
to Effect the Merger............................................. 78
8.2 Additional Conditions to the Obligations of Heinz and Spinco..... 79
8.3 Additional Conditions to the Obligations of Del Monte............ 80
ARTICLE 9 TERMINATION, AMENDMENT AND WAIVERS................................ 81
9.1 Termination...................................................... 81
9.2 Effect of Termination............................................ 82
9.3 Fees and Expenses................................................ 82
9.4 Amendment........................................................ 84
9.5 Waivers.......................................................... 84
ARTICLE 10 MISCELLANEOUS.................................................... 84
10.1 Non-Survival of Representations and Warranties and Agreements.... 84
10.2 Notices.......................................................... 85
10.3 Certain Construction Rules....................................... 86
10.4 Letters.......................................................... 86
10.5 Severability..................................................... 86
10.6 Assignment; Binding Effect....................................... 86
10.7 No Third Party Beneficiaries..................................... 87
10.8 Limited Liability................................................ 87
10.9 Entire Agreement................................................. 87
10.10 Governing Law................................................... 87
iii
PAGE
----
10.11 Counterparts.................................................... 87
10.12 Specific Performance; Remedies.................................. 88
iv
EXHIBITS:
Exhibit A Certificate of Incorporation of Spinco
Exhibit B Amended and Restated Certificate of
Incorporation of Del Monte
Exhibit C Bylaws of Del Monte
Exhibit D Bylaws of Spinco
Exhibit E Form of Rule 145 Affiliate Agreements
v
65
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of June 12, 2002, is
among X. X. Xxxxx Company, a Pennsylvania corporation ("Heinz"), SKF Foods Inc.,
a Delaware corporation ("Spinco"), Del Monte Foods Company, a Delaware
corporation ("Del Monte") and Del Monte Corporation, a New York corporation and
a wholly-owned direct subsidiary of Del Monte ("Merger Sub") (Heinz, Spinco, Del
Monte and Merger Sub, collectively, the "Parties" and each a "Party").
WHEREAS, Heinz directly and indirectly through its Subsidiaries is
engaged in the Spinco Business (as defined herein);
WHEREAS, prior to the Effective Time on the Closing Date, Heinz
shall, (i) pursuant to the Separation Agreement, transfer or cause to be
transferred to Spinco the Spinco Assets (as defined herein) and the Spinco
Liabilities (as defined herein) in exchange for all of the issued and
outstanding shares of common stock, par value $0.01 per share, of Spinco (the
"Spinco Common Stock"), cash in an amount equal to the Bank Debt Amount (as
defined herein) and the Debt Security (as defined herein) (the "Contribution")
and (ii) distribute all of the issued and outstanding shares of Spinco Common
Stock on a pro rata basis (the "Distribution") to the holders as of the Record
Date of the outstanding common stock of Heinz, par value $0.25 per share ("Heinz
Common Stock");
WHEREAS, at the Effective Time, the parties intend to effect a
merger of Merger Sub with and into Spinco, with Spinco being the Surviving
Corporation (as defined herein) (the "Merger"), resulting in Spinco becoming a
wholly-owned direct subsidiary of Del Monte;
WHEREAS, (i) an executed commitment letter and related term sheet(s)
pursuant to which the financial institutions named therein agreed to provide
senior bank debt financing to Spinco and the Surviving Corporation (as defined
herein) in the amount and on the terms and conditions set forth therein (the
"First Commitment Letter") has been delivered to the Parties, (ii) an executed
engagement letter, providing that the financial institutions named therein
agreed to arrange in the capital markets debt financing on behalf of Spinco in
the amount and on the terms and conditions set forth in the term sheet attached
thereto (the "Engagement Letter") has been delivered to the Parties and (iii) an
executed commitment letter and related term sheet(s) pursuant to which the
financial institutions named therein agreed to provide, in the event the
financing contemplated by the Engagement Letter is not obtained, senior
financing in the amount and on the terms and conditions set forth therein (the
"Second Commitment Letter") has been delivered to the Parties;
WHEREAS, the parties to this Agreement intend that (i) the
Contribution and the Distribution qualify under Sections 355 and 368 of the
Code, (ii) the Merger qualify under Section 368 of the Code and (iii) this
Agreement constitute a plan of reorganization as that term is defined in Section
368 of the Code; and
WHEREAS, simultaneously with the execution of this Agreement, (i)
Heinz and Stockholder (as defined herein) have entered into the Voting Agreement
(as defined herein) and
(ii) Del Monte and Stockholder have entered into the Stockholder Rights
Agreement (as defined herein).
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements set forth in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound hereby, agree as
follows:
ARTICLE 1
DEFINITIONS
"2002 Audited Financial Statements" shall have the meaning specified
in Section 7.5.
"Action" shall mean any action, claim, arbitration, proceeding,
review, audit, hearing, investigation, litigation or suit (whether civil,
criminal, administrative, investigative or informal) commenced, brought or heard
by or before any Governmental Authority or arbitrator.
"Affiliate" shall mean, with respect to any specified Person, any
other Person that, directly or indirectly, controls, is controlled by or is
under common control with, such specified Person. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by contract or otherwise.
"Agreement" shall mean this Agreement and Plan of Merger, together
with all exhibits attached hereto and the Disclosure Letters.
"Amended and Restated Certificate of Incorporation" shall have the
meaning specified in Section 2.1(c).
"Approved for Listing" shall mean, with respect to the shares of Del
Monte Common Stock to be issued in the Merger, that such shares have been
approved for listing on the NYSE and the PE, subject to official notice of
issuance.
"Audited 2002 Balance Sheet" shall have the meaning specified in
Section 7.5.
"Audited 2002 Statement of Operations" shall have the meaning
specified in Section 7.5.
"Audited Statements" shall have the meaning specified in Section
4.5(a).
"Bank Debt Amount" shall have the meaning assigned to such term in
the Separation Agreement.
2
"Bonus Plans" shall have the meaning specified in Section
7.6(b)(ii).
"Change in the Del Monte Board Recommendation" shall have the
meaning specified in Section 6.4(c)
"Closing" shall have the meaning specified in Section 2.4.
"Closing Date" shall have the meaning specified in Section 2.4.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
as the context requires, the Treasury regulations promulgated thereunder.
"Commitment Letters" shall mean, collectively, the First Commitment
Letter, the Engagement Letter and the Second Commitment Letter.
"Confidentiality Agreement" shall mean the Confidentiality
Agreement, dated March 11, 2002, between Heinz and Del Monte.
"Contract" shall mean any written loan or credit agreement, note,
bond, debenture, indenture, mortgage, guarantee, deed of trust, lease,
franchise, permit, authorization, license, contract, instrument, employee
benefit plan or practice or other binding agreement, obligation, arrangement,
understanding or commitment.
"Contribution" shall have the meaning set forth in the Recitals
hereto.
"Co-Pack Agreements" shall mean the Co-Pack Agreements to be entered
into between Heinz and Spinco in the form attached to the Separation Agreement,
with such additions, deletions and other modifications thereto that are (a)
mutually agreed upon in writing by Heinz and Spinco, with a Del Monte Consent or
(b) requested by Del Monte and agreed to by Heinz in accordance with Section
7.26.
"Data Communications Infrastructure" shall have the meaning assigned
to such term in the Separation Agreement.
"Debt Security" shall have the meaning assigned to such term in the
Separation Agreement.
"Deferred Share Unit" shall have the meaning assigned to such term
in Section 7.6(b)(iii).
"Delaware Certificate of Merger" shall have the meaning specified in
Section 2.5.
"Delaware Secretary of State" shall have the meaning specified in
Section 2.5.
"Del Monte" shall have the meaning specified in the Preamble hereof.
"Del Monte Acquisition Agreement" shall mean a letter of intent,
agreement in principle, acquisition agreement, exclusivity agreement or other
similar agreement related to any Del Monte Acquisition Proposal.
3
"Del Monte Acquisition Proposal" shall mean, other than in
connection with the Merger or as otherwise specifically contemplated by this
Agreement, any proposal relating to (i) any merger, consolidation, share
exchange, business combination, recapitalization or other similar transaction or
series of related transactions involving Del Monte or any of its Subsidiaries
other than the Merger; (ii) any sale, lease, exchange, transfer or other
disposition (including by way of merger, consolidation or exchange), in a single
transaction or a series of related transactions, of the assets of Del Monte or
any of its Subsidiaries constituting 10% or more of the consolidated assets of
Del Monte or accounting for 10% or more of the consolidated revenues of Del
Monte; (iii) any tender offer, exchange offer or similar transactions or series
of related transactions made by any Person involving Del Monte Common Stock or
the common stock of any Subsidiary of Del Monte constituting 5% or more of Del
Monte's common stock or the common stock of any Subsidiary of Del Monte; (iv)
the acquisition by any Person (other than Heinz or any of its Affiliates) of
beneficial ownership (as determined pursuant to Rule 13d-3 of the Exchange Act)
or the formation of any group (as defined in Section 13(d) of the Exchange Act)
to acquire beneficial ownership (as determined pursuant to Rule 13d-3 of the
Exchange Act) of more than 5% of Del Monte's common stock or the common stock of
any Subsidiary of Del Monte; or (v) any other substantially similar transaction
or series of related transactions that would reasonably be expected to result in
the acquisition of a controlling interest in Del Monte, or that would be
inconsistent in any material respect with, or hinder or delay in any material
respect the consummation of, the transactions contemplated by, or otherwise
defeat in any material respect the purpose of, the Merger Agreement or the other
Transaction Agreements.
"Del Monte Benefit Plans" shall have the meaning specified in
Section 5.12(a).
"Del Monte Board Recommendation" shall have the meaning specified in
Section 5.17.
"Del Monte Common Stock" shall mean the capital stock, par value
$0.01 per share, of Del Monte.
"Del Monte Consent" shall mean, with respect to any consent sought
in good faith, the consent of Del Monte, which consent shall not be unreasonably
delayed or withheld, unless such consent is sought with respect to an amendment
that would, individually or together with all other such amendments to any of
the Transaction Agreements (other than this Agreement) previously proposed by
Heinz and agreed to by Del Monte, reasonably be expected to result in any
material cost or detriment to Del Monte (or, following the Merger, the Surviving
Corporation) or result in any material reduction of the benefits to be obtained
by Del Monte (or, following the Merger, the Surviving Corporation) from the
transactions contemplated hereby, in which case such consent shall be in Del
Monte's discretion.
"Del Monte Deferred Share Units" shall have the meaning specified
in Section 7.6(b)(iii).
"Del Monte Disclosure Letter" shall mean the Disclosure Letter
prepared and delivered by Del Monte to Heinz and Spinco prior to the execution
of this Agreement.
"Del Monte Employee" shall have the meaning specified in Section
5.12(a).
4
"Del Monte Financing Fees" shall mean all fees and expenses incurred
by Del Monte related to the financing of the transactions contemplated by this
Agreement and the other Transaction Agreements, including (i) all commitment,
ticking, underwriting or similar fees and expenses incurred in connection with
the Commitment Letters (which for purposes of this definition are deemed to be
incurred solely by Del Monte) and the financing contemplated thereby or
replacement financing therefor, (ii) professional fees and (iii) roadshow
expenses, whether such liabilities arise prior to, on or after the Effective
Time.
"Del Monte IP" shall have the meaning specified in Section 5.14.
"Del Monte Options" shall have the meaning specified in Section
2.9(b).
"Del Monte Preferred Stock" shall have the meaning specified in
Section 5.2.
"Del Monte Professional Fees" shall mean all fees (and expense
reimbursement, if any) payable by Del Monte to professional advisors (including
any transaction advisory fee to be paid to Stockholder and fees payable to
Xxxxxx Xxxxxxx & Co. Incorporated, Xxxxxx, Xxxx & Xxxxxxxx LLP, KPMG LLC and any
other professional service firm hired by Del Monte to provide similar services,
but excluding any Del Monte Financing Fees), whether such liabilities arise
prior to, on or after the Effective Time, paid or payable in connection with the
transactions contemplated by this Agreement.
"Del Monte Professional Fee Statement" shall have the meaning
specified in Section 9.3(d).
"Del Monte Restricted Business" shall have the meaning specified in
Section 7.23(b).
"Del Monte Restricted Territory" shall mean anywhere in the world
other than the Heinz Restricted Territory.
"Del Monte Rights" shall have the meaning specified in Section
6.2(p).
"Del Monte Rights Agreement" shall have the meaning specified in
Section 5.21.
"Del Monte SEC Documents" shall have the meaning specified in
Section 5.5.
"Del Monte Stockholders" shall mean the holders of Del Monte Common
Stock.
"Del Monte Stockholders Meeting" shall have the meaning specified in
Section 6.3(b).
"Del Monte Stock Plans" shall mean have the meaning specified in
Section 2.9(a).
"Del Monte Transaction Expenses" shall mean all fees and expenses
incurred by Del Monte related to the transactions contemplated by this Agreement
and the other Transaction Agreements, including legal and accounting fees, SEC
registration fees, listing fees, HSR Act
5
filing fees and printer fees, other than Del Monte Financing Fees and Del Monte
Professional Fees.
"Del Monte Voting Debt" shall have the meaning specified in Section
5.2(a).
"DGCL" shall mean the General Corporation Law of the State of
Delaware.
"Disclosure Letters" shall mean, collectively, the Heinz Disclosure
Letter, the Spinco Disclosure Letter and the Del Monte Disclosure Letter.
"Distribution" shall have the meaning set forth in the Recitals
hereto.
"Distribution Date" shall mean the date and time that the
Distribution shall become effective.
"Distribution Stock Certificate" shall have the meaning specified in
Section 2.1(a).
"Effective Time" shall have the meaning specified in Section 2.5.
"Employee Benefits Agreement" shall mean the Employee Benefits
Agreement between Heinz and Spinco, in the form attached to the Separation
Agreement, with such additions, deletions and other modifications thereto that
are (a) mutually agreed upon in writing by Heinz and Spinco, with a Del Monte
Consent or (b) requested by Del Monte and agreed to by Heinz in accordance with
Section 7.26.
"Engagement Letter" shall have the meaning set forth in the Recitals
hereto.
"Environmental Claim" shall mean any claim, action, notice, letter,
demand or request for information (in each case in writing) by any person or
entity alleging potential liability (including potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries or penalties) arising out
of, based on or resulting from any violation of Environmental Law or the
release, emission, discharge, presence or disposal of any Hazardous Material at
any location.
"Environmental Law" shall mean any and all foreign, federal, state
or local statute, rule, regulation or ordinance, as well as any order, decree,
determination, judgment or injunction issued, promulgated, approved or entered
thereunder by any Governmental Authority, including requirements of common law,
relating to pollution or the protection, cleanup or restoration of the
environment, or to human health, including the Federal Clean Air Act, the
Federal Clean Water Act, the Federal Resource Conservation and Recovery Act, the
Federal Comprehensive Environmental Response, Compensation, and Liability Act
and the Federal Toxic Substances Control Act, in each case as in effect on the
date hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
6
"ERISA Affiliate" shall mean, with respect to any Person, any other
Person or any trade or business, whether or not incorporated, that, together
with such first Person would be deemed a "single employer" within the meaning of
Section 4001(b) of ERISA.
"Estimated 2002 Financial Statements" shall have the meaning
specified in Section 4.5(b).
"Excess Liability Amount" shall have the meaning specified in
Section 9.3(d).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, together with the rules and regulations of the SEC promulgated
thereunder.
"Exchange Agent" shall have the meaning specified in Section 2.1(a).
"Exchange Fund" shall have the meaning specified in Section 2.8(a).
"Exchange Ratio" shall have the meaning specified in Section 2.2(a).
"Final Net Accounts Balance" shall have the meaning specified in
Section 7.19(c)(iii).
"Final Transferred Accounts Differential" shall have the meaning
specified in Section 7.19(b)(iii).
"First Commitment Letter" shall have the meaning set forth in the
Recitals hereto.
"GAAP" shall mean United States generally accepted accounting
principles as set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board.
"Governmental Authority" shall mean any foreign, federal,
provincial, state or local government court, administrative or regulatory
agency, board, bureau or commission or other governmental department, authority
or instrumentality.
"Hazardous Material" shall mean chemicals, pollutants, contaminants,
hazardous materials, hazardous substances and hazardous wastes, medical waste,
toxic substances, petroleum and petroleum products and by-products,
asbestos-containing materials, PCBs, and any other chemicals, pollutants,
substances or wastes, in each case regulated, or that could result in liability,
under Environmental Law.
"Heinz" shall have the meaning specified in the Preamble hereto.
"Heinz Common Stock" shall have the meaning set forth in the
Recitals hereto.
"Heinz Disclosure Letter" shall mean the Disclosure Letter prepared
and delivered by Heinz to Del Monte prior to the execution of this Agreement.
7
"Heinz Financing Fees" shall mean all fees and expenses incurred by
Heinz and Spinco related to the financing of the transactions contemplated by
this Agreement and the other Transaction Agreements and the preparation of the
Form S-4, whether such liabilities arise prior to, on or after the Effective
Time, paid or payable in connection with the transactions contemplated hereby,
other than the fees and expenses of counsel for Heinz incurred in connection
with their review of the Commitment Letters.
"Heinz Information" shall have the meaning specified in Section
7.15.
"Heinz Option" shall have the meaning specified in Section 2.9(b).
"Heinz Record Date" shall have the meaning assigned to such term in
the Separation Agreement.
"Heinz Restricted Business" shall have the meaning specified in
Section 7.23(a).
"Heinz Restricted Territory" shall mean, with respect to the (i) dry
and canned pet food and pet snacks business, the United States and Canada, (ii)
specialty pet food business, worldwide, (iii) ambient tuna business, the United
States, (iv) other ambient seafood businesses, but limited to products currently
marketed or marketed at the Effective Time by the StarKist Seafood business
unit, the United States, (v) retail private label soup and retail private label
gravy businesses, the United States, (vi) broth business, the United States and
(vii) infant feeding business, the United States.
"Heinz SEC Documents" shall have the meaning specified in Section
3.5.
"Heinz Stock Plans" shall have the meaning specified in Section
2.9(b).
"Heinz Subsidiaries" shall mean all direct and indirect Subsidiaries
of Heinz immediately after the Distribution Date.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
"Infringes" shall have the meaning specified in Section 4.14.
"Intellectual Property" shall mean all intellectual property rights
of any nature or forms of protection of a similar nature or having equivalent or
similar effect to any of these, including all: (i) inventions, discoveries,
processes, designs, techniques, developments, technology, and related
improvements and know-how, whether or not patentable; (ii) patents, patent
applications, divisionals, continuations, reissues, renewals, registrations,
confirmations, re-examinations, certificates of inventorship, extensions, and
the like, and any provisional applications, of any such patents or patent
applications and any foreign or international equivalent of any of the
foregoing; (iii) copyright registrations and applications therefor; (iv)
registered, unregistered or pending trademarks, service marks, trade names,
service names, brand names, corporate names, domain names, logos or business
symbols, trade dress, or other source indicators and all goodwill associated
therewith; (v) technical, scientific, and other know-how and information, trade
secrets, knowledge, technology, means, methods, processes, practices,
8
formulas, recipes, techniques, procedures, designs, drawings, assembly
procedures, computer programs, apparatuses, specifications, production data,
publications and databases in written, electronic, or any other form now known
or hereafter developed; and (vi) moral rights, rights of publicity and privacy,
"name and likeness" rights and other similar rights.
"IRS" shall mean the U.S. Internal Revenue Service.
"Joint Procurement Agreement" shall mean the Joint Procurement
Memorandum of Understanding to be entered into between Heinz and Spinco in the
form attached to the Separation Agreement, with such additions, deletions and
other modifications thereto that are (a) mutually agreed upon in writing by
Heinz and Spinco, with a Del Monte Consent or (b) requested by Del Monte and
agreed to by Heinz in accordance with Section 7.26.
"Knowledge" shall mean (i) when used with respect to Heinz, the
actual knowledge of Messrs. Xxxxxxx X. Xxxxxxx, Xxxxxx Xxxxxxxxxxx, Xxxxxxx X.
Xxxxxxxx, Xxxxxxx Xxxxx, Xxxxxxx Xxxxxx, Xxxxxxxx X. Ring, Xxx Xxxxxxx, Xxxxxx
X. Xxxxxxxxx, Xxxxx Xxxxxxx, Xxxxx Xxxxxxx, Xxxx Xxxxxxx, Xxx Xxxxxxx, Xxx
Xxxxxxxx and Xxxx Xxxxxx and (ii) when used with respect to Del Monte, the
actual knowledge of Messrs. Xxxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxx, Xxxxx X.
Xxxxxx, Xxxx X. Xxxxxxxx, Xxxx X. Xxxxxx, Xxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxx
Xxxx and Xxx Xxxxxxx.
"Letter Agreement" shall have the meaning specified in Section
6.4(a).
"Licenses" shall mean any license, ordinance, authorization, permit,
certificate, easement, variance, exemption, consent, order, franchise or
approval from any Governmental Authority, domestic or foreign.
"Lien" shall mean, with respect to any property or asset, any
mortgage, easement, lien, pledge (including any negative pledge), charge,
option, right of first or last refusal or offer, security interest or
encumbrance of any kind in respect of such property or asset.
"Material Adverse Effect," with respect to any Person, shall mean
any change, effect or circumstance that is materially adverse to the business,
results of operations or financial condition of such Person and its
Subsidiaries, taken as a whole, or on the ability of such Person to perform its
obligations hereunder or under the other Transaction Agreements, excluding any
such effect to the extent resulting from or arising in connection with (i)
changes or conditions generally affecting the industries or segments in which
such Person operates or (ii) changes in general economic, market or political
conditions which, in the case of (i) or (ii), is not specifically related to, or
does not have a materially disproportionate effect (relative to other industry
participants) on, such Person; provided, that any reduction in the market price
or trading volume of such Person's publicly traded common stock shall not be
deemed to constitute a Material Adverse Effect (it being understood that the
foregoing shall not prevent a Party from asserting that any underlying cause of
such reduction independently constitutes such a Material Adverse Effect). When
used with respect to Spinco, such term, unless otherwise provided herein, shall
refer to Spinco after giving effect to the Contribution and the Distribution.
"Merger" shall have the meaning specified in the Recitals hereto.
9
"Merger Sub" shall have the meaning specified in the Preamble
hereto.
"New York Certificate of Merger" shall have the meaning specified
in Section 2.5.
"New York Department of State" shall have the meaning specified in
Section 2.5.
"NYBCL" shall mean the New York Business Corporation Law.
"NYSE" shall mean the New York Stock Exchange, Inc.
"One-Year Period" shall have the meaning specified in Section
7.6(a).
"Order" shall have the meaning specified in Section 3.3.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Parties" shall have the meaning specified in the Preamble hereto.
"Party" shall have the meaning specified in the Preamble hereto.
"past practice" when used with respect to Heinz and Spinco shall
mean, unless otherwise specified, the past practice of the Spinco Business.
"PE" shall mean the Pacific Exchange, Inc.
"Person" shall mean a natural person, corporation, limited liability
company, partnership, limited partnership or other entity, including a
Governmental Authority.
"Professional Fees" shall have the meaning specified in Section
9.3(d).
"Proxy Statement/Prospectus" shall mean the proxy
statement/prospectus to be distributed to the Del Monte Stockholders and the
Heinz shareholders in connection with the Merger and the transactions
contemplated by this Agreement, including any preliminary proxy
statement/prospectus or definitive proxy statement/prospectus filed with the SEC
in accordance with the terms and provisions hereof. The Proxy
Statement/Prospectus shall constitute a part of the Registration Statement.
"Record Date" shall have the meaning specified in Section 6.3(b).
"Registration Statement" shall mean the Registration Statement on
Form S-4 to be filed by Del Monte with the SEC to effect the registration under
the Securities Act of the shares of Del Monte Common Stock to be issued to
holders of shares of Spinco Common Stock pursuant to the Merger.
"Required Resignations" shall have the meaning specified in Section
7.22.
"Requisite Approval" shall have the meaning specified in Section
5.18(a).
10
"Residual Spinco Business" shall have the meaning specified in
Section 7.23(b).
"Restricted Business" shall mean the (i) dry and canned pet food and
pet snacks business, (ii) specialty pet food business, (iii) ambient tuna
business, (iv) other ambient seafood businesses, but limited to products
currently marketed or marketed at the Effective Time by the StarKist Seafood
business unit, (v) retail private label soup and retail private label gravy
businesses, (vi) broth business and (vii) infant feeding business.
"Restricted Stock" shall have the meaning specified in Section
2.9(d).
"Retained Businesses" shall have the meaning assigned to such term
in the Separation Agreement.
"Retiree Medical Plans" shall have the meaning specified in Section
7.6(b).
"Return" shall mean any return, report, declaration, form, claim for
refund or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Rule 145 Affiliate" shall have the meaning specified in Section
7.10.
"Rule 145 Affiliate Agreement" shall have the meaning specified in
Section 7.10.
"Ruling" means any award, decision, injunction, decree, stipulation,
determination, writ, judgment, order, ruling, subpoena or verdict entered,
issued, made or rendered by any court, administrative agency or other
Governmental Authority or arbitrator.
"SEC" shall mean the U.S. Securities and Exchange Commission.
"Second Commitment Letter" shall have the meaning set forth in the
Recitals hereto.
"Section 355 Ruling" shall have the meaning set forth in Section
7.8(b).
"Securities Act" shall mean the Securities Act of 1933, as amended,
together with the rules and regulations of the SEC promulgated thereunder.
"Separation Agreement" shall mean the Separation Agreement between
Heinz and Spinco, with such additions, deletions and other modifications thereto
that are (a) mutually agreed upon in writing by Heinz and Spinco, with a Del
Monte Consent or (b) requested by Del Monte and agreed to by Heinz in accordance
with Section 7.26.
"Separation Date" shall have the meaning specified in Section
7.19(a).
"SERP" shall have the meaning specified in Section 7.6(b).
"Severance Plans" shall have the meaning specified in Section
7.6(b).
"Share Issuance" shall have the meaning specified in Section 5.17.
11
"Share Issuance Approval" shall have the meaning specified in
Section 5.18(a).
"Spinco" shall have the meaning specified in the Preamble hereof.
"Spinco Accounts" shall have the meaning specified in Section
7.19(a).
"Spinco Acquisition Proposal" shall mean, other than in connection
with the Merger or as otherwise specifically contemplated by this Agreement, any
proposal relating to (i) any merger, consolidation, share exchange, business
combination, recapitalization or other similar transaction or series of related
transactions involving principally the Spinco Assets other than the Merger; (ii)
any sale, lease, exchange, transfer or other disposition (including by way of
merger, consolidation or exchange), in a single transaction or a series of
related transactions, of the Spinco Assets constituting 10% or more of the
Spinco Assets or accounting for 10% or more of the consolidated revenues of the
Spinco Business; or (iii) any other substantially similar transaction or series
of related transactions that would reasonably be expected to result in the
acquisition of a controlling interest in Spinco or substantially all of the
Spinco Assets or that would be inconsistent in any material respect with, or
hinder or delay in any material respect the Distribution or the consummation of,
the Transactions contemplated by, or otherwise defeat in any material respect
the purpose of, this Agreement or the other Transaction Agreements; provided,
however, that any of the foregoing relating to Heinz substantially as a whole
shall not constitute a Spinco Acquisition Proposal so long as any such
transaction does not interfere in any material respect with, or hinder or delay
in any material respect the consummation of, the Transactions contemplated by
this Agreement or the other Transaction Agreements.
"Spinco Assets" shall have the meaning ascribed to such term in the
Separation Agreement.
"Spinco Benefit Plans" shall have the meaning specified in Section
4.12(a).
"Spinco Business" shall mean Heinz's (i) dry and canned pet food and
pet snacks businesses in the U.S. and Canada, (ii) specialty pet food businesses
conducted under the "Nature's Recipe," "IVD", "TechniCal" and "MediCal"
trademarks worldwide, (iii) ambient tuna business in the U.S., (iv) other
ambient seafood products currently marketed by the StarKist Seafood business
unit in the U.S., (v) retail private label soup and retail private label gravy
businesses in the U.S., (vi) broth business conducted in the U.S. under the
trademark "College Inn" and (vii) infant feeding business in the U.S., including
pureed foods currently produced in the Pittsburgh plant. For the purpose of this
definition, (A) "in the U.S." or "in Canada" shall mean all channels of
distribution, except in the case of clause (v), where it shall include only
retail sales, in such country and its territories and (B) "retail" shall refer
to products sold as packaged goods for consumption in the home, as opposed to
prepared foods sold for away-from-home consumption or consumption without
further preparation beyond reheating.
"Spinco Business IP" shall have the meaning specified in Section
4.14.
"Spinco Common Stock" shall have the meaning set forth in the
Recitals hereto.
12
"Spinco Disclosure Letter" shall mean the Disclosure Letter prepared
and delivered by Heinz and Spinco to Del Monte prior to the execution of this
Agreement.
"Spinco Employee" shall have the meaning specified in Section
4.12(a).
"Spinco Liabilities" shall have the meaning ascribed to such term in
the Separation Agreement.
"Spinco Option" shall have the meaning specified in Section 2.9(b).
"Spinco Pension Plans" shall have the meaning specified in Section
7.6(f).
"Spinco Post-Distribution Stock Price" shall have the meaning
assigned to such term in the Employee Benefits Agreement.
"Spinco Savings Plans" shall have the meaning specified in Section
7.6(g).
"Spinco Subsidiaries" shall mean all direct and indirect
Subsidiaries of Spinco immediately after the Distribution.
"Spinco Voting Debt" shall have the meaning specified in Section
4.2(a).
"Stockholder" shall mean, collectively, TPG Partners, L.P. and TPG
Parallel I, L.P.
"Stockholder Rights Agreement" shall mean the Stockholder Rights
Agreement between Del Monte and Stockholder.
"Subsidiaries" shall mean, with respect to any Person, another
Person (i) of which 50% or more of the capital stock, voting securities, other
voting ownership or voting partnership interests having voting power under
ordinary circumstances to elect directors or similar members of the governing
body of such corporation or other entity (or, if there are no such voting
interests, 50% or more of the equity interests) are owned or controlled,
directly or indirectly, by such first Person or (ii) of which such first Person
is a general partner.
"Superior Proposal" shall mean a written Del Monte Acquisition
Proposal from a third-party that is for more than 50% of the voting power of
Del Monte or a majority of the assets of Del Monte and its Subsidiaries, taken
as a whole, and which the Board of Directors of Del Monte determines in good
faith (after consultation with a financial advisor of nationally recognized
reputation and its legal advisors), taking into account all financial, legal,
regulatory and other aspects of the proposal and the Person making the
proposal, is reasonably capable of being completed and would result in a
transaction that is more favorable from a financial point of view to the Del
Monte Stockholders than the Merger and the transactions contemplated by this
Agreement, including any proposed alterations of the terms of the Merger
submitted by Heinz and Spinco in response to such Superior Proposal.
"Surviving Corporation" shall have the meaning specified in Section
2.1(c).
13
"Tax" or "Taxes" shall mean (A) any foreign or U.S. federal, state,
local or municipal taxes, charges, fees, levies, imposts, duties, or other
assessments of a similar nature, including, income, alternative or add-on
minimum, gross receipts, excise, employment, sales, use, transfer, license,
payroll, franchise, severance, stamp, occupation, windfall profits, withholding,
Social Security, unemployment, disability, ad valorem, estimated, highway use,
commercial rent, capital stock, paid up capital, recording, registration,
property, real property gains, value added, business license, custom duties, or
other tax or governmental fee of any kind whatsoever, imposed or required to be
withheld by any taxing authority including any interest, additions to tax, or
penalties applicable thereto, (B) any liability for payment of amounts described
in clause (A) whether as a result of transferee liability, joint and several
liability for being a member of an affiliated, consolidated, combined or unitary
group for any period, or otherwise by operation of law and (C) any liability for
the payment of amounts described in clause (A) or (B) as a result of any tax
sharing, tax indemnity or tax allocation agreement or any other express or
implied agreement to pay or indemnify any other Person.
"Tax Separation Agreement" shall mean the Tax Separation Agreement
to be entered into among Heinz, Spinco and Del Monte in the form attached to the
Separation Agreement, with such additions, deletions and other modifications
thereto that are (a) mutually agreed upon in writing by Heinz and Spinco, with a
Del Monte Consent or (b) requested by Del Monte and agreed to by Heinz in
accordance with Section 7.26.
"Termination Date" shall have the meaning specified in Section
9.1(b)(i).
"Termination Fee" shall have the meaning specified in Section
9.3(a)(i).
"Third Cumulative Preferred Stock" shall have the meaning specified
in Section 3.2.
"Trade Accounts Payable" shall mean accounts payable and accrued
expenses to the extent owed to suppliers and other business partners of the
Spinco Business.
"Trade Accounts Receivable" shall mean accounts receivable to the
extent originating from customers and other business partners of the Spinco
Business.
"Trademark and Cooperation Agreement" shall mean the Trademark and
Cooperation Agreement to be entered into between Heinz and Spinco in the form
attached to the Separation Agreement, with such additions, deletions and other
modifications thereto that are (a) mutually agreed upon in writing by Heinz and
Spinco, with a Del Monte Consent or (b) requested by Del Monte and agreed to by
Heinz in accordance with Section 7.26.
"Trademark License Agreement" shall mean the Trademark License
Agreement to be entered into between Heinz and Spinco in the form attached to
the Separation Agreement, with such additions, deletions and other modifications
thereto that are (a) mutually agreed upon in writing by Heinz and Spinco, with a
Del Monte Consent or (b) requested by Del Monte and agreed to by Heinz in
accordance with Section 7.26.
"Trademarks" shall have the meaning assigned to such term in the
Separation Agreement.
14
"Transaction Agreements" shall have the meaning assigned to such
term in the Separation Agreement.
"Transferred Accounts" shall have the meaning specified in Section
7.19(a).
"Transition Services Agreement" shall mean the Transition Services
Agreement to be entered into between Heinz and Spinco in the form attached to
the Separation Agreement, with such additions, deletions and other modifications
thereto that are (a) mutually agreed upon in writing by Heinz and Spinco, with a
Del Monte Consent or (b) requested by Del Monte and agreed to by Heinz in
accordance with Section 7.26.
"Voting Agreement" shall mean the Voting Agreement, dated as of the
date hereof, between Heinz and Stockholder.
"WARN" shall have the meaning specified in Section 4.13(a).
ARTICLE 2
THE MERGER
2.1 Distribution and Merger. (a) Prior to the Effective Time, on the
Closing Date, Heinz shall, subject to the terms and conditions of the Separation
Agreement, effect the Contribution and the Distribution and deliver or cause to
be delivered, to such bank or trust company as shall be selected by Del Monte
and be reasonably acceptable to Heinz (the "Exchange Agent"), a certificate (the
"Distribution Stock Certificate") representing that number of shares of Spinco
Common Stock that is equal to the number of shares of Heinz Common Stock that
are outstanding as of the Heinz Record Date (other than treasury shares). Until
the Effective Time, the Exchange Agent shall hold the shares of Spinco Common
Stock represented by the Distribution Stock Certificate on behalf of the Heinz
shareholders as of the Heinz Record Date. Until the Effective Time, the shares
of Spinco Common Stock represented by the Distribution Stock Certificate shall
not be transferred and the Exchange Agent shall not deliver any shares of Spinco
Common Stock represented by the Distribution Stock Certificate to any
shareholder of Heinz.
(b) Immediately prior to the Effective Time, the issued and
outstanding capital stock of Merger Sub shall consist of only shares of common
stock, all of which shall be owned directly by Del Monte.
(c) Upon the terms and subject to the conditions of this Agreement,
and in accordance with the NYBCL and the DGCL, at the Effective Time: (i) Merger
Sub shall be merged with and into Spinco, the separate existence of Merger Sub
shall cease and Spinco shall continue as the surviving corporation (sometimes
referred to herein as the "Surviving Corporation") and shall succeed to and
assume all the rights and obligations of Merger Sub in accordance with the NYBCL
and the DGCL and (ii) the certificate of incorporation of Spinco as in effect
immediately prior to the Effective Time shall be amended so as to read in its
entirety in the form attached hereto as Exhibit A, and, as so amended, shall
thereafter be the certificate of
15
incorporation of the Surviving Corporation. The bylaws of Spinco as in effect at
the Effective Time shall be in the form attached hereto as Exhibit D, which
shall be the bylaws of the Surviving Corporation. At or prior to the Effective
Time, Del Monte shall file with the Secretary of State of the State of Delaware
an amendment and restatement to its certificate of incorporation in the form
attached hereto as Exhibit B (the "Amended and Restated Certificate of
Incorporation"). At or prior to the Effective Time, the Board of Directors of
Del Monte shall approve an amendment to Del Monte's bylaws in the form attached
hereto as Exhibit C.
(d) Section 2.1(d) of the Spinco Disclosure Letter lists the names
of the directors of Spinco. The directors of Spinco at the Effective Time shall,
from and after the Effective Time, be the same individuals serving on the board
of directors of Del Monte at and after the Effective Time and the officers of
Spinco at the Effective Time, who shall be designated by Heinz after
consultation with Del Monte, shall, from and after the Effective Time, be the
initial officers of the Surviving Corporation, and such directors and officers
shall serve until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's certificate of incorporation and bylaws.
(e) From and after the Effective Time, (i) Del Monte's executive
headquarters will be located in San Francisco, California; (ii) the headquarters
for the Spinco Business will be located in Pittsburgh, Pennsylvania; and (iii)
the headquarters for the business conducted by Del Monte prior to the Effective
Time will be located in San Francisco, California.
(f) Immediately following the Effective Time, Del Monte's name
shall continue to be Del Monte Foods Company.
(g) The Merger shall have the effects set forth in this Article 2
and the applicable provisions of the DGCL and the NYBCL.
2.2 Effect on Capital Stock. At the Effective Time, by virtue
of the Merger and without any action on the part of any holder of any capital
stock of Del Monte or Spinco:
(a) Each share of Spinco Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares to be canceled in
accordance with Section 2.2(b)) shall be automatically converted into the right
to receive a number of fully paid and nonassessable shares of Del Monte Common
Stock equal to the Exchange Ratio. The "Exchange Ratio" shall equal 745/255
times the number of fully diluted shares of Del Monte Common Stock (calculated
according to the treasury method using the Del Monte Average) immediately prior
to the Effective Time divided by the number of fully diluted shares of Spinco
Common Stock (calculated according to the treasury method using an implied price
for Spinco Common Stock equal to the product of (i) the Del Monte Average and
(ii) the Exchange Ratio) immediately prior to the Effective Time. The Exchange
Ratio shall be rounded to the nearest ten-thousandth of a share of Del Monte
Common Stock.
The "Del Monte Average" shall mean the quotient obtained by dividing
(i) the sum of (A) the closing price of Del Monte Common Stock on the NYSE on
the date of this
16
Agreement and (B) the average of the closing prices of Del Monte Common Stock on
the NYSE for the 30 trading days ending on the trading day immediately preceding
the Closing Date by (ii) two.
(b) Each share of Spinco Common Stock held by Spinco as treasury
stock and each share of Spinco Common Stock owned by Del Monte, if any, in each
case immediately prior to the Effective Time, shall be canceled and shall cease
to exist and no stock or other consideration shall be delivered in exchange
therefor.
(c) Each share of capital stock of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into one fully paid
and non-assessable share of Surviving Corporation stock.
2.3 Cancellation of Stock. Each share of Spinco Common Stock issued
and outstanding immediately prior to the Effective Time, when converted in
accordance with Section 2.2, shall no longer be outstanding and shall
automatically be canceled and shall cease to exist. Each holder of shares of
Heinz Common Stock as of the Heinz Record Date shall cease to have any rights
with respect to such shares of Spinco Common Stock, except the right to receive
a certificate representing the shares of Del Monte Common Stock to which such
holder is entitled pursuant to Section 2.2, the amount of dividends or other
distributions thereon with a record date after the Effective Time and a payment
date prior to the delivery of such shares by the Exchange Agent and any cash in
lieu of fractional shares of Del Monte Common Stock payable in accordance with
Section 2.8(d), without interest.
2.4 Closing. Unless the transactions herein contemplated shall have
been abandoned and this Agreement terminated pursuant to Section 9.1, the
closing of the Merger and the other transactions contemplated hereby (the
"Closing") shall take place at the offices of Xxxxxxx Xxxxxxx & Xxxxxxxx, 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, as promptly as practicable after the
last of the conditions set forth in Article 8 is satisfied or waived (except for
those conditions that, by the express terms thereof, are not capable of being
satisfied until the Effective Time, but subject to the satisfaction or waiver of
those conditions) (the "Closing Date"), or at such other time and place as Heinz
and Del Monte shall agree in writing; provided, however, that the Parties shall
consult as to whether it would be advisable to defer the Closing until the last
day of the accounting month of either Heinz or Del Monte next following the date
on which such conditions are satisfied.
2.5 Effective Time. Upon the terms and subject to the conditions of
this Agreement, as soon as practicable at or after the Closing, (i) a
certificate of merger or other appropriate documents (in any such case, the
"Delaware Certificate of Merger") shall be filed with the Secretary of State of
the State of Delaware (the "Delaware Secretary of State") with respect to the
Merger, in such form as is required by, and executed in accordance with, the
applicable provisions of the DGCL, (ii) a certificate of merger or other
appropriate documents (in any such case, the "New York Certificate of Merger")
shall be filed with the Department of State for the State of New York (the "New
York Department of State") with respect to the Merger, in such form as is
required by, and executed in accordance with, the applicable provisions of the
NYBCL and (iii) all other filings or recordings required under the NYBCL and the
DGCL, in each case necessary to effect the Merger, shall be made. The Merger
shall become
17
effective at the time of filing of the Delaware Certificate of Merger with the
Delaware Secretary of State in accordance with the DGCL and the New York
Certificate of Merger with the New York Department of State in accordance with
the NYBCL, or at such later time as the parties hereto may agree and as is
provided in the Delaware Certificate of Merger and the New York Certificate of
Merger. The date and time at which the Merger shall so become effective is
herein referred to as the "Effective Time."
2.6 Effects of the Merger. The Merger shall have the effects set
forth in Section 906 of the NYBCL and Section 259 of the DGCL.
2.7 Closing of Transfer Books. From and after the Effective Time,
the stock transfer books of Spinco shall be closed and no transfer shall be made
of any shares of capital stock of Spinco that were outstanding immediately prior
to the Effective Time.
2.8 Exchange of Certificates. (a) Exchange Agent. As soon as
practicable after the Effective Time (but no later than five (5) business days
after the Closing Date), Del Monte shall deposit with the Exchange Agent, for
the benefit of the Heinz shareholders as of the Heinz Record Date and for the
purpose of exchanging the Distribution Stock Certificate for certificates
representing that number of shares of Del Monte Common Stock that are to be
issued in the Merger in accordance with this Article 2, certificates
representing the shares of Del Monte Common Stock (such shares of Del Monte
Common Stock, together with any dividends or distributions thereon having a
record date after the Effective Time and a payment date prior to the delivery of
such shares by the Exchange Agent and any cash in lieu of fractional shares of
Del Monte Common Stock payable in accordance with Section 2.8(d), being
hereinafter referred to as the "Exchange Fund") issuable pursuant to Section 2.2
in exchange for outstanding shares of Spinco Common Stock. The Exchange Agent
shall, pursuant to irrevocable instructions, deliver to the Heinz shareholders
as of the Heinz Record Date the Del Monte Common Stock contemplated to be issued
pursuant to Section 2.2 from the shares of stock held in the Exchange Fund. The
Exchange Fund shall not be used for any other purpose. Del Monte shall deliver
all such dividends referred to above to the Exchange Agent. Heinz shareholders
shall not be entitled to receive interest on any funds in the Exchange Fund.
(b) Exchange Procedures. As promptly as practicable after the
Effective Time, Del Monte shall cause the Exchange Agent to mail or deliver to
the Heinz shareholders as of the Heinz Record Date (i) certificates representing
the number of whole shares of Del Monte Common Stock that such holder has the
right to receive pursuant to this Article 2 (and cash in lieu of any fractional
shares of Del Monte Common Stock, as contemplated by Section 2.8(d)) and (ii)
the amount of dividends and other distributions, if any, with a record date
after the Effective Time which theretofore became payable with respect to such
shares of Del Monte Common Stock, and the Distribution Stock Certificate shall
forthwith be cancelled. Del Monte shall be entitled, and may instruct the
Exchange Agent, to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement such amounts required to be deducted and withheld
with respect to the making of such payments under the Code or any provision of
U.S., state or local or foreign tax law. Any withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the applicable Heinz
shareholder.
18
(c) No Further Ownership Rights in Spinco Common Stock. All shares
of Del Monte Common Stock issued pursuant to Sections 2.8(a) and (b) and any
cash paid pursuant to Section 2.8(d) shall be deemed to have been issued in full
satisfaction of all rights pertaining to the shares of Spinco Common Stock
converted in the Merger in accordance with Section 2.2.
(d) No Fractional Shares. Notwithstanding anything herein to the
contrary, no certificate or scrip representing fractional shares of Del Monte
Common Stock shall be issued in the Merger, and, to the extent the Exchange
Ratio would result in any Heinz shareholder as of the Heinz Record Date being
entitled to receive a fractional share of Del Monte Common Stock, such
fractional share interests will not entitle any such shareholder to vote or to
any rights as a stockholder of Del Monte. All fractional interests in Del Monte
Common Stock that would otherwise be issuable as a result of the Merger shall be
aggregated and if a fractional interest results from such aggregation, the
holder otherwise entitled thereto shall be entitled to receive, in lieu thereof,
an amount in cash determined by multiplying (i) the closing sale price per share
of Del Monte Common Stock on the NYSE on the business day preceding the
Effective Time, if the stock is being traded on such date, or if the stock is
not being traded on such date, the closing sale price per share of Del Monte
Common Stock on the NYSE on the first business day that such stock is traded, by
(ii) the fraction of a share of Del Monte Common Stock to which such holder
would otherwise have been entitled. Del Monte shall timely make available to the
Exchange Agent any cash necessary to make payments in lieu of fractional shares
as aforesaid. Alternatively, Del Monte shall have the option of instructing the
Exchange Agent to aggregate all fractional interests in Del Monte Common Stock
resulting from the Merger, sell shares representing such aggregate interests in
the public market and distribute to the Heinz shareholders as of the Heinz
Record Date who otherwise would have been entitled to fractional shares a pro
rata portion of the proceeds of such sale.
(e) Termination of Exchange Fund. Any portion of the Exchange Fund
and any cash in lieu of fractional shares of Del Monte Common Stock made
available to the Exchange Agent that remains undistributed on the one-year
anniversary of the Effective Time shall be delivered to Del Monte, upon demand,
and any Heinz shareholder as of the Heinz Record Date shall thereafter look only
to Del Monte for payment of their claim for Del Monte Common Stock and any cash
in lieu of fractional shares of Del Monte Common Stock and any dividends or
distributions with respect to Del Monte Common Stock.
(f) No Liability. Neither Del Monte nor the Surviving Corporation
shall be liable to any Heinz shareholder as of the Heinz Record Date or any
holder of shares of Del Monte Common Stock for shares of Del Monte Common Stock
(or dividends or distributions with respect thereto or with respect to Spinco
Common Stock) or cash in lieu of fractional shares of Del Monte Common Stock
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
2.9 Employee Stock Options and Other Equity Awards. (a) In
accordance with the terms of the Del Monte 1997 Stock Incentive Plan, the Del
Monte 1998 Stock Incentive Plan and the Non-Employee Directors and Independent
Contractors 1997 Stock Incentive Plan (collectively, the "Del Monte Stock
Plans"), the Board of Directors (or any committee) of Del Monte shall take any
action necessary to ensure that each option to acquire shares of Del Monte
Common Stock and each other incentive award granted to an employee, officer or
director of Del
19
Monte under the Del Monte Stock Plans and outstanding immediately prior to the
Effective Time shall not, as a result of the transactions contemplated by this
Agreement, become vested or exercisable.
(b) (i) In accordance with the terms of the Heinz 1994 Stock Option
Plan, the Heinz 1996 Stock Option Plan and the Heinz 2000 Stock Option Plan and
any other stock option or stock incentive compensation plan for employees,
officers, or directors of Heinz, as amended (collectively, the "Heinz Stock
Plans"), each option to acquire shares of Heinz Common Stock (each, a "Heinz
Option") granted to a Spinco Employee under the Heinz Stock Plans and
outstanding immediately prior to the Effective Time, shall, immediately prior to
the Effective Time, be adjusted, pursuant to the Heinz Stock Plans, into a Heinz
Option on Heinz Common Stock (as in existence after the spin-off of Spinco) and
an option to purchase Spinco Common Stock (a "Spinco Option") in accordance with
the Employee Benefits Agreement. In accordance with the terms of the Heinz Stock
Plans, the Board of Directors (or any committee) of Heinz shall take any action
necessary to ensure that each Heinz Option that is to be adjusted into a Spinco
Option as set forth in the immediately preceding sentence (and converted into a
Del Monte Option as set forth below) and that is outstanding immediately prior
to the Effective Time shall not, as a result of the transactions contemplated by
this Agreement, become vested or exercisable.
(ii) At or prior to the Effective Time, Heinz shall, or Heinz
shall cause Spinco to, take all action necessary such that each Spinco
Option which remains outstanding immediately prior to the Effective Time
shall cease to represent a right to acquire shares of Spinco Common Stock,
and at the Effective Time each such Spinco Option shall be converted into
a right to acquire, on the same terms and conditions as were applicable
under the Spinco Option prior to the Effective Time, that number of shares
of Del Monte Common Stock determined by multiplying the number of shares
of Spinco Common Stock subject to such Spinco Option by the Exchange
Ratio, rounded, if necessary, to the nearest whole share of Del Monte
Common Stock, at a price per share (rounded to the nearest one-hundredth
of a cent) equal to the per share exercise price specified in such Spinco
Option divided by the Exchange Ratio. All Spinco Options, once converted
into options on Del Monte Common Stock, shall hereinafter be referred to
as "Del Monte Options."
(c) As soon as practicable after the Effective Time, (i) Del Monte
shall deliver to the holders of Del Monte Options appropriate notices setting
forth such holders' rights thereunder (which, for the avoidance of doubt, shall
include the rights such holders had pursuant to the applicable Heinz Stock Plans
under which the Heinz Options (adjusted into Del Monte Options) were originally
granted), and the agreements evidencing the grants of such Del Monte Options
shall contain the same terms and conditions as in effect prior to the Effective
Time (subject to the adjustments required by this Section 2.9 after giving
effect to the Merger, the Employee Benefits Agreement and the terms of the Heinz
Stock Plans) and (ii) Heinz shall deliver to the holders of Heinz Options (as
adjusted) appropriate notices setting forth such holders' rights thereunder
(which, for the avoidance of doubt, shall include the rights such holders had
pursuant to the applicable Heinz Plans under which the Heinz Options were
originally granted), and the agreements evidencing the grants of such Heinz
Options shall continue in effect on the same terms and conditions as in effect
prior to the Effective Time
20
(subject to the adjustments required by this Section 2.9 after giving effect to
the Merger, the Employee Benefits Agreement, and the terms of the Heinz Stock
Plans).
(d) Heinz Restricted Stock Bonus Plan. As of the Effective Time, all
shares of Spinco Common Stock held by Spinco Employees pursuant to the Heinz
Restricted Stock Bonus Plan shall be treated in accordance with the terms of
Section 2.2 of this Agreement ("Restricted Stock") and, thereafter, shall be
treated in accordance with the terms of the other Transaction Agreements.
(e) On or prior to the Effective Time, Del Monte shall take all
corporate action necessary to reserve for issuance a sufficient number of shares
of Del Monte Common Stock for delivery upon exercise of the Del Monte Options in
accordance with this Section 2.9. Prior to the Effective Time, Del Monte shall
take all corporate action necessary such that, at the Effective Time, Del Monte
shall file a registration statement on Form S-8 with respect to the Del Monte
Options (or any successor or other appropriate forms), with respect to the
shares of Del Monte Common Stock subject to such Del Monte Options and, after
the Effective Time, Del Monte shall use its reasonable best efforts to maintain
the effectiveness of such registration statement (and maintain current the
status of the prospectus contained therein) for so long as such Del Monte
Options remain outstanding.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF HEINZ
Except as set forth in the Heinz Disclosure Letter, Heinz
represents and warrants to Del Monte as follows:
3.1 Organization, Qualification, Etc. Heinz is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania. Heinz and its Subsidiaries have all requisite
corporate power and authority to own, lease and operate their properties that
will be contributed to Spinco pursuant to the Separation Agreement and to carry
on the Spinco Business as now being conducted. Each of Heinz and its
Subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the property owned, leased or operated by
the Spinco Business that will be contributed to Spinco pursuant to the
Separation Agreement or the nature of the Spinco Business conducted by it makes
such qualification necessary, except in such jurisdictions where the failure to
be so qualified or licensed and in good standing would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on
Spinco.
3.2 Capital Stock and Other Matters. As of the date of this
Agreement, the authorized capital stock of Heinz consists of 600,000,000 shares
of Heinz Common Stock and 2,210,931 shares of Third Cumulative Preferred Stock,
par value $10 per share ("Third Cumulative Preferred Stock"). At the close of
business on June 10, 2002, (i) (A) 350,915,017 shares of Heinz Common Stock
(excluding shares held by Heinz as treasury shares) were issued and outstanding,
8,032,878 shares of Heinz Common Stock were reserved for issuance pursuant to
the Heinz Stock Plans and options to purchase 31,102,865 shares of Heinz Common
Stock
21
pursuant to the Heinz Stock Plans were outstanding and (B) 10,931 shares of
Third Cumulative Preferred Stock of Heinz were issued and outstanding and (ii)
80,181,468 shares of Heinz Common Stock were held by Heinz in its treasury. All
outstanding shares of Heinz Common Stock are, and all shares thereof which may
be issued after the date of this Agreement and prior to the Effective Time will
be, when issued, duly authorized validly issued, fully paid and not subject to
preemptive rights. Except as set forth in this Section 3.2, as of the date of
this Agreement, there are not outstanding (i) any shares of capital stock of
Heinz or Heinz Common Stock, (ii) any securities of Heinz or any of its
Subsidiaries convertible into or exchangeable for shares of capital stock of
Heinz or Heinz Common Stock or (iii) any options, warrants, calls, rights
(including preemptive rights), commitments or other Contracts (other than this
Agreement and certain other Transaction Agreements) to which Heinz or any of its
Subsidiaries is a party or by which Heinz or any of its Subsidiaries will be
bound obligating Heinz or any of its Subsidiaries to issue, deliver, sell,
purchase, redeem or acquire, or cause to be issued, delivered, sold, purchased,
redeemed or acquired, or otherwise relating to, shares of capital stock of Heinz
or Heinz Common Stock or obligating Heinz or any of its Subsidiaries to grant,
extend or enter into any such option, warrant, call, right, commitment or
Contract, other than shares issued since June 10, 2002 (A) upon the exercise of
outstanding options or the conversion of shares of Third Cumulative Preferred
Stock or (B) in accordance with Heinz's Direct Purchase Plan (and dividend
reinvestment option therein).
3.3 Corporate Authority; No Violation, Etc. Heinz has the requisite
corporate power and authority to enter into this Agreement and each other
Transaction Agreement to which Heinz is to be a party and to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by
Heinz of this Agreement and each such other Transaction Agreement and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all requisite corporate action on the part of Heinz. This
Agreement has been duly executed and delivered by Heinz and constitutes a legal,
valid and binding agreement of Heinz, enforceable against Heinz in accordance
with its terms, subject to bankruptcy, insolvency, reorganization, moratorium
and similar laws of general application relating to or affecting creditors'
rights and to general equity principles. As of the Distribution Date, each other
Transaction Agreement to which Heinz is to be a party will have been duly
executed and delivered by Heinz and will constitute a legal, valid and binding
agreement of Heinz, enforceable against Heinz in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and similar laws
of general application relating to or affecting creditors' rights and to general
equity principles. None of the execution and delivery by Heinz of this Agreement
or any other Transaction Agreement, the consummation by Heinz of the
transactions contemplated hereby or thereby or compliance by Heinz with any of
the provisions hereof or thereof (i) violates or conflicts with any provisions
of Heinz's articles of incorporation or bylaws, (ii) requires any consent,
approval, authorization or permit of, registration, declaration or filing with,
or notification to, any Governmental Authority or any other Person, (iii)
results in a default (or an event that, with notice or lapse of time or both,
would become a default) or gives rise to any right of termination or buy-out by
any third party, cancellation, amendment or acceleration of any obligation or
the loss of any benefit under, any Contract to which Heinz or any of its
Subsidiaries or Spinco or any of its Subsidiaries is a party or by which Heinz
or any of its Subsidiaries or Spinco or any of its Subsidiaries or any of the
Spinco Assets is or will be bound or affected, (iv) results in the creation of a
Lien on any of the issued and outstanding shares of
22
Spinco Common Stock, capital stock of any Spinco Subsidiary or on any of the
Spinco Assets or (v) violates or conflicts with any decree, judgment, injunction
or other order (whether temporary, preliminary or permanent) (an "Order"), law,
ordinance, rule or regulation applicable to Heinz or any of its Subsidiaries
(including Spinco and its Subsidiaries), or any of the properties, businesses or
assets of any of the foregoing, other than such exceptions in the case of each
of clauses (ii), (iii), (iv) and (v) above as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Heinz.
3.4 Brokers or Finders. No agent, broker, investment banker,
financial advisor or other similar Person is or will be entitled, by reason of
any agreement, act or statement by Heinz or any of its Subsidiaries, directors,
officers or employees, to any financial advisory, broker's, finder's or similar
fee or commission from, to reimbursement of expenses by or to indemnification or
contribution by, in each case, Heinz, Spinco or any of their respective
Subsidiaries in connection with any of the transactions contemplated by this
Agreement or the other Transaction Agreements.
3.5 Heinz Reports and Financial Statements. As of their respective
dates, all reports, prospectuses, forms, schedules, registration statements,
proxy statements or information statements required to be filed by Heinz under
the Securities Act or under the Securities Exchange Act (the "Heinz SEC
Documents") complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and none of such Heinz
SEC Documents when filed contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading. Since May 3, 2000, Heinz has timely filed all
reports, registration statements and other filings required to be filed with the
SEC under the rules and regulations of the SEC. The books and records of Heinz
and its Subsidiaries have been, and are being, maintained in accordance with
GAAP and any other applicable legal and accounting requirements. Each of the
foregoing representations in this Section 3.5 is made only with respect to
information relating to the Spinco Business and with "materiality" being defined
by reference to Heinz as a whole and not by reference to Spinco or the Spinco
Business.
3.6 No Other Representations and Warranties. Except for the
representations and warranties contained in this Article 3 and in Article 4 and
except for any representations and warranties specifically set forth in the
other Transaction Agreements, Del Monte acknowledges that neither Heinz nor any
other Person makes any express or implied representation or warranty with
respect to Heinz and its Subsidiaries or otherwise or with respect to any other
information provided to Del Monte, whether on behalf of Heinz or such other
Persons. Neither Heinz nor any other Person will have or be subject to any
liability or indemnification obligation to Del Monte or any other Person to the
extent resulting from the distribution to Del Monte or Del Monte's use of, any
information related to Heinz and any other information, document, financial
information or projections or material made available to Del Monte in certain
"data rooms," management presentations or any other form in connection with the
transactions contemplated by this Agreement.
23
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF HEINZ AND SPINCO
Except as set forth in the Spinco Disclosure Letter, Heinz and
Spinco, jointly and severally, represent and warrant to Del Monte as follows and
in each case after giving effect to the Contribution and the Distribution
(unless otherwise explicitly stated):
4.1 Organization, Qualification, Etc. Spinco is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Spinco has or will have at the Effective Time all requisite power and
authority to own or lease and operate and use its properties and assets and
carry on its business as presently conducted and is or will be at the Effective
Time duly qualified and licensed to do business and is or will be at the
Effective Time in good standing in each jurisdiction in which the ownership or
leasing of its property or the conduct of its business requires such
qualification, except for jurisdictions in which the failure to be so qualified
or to be in good standing would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Spinco. Copies of
the Spinco certificate of incorporation and bylaws in existence on the date
hereof are included as part of Section 4.1 of the Spinco Disclosure Letter and
are complete and correct and in full force and effect on the date hereof. Each
of the Spinco Subsidiaries is or will be at the Effective Time a corporation or
(as indicated in Section 4.1 of the Spinco Disclosure Letter) other legal entity
duly organized, validly existing and, to the extent such concept or similar
concept exists in the relevant jurisdiction, in good standing under the laws of
the state or other jurisdiction of its incorporation or other organization, has
or will have at the Effective Time all requisite power and authority to own or
lease and operate and use its properties and assets and to carry on its business
as presently conducted and is or will be duly qualified and licensed to do
business and is or will be at the Effective Time in good standing in each
jurisdiction in which the ownership or leasing of its property or the conduct of
its business requires such qualification, except for jurisdictions in which the
failure to be so qualified or to be in good standing would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect on
Spinco.
4.2 Capital Stock and Other Matters. (a) The authorized capital
stock of Spinco consists of 1,000 shares of Spinco Common Stock, all of which
are held by Heinz prior to the Distribution. Immediately following the
Distribution, (i) there will be outstanding a number of shares of Spinco Common
Stock equal to the number of shares of Heinz Common Stock outstanding as of the
Heinz Record Date, (ii) no shares of Spinco Common Stock will be held by Spinco
in its treasury and (iii) no bonds, debentures, notes or other indebtedness of
Spinco or any of its Subsidiaries having the right to vote (or convertible into
securities having the right to vote) on any matters on which holders of shares
of capital stock of Spinco (including Spinco Common Stock) may vote ("Spinco
Voting Debt") will be issued or outstanding. All outstanding shares of Spinco
Common Stock are, and all shares thereof which may be issued will be, when
issued, duly authorized, validly issued, fully paid and not subject to
preemptive rights. Except as set forth in this Section 4.2, as of the date of
this Agreement there are not outstanding (i) any shares of capital stock of
Spinco, Spinco Voting Debt, Spinco Common Stock or other voting securities of
Spinco, (ii) any securities of Spinco or any of its Subsidiaries convertible
into or exchangeable for shares of capital stock of Spinco, Spinco Voting Debt,
Spinco Common Stock or other voting securities of Spinco or (iii) except as
specified in Section 2.9 and Section 7.6, any options,
24
warrants, calls, rights (including preemptive rights), commitments or other
Contracts (other than certain Transaction Agreements) to which Spinco or any of
its Subsidiaries is a party or by which Spinco or any of its Subsidiaries will
be bound obligating Spinco or any of its Subsidiaries to issue, deliver, sell,
purchase, redeem or acquire, or cause to be issued, delivered, sold, purchased,
redeemed or acquired, or otherwise relating to, shares of capital stock of
Spinco, Spinco Voting Debt, Spinco Common Stock or other voting securities of
Spinco or any of its Subsidiaries or obligating Spinco or any of its
Subsidiaries to grant, extend or enter into any such option, warrant, call,
right, commitment or Contract. Section 4.2 of the Spinco Disclosure Letter
contains a true and complete list of each entity that will be a material
Subsidiary of Spinco at the Effective Time, including its jurisdiction of
organization, Spinco's interest therein and a brief description of the principal
line or lines of business conducted by each such material Subsidiary. All the
issued and outstanding shares of capital stock of, or other equity or voting
interests in, each Subsidiary of Spinco are owned by Spinco, by another
wholly-owned Subsidiary of Spinco or by Spinco and another wholly-owned
Subsidiary of Spinco, free and clear of all Liens and are duly authorized,
validly issued, fully paid and nonassessable.
(b) There are no stockholder agreements, voting trusts or other
Contracts to which Spinco is a party or by which it is bound relating to the
voting or transfer of any shares of capital stock of Spinco. Except for the
shares of capital stock of, or other equity interest in, its Subsidiaries, as of
the date of this Agreement, Spinco does not own, directly or indirectly, any
capital stock of, or other equity interest or voting interests in, any
corporation, partnership, joint venture, association, limited liability company
or other entity.
4.3 Corporate Authority; No Violation, Etc. Spinco has the requisite
corporate power and authority to enter into this Agreement and each other
Transaction Agreement to which Spinco is to be a party and to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by
Spinco of this Agreement and each such other Transaction Agreement and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all requisite corporate action on the part of Spinco, it being
understood that Heinz is required to adopt this Agreement after the date of this
Agreement as the sole stockholder of Spinco. This Agreement has been duly
executed and delivered by Spinco and constitutes a legal, valid and binding
agreement of Spinco, enforceable against Spinco in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and similar laws
of general application relating to or affecting creditors' rights and to general
equity principles. As of the Distribution Date, each other Transaction Agreement
to which Spinco is to be a party will have been duly executed and delivered by
Spinco and will constitute a legal, valid and binding agreement of Spinco,
enforceable against Spinco in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws of general application
relating to or affecting creditors' rights and to general equity principles.
None of the execution and delivery by Spinco of this Agreement or any other
Transaction Agreement, the consummation by Spinco of the transactions
contemplated hereby or thereby or compliance by Spinco with any of the
provisions hereof or thereof (i) violates or conflicts with any provisions of
Spinco's certificate of incorporation or bylaws, (ii) requires any consent,
approval, authorization or permit of, registration, declaration or filing with,
or notification to, any Governmental Authority or any other Person, (iii)
results in a default (or an event that, with notice or lapse of time or both,
would become a default) or gives rise to any right of termination or buy-out by
any
25
third party, cancellation, amendment or acceleration of any obligation or the
loss of any benefit under any Contract to which Spinco or any of its
Subsidiaries is a party or by which Spinco or any of its Subsidiaries or any of
the Spinco Assets is bound or affected, (iv) results in the creation of a Lien
on any of the issued and outstanding shares of Spinco Common Stock, capital
stock of any Spinco Subsidiaries or on any of the Spinco Assets or (v) violates
or conflicts with any Order, law, ordinance, rule or regulation applicable to
Spinco or any of its Subsidiaries, or any of the properties, businesses or
assets of any of the foregoing, other than such exceptions in the case of each
of clauses (ii), (iii), (iv) and (v) above as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Spinco.
4.4 Affiliate Transactions. Except for the other Transaction
Agreements, there are no transactions, agreements, arrangements or
understandings between (i) Spinco or any of its Subsidiaries, on the one hand,
and (ii) Heinz or any of its Subsidiaries (other than Spinco and its
Subsidiaries) or Affiliates, on the other hand, of the type that would be
required to be disclosed if Spinco were a company subject to Item 404 of
Regulation S-K under the Securities Act.
4.5 Spinco Financial Statements. (a) Audited 2000 and 2001 Financial
Statements. The financial statements delivered to Del Monte as Section 4.5(a) of
the Spinco Disclosure Letter, which consist of the audited combined statements
of assets and liabilities of the Spinco Business as of May 2, 2001 and May 3,
2000, and the audited combined statements of operations and cash flows for the
years ended May 2, 2001 and May 3, 2000, and the notes thereto, audited by
PriceWaterhouseCoopers L.L.P. (collectively, the "Audited Statements"), whose
report thereon is included therewith, were prepared in accordance with GAAP,
consistently applied, and present fairly, in all material respects, the
financial position of the Spinco Business and the results of its operations and
changes in cash flows as of the dates thereof and for the periods covered
thereby.
(b) Estimated 2002 Financial Statements. The financial statements
delivered to Del Monte as Section 4.5(b) of the Spinco Disclosure Letter, which
consist of management's estimated statement of assets and liabilities of the
Spinco Business (as it is to be constituted immediately following the
Distribution), as of May 1, 2002 and management's estimated statement of
operations of the Spinco Business (constituted as aforesaid) for the year ended
May 1, 2002 (collectively, the "Estimated 2002 Financial Statements"), were
prepared in accordance with GAAP, consistently applied, except (i) that such
financial statements do not include all of the schedules and footnotes required
by GAAP and (ii) for such other exceptions to GAAP as are described in Section
4.5(b) of the Spinco Disclosure Letter.
(c) Undisclosed Liabilities. Except as set forth in the Audited
Statements or the Estimated 2002 Financial Statements, Spinco and its
Subsidiaries do not have any liability or obligation of any nature (whether
accrued, absolute, contingent or otherwise) other than (i) liabilities or
obligations incurred in the ordinary course of business since May 1, 2002, (ii)
liabilities or obligations not required to be disclosed on a balance sheet
prepared in accordance with GAAP or in the notes thereto, or (iii) liabilities
or obligations that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Spinco.
26
4.6 Absence of Certain Changes or Events. (a) Except (i) as
specifically contemplated or permitted by this Agreement or the other
Transaction Agreements, (ii) as set forth in the Audited Statements or the
Estimated 2002 Financial Statements and (iii) for changes resulting from the
announcement of this Agreement or the transactions contemplated hereby, since
May 1, 2002, the Spinco Business has been conducted in all material respects
only in the ordinary course, and there has not been any event (including any
damage, destruction or loss whether or not covered by insurance), that would,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Spinco.
(b) Since May 1, 2002, there has not been (i) any declaration,
setting aside or payment of or dividend on, or other distribution (whether in
cash, stock or property) in respect of, any of Spinco's or any of its
Subsidiaries capital stock or other equity or voting interests, except for
dividends by a wholly owned Subsidiary of Spinco to its stockholders, (ii) any
purchase, redemption or other acquisition of any shares of capital stock of, or
other equity or voting interests in, Spinco or any of its Subsidiaries or any
options, warrants, calls or rights to acquire such shares or other interests,
(iii) any split, combination or reclassification of any of Spinco's capital
stock or other equity or voting interests or any issuance or the authorization
of any issuance of any other securities in respect of, in lieu of or in
substitution for shares of capital stock of, or other equity or voting interest
in, Spinco, (iv) other than as would be permitted by Section 6.1(j), any change
by Heinz or its Subsidiaries (that would adversely affect the Spinco Business)
or by Spinco or its Subsidiaries in its accounting principles, practices or
methods or (v) any increase in the compensation payable by Heinz or its
Subsidiaries (with respect to the Spinco Employees only) or Spinco or any of its
Subsidiaries to officers or key employees or any material amendment of any of
the Heinz Benefit Plans (to the extent any Spinco Employee would be affected) or
the Spinco Benefit Plans except for increases or amendments (A) required by
applicable law, (B) in the ordinary and usual course of business consistent with
past practice, (C) in connection with the transactions contemplated under
Section 7.6 of this Agreement and the Employee Benefits Agreement or (D)
permitted by Section 6.1(h).
4.7 Actions; Litigation. (a) No Action against Heinz, any of Heinz's
Subsidiaries, Spinco, any Spinco Subsidiary or the Spinco Business is pending
or, to Heinz's Knowledge, threatened, except with respect to such Actions the
outcome of which would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Spinco.
(b) There is no Ruling against Heinz, any of Heinz's Subsidiaries,
Spinco, any Spinco Subsidiary or the Spinco Business, that would, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect on
Spinco.
4.8 Licenses; Compliance with Laws. (a) Spinco and its Subsidiaries
hold all Licenses that are required for the conduct of the Spinco Business as
currently conducted and are in compliance with the terms of all such Licenses so
held, except, in the case of each of the foregoing, as would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect on
Spinco.
(b) Except with respect to Environmental Laws, tax matters, employee
benefits, and labor matters (which are addressed in Sections 4.10, 4.11, 4.12
and 4.13
27
respectively), Spinco and its Subsidiaries are in compliance with all laws,
ordinances or regulations of any Governmental Authority applicable to any of
them or their respective operations, except to the extent such noncompliance
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Spinco.
4.9 Proxy Statement/Prospectus; Registration Statement. None of the
information regarding Heinz or its Subsidiaries or Spinco or its Subsidiaries or
the Spinco Business provided by Heinz or Spinco for inclusion in, or
incorporation by reference into, the Proxy Statement/Prospectus or the
Registration Statement or the Form 10 filed by Spinco, if any, will, in the case
of the definitive Proxy Statement/Prospectus or any amendment or supplement
thereto, at the time of the mailing of the definitive Proxy Statement/Prospectus
and any amendment or supplement thereto and at the time of the Del Monte
Stockholders Meeting, or, in the case of the Registration Statement, at the time
it becomes effective, at the time of the Del Monte Stockholders Meeting and at
the Effective Time, or in the case of the Form 10, if any, at the time of filing
with the SEC, contain an untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they are
made, not misleading.
4.10 Environmental Matters. (a) Except as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Spinco:
(i) Each of Spinco and its Subsidiaries has obtained all licenses,
permits and other authorizations under Environmental Laws required for the
conduct and operation of its business and is in compliance with the terms and
conditions contained therein, and is in compliance with all applicable
Environmental Laws;
(ii) To Heinz's Knowledge, none of Spinco and its Subsidiaries is
subject to any contractual environmental indemnification obligation regarding
businesses currently owned or operated by Spinco or regarding properties
currently owned or leased by Spinco;
(iii) There are no Environmental Claims pending or, to Heinz's
Knowledge, threatened against Spinco or any of its Subsidiaries or with respect
to the Spinco Business;
(iv) There is no condition on, at or under any property (including
the air, soil and ground water) currently or, to Heinz's Knowledge, formerly
owned, leased or used by Spinco or any of its Subsidiaries (including off-site
waste disposal facilities) or created by Spinco's or any Spinco Subsidiary's
operations that would create liability for Spinco under applicable Environmental
Laws; and
(v) There are no past or present actions, activities, circumstances,
events or incidents (including the release, emission, discharge, presence or
disposal of any Hazardous Material) with respect to Spinco or any of its
Subsidiaries that are reasonably expected to form the basis of a claim under
Environmental Laws or create liability under applicable Environmental Laws.
(b) Spinco has made available to Del Monte all material site
assessments, compliance audits and environmental studies or reports in its
possession, custody or control relating to (i) the environmental conditions on,
under or about the properties or assets currently
28
owned, leased, operated or used by Spinco, any of its Subsidiaries or any
predecessor in interest thereto and (ii) any Hazardous Materials used, managed,
handled, transported, treated, generated, stored, discharged, emitted, or
otherwise released by Spinco, any of its Subsidiaries or any other Person on,
under, about or from any of the properties currently owned or leased, or
otherwise in connection with the use or operation of any of the properties owned
or leased, or otherwise in connection with the use or operation of any of the
properties and assets of Spinco or any of its Subsidiaries, or their respective
businesses and operations.
(c) Notwithstanding any provision of this Agreement to the contrary,
this Section 4.10 constitutes the sole and exclusive representations and
warranties of Heinz and Spinco relating to Environmental Laws, Environmental
Claims or Hazardous Materials.
4.11 Tax Matters. (a) (i) All material Returns relating to Spinco,
the Spinco Business and the Spinco Subsidiaries required to be filed on or prior
to the Closing Date have been timely filed, (ii) all such Returns are true,
correct and complete in all material respects, (iii) all material Taxes relating
to Spinco, the Spinco Business or any Spinco Subsidiary required to be paid on
or prior to the Closing Date have been timely paid, (iv) all material Taxes
relating to Spinco, the Spinco Business and the Spinco Subsidiaries for any
taxable period (or a portion thereof) beginning on or prior to the Closing Date
(which are not yet due and payable) have been properly reserved for in the Heinz
SEC Documents, and (v) Heinz, Spinco, and the Spinco Subsidiaries have duly and
timely withheld all material Taxes relating to the Spinco Business required to
be withheld and such withheld Taxes have been either duly and timely paid to the
proper Governmental Authority or properly set aside in accounts for such purpose
and will be duly and timely paid to the proper Governmental Authority except for
failures with respect to matters covered under clauses (a)(i)-(iv) which would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Spinco.
(b) (i) No audits or other administrative proceedings or court
proceedings are presently pending with regard to any material Taxes or material
Return of Heinz, Spinco or any Spinco Subsidiary relating to the Spinco Business
as to which any taxing authority has asserted in writing any claim which, if
adversely determined, would have a Material Adverse Effect on Spinco, and (ii)
no Governmental Authority is now asserting in writing any deficiency or claim
for material Taxes or any adjustment to material Taxes relating to the Spinco
Business with respect to which Spinco or any Spinco Subsidiary may be liable
with respect to income and other material Taxes which have not been fully paid
or finally settled which would, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Spinco.
(c) Neither Spinco nor any Spinco Subsidiary (i) is a party to or
bound by or has any obligation under any written Tax allocation, sharing or
similar agreement or arrangement other than with respect to the group for which
Heinz is the common Parent, or (ii) is or has been a member of any consolidated,
combined or unitary group for purposes of filing Returns or paying Taxes (other
than the group of which Heinz is the common Parent).
(d) None of the assets of Heinz or any of its Subsidiaries (with
respect to the Spinco Business only) or Spinco or any of its Subsidiaries are
subject to any material Tax lien (other than liens for Taxes that are not yet
due or that are being contested in good faith by appropriate proceedings and
which have been properly reserved (other than reserves for deferred
29
Taxes reflecting differences between book and tax bases in assets and
liabilities ) in the books and records of Heinz or Spinco).
4.12 Benefit Plans. (a) Section 4.12(a) of the Spinco Disclosure
Letter lists each material "employee benefit plan" (as defined in Section 3(3)
of ERISA), and all other material employee benefit, bonus, incentive, deferred
compensation, stock option (or other equity-based), severance, change in
control, welfare (including post-retirement medical and life insurance) and
fringe benefit plans, programs and arrangements, whether or not subject to
ERISA, and whether written or oral (i) sponsored, maintained or contributed to
or required to be contributed to by Heinz or any of its Subsidiaries or to which
Heinz or any of its Subsidiaries is a party and (ii) in which any individual who
is currently or, at or prior to the Effective Time, is expected to become an
officer, director or employee of Spinco (including employees who are, at the
Effective Time, not actively at work on such date by reason of illness,
vacation, leave of absence or short-term disability) (a "Spinco Employee") is a
participant (the "Spinco Benefit Plans"). Except as otherwise provided for in
this Agreement and the other Transaction Agreements, neither Spinco, any of its
Subsidiaries nor any ERISA Affiliate thereof has any commitment or formal plan,
whether legally binding or not, to create any additional employee benefit plan
or modify or change any existing Spinco Benefit Plan that would affect any
Spinco Employee except in the ordinary course of business. Spinco has heretofore
delivered or made available to Del Monte true and complete copies of each Spinco
Benefit Plan and any amendments thereto (or if the plan is not a written plan, a
description thereof), any related trust or other funding vehicle, the most
recent annual reports or summaries required to be prepared or filed under ERISA
or the Code and the most recent determination letter received from the IRS with
respect to each such plan intended to qualify under Section 401 of the Code.
(b) Except as would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect on Spinco, (i)
neither Spinco nor any of its ERISA Affiliates has incurred any liability under
Title IV or Section 302 of ERISA or under Section 412 of the Code that has not
been satisfied in full, and (ii) no condition exists that would reasonably be
expected to result in Spinco incurring any such liability.
(c) (i) No Spinco Benefit Plan is a "multiemployer pension plan," as
defined in Section 3(37) of ERISA, and (ii) none of Spinco or any ERISA
Affiliate thereof has made or suffered a "complete withdrawal" or a "partial
withdrawal," as such terms are respectively defined in Sections 4203 and 4205 of
ERISA, the liability for which would reasonably be expected to have a Material
Adverse Effect on Spinco.
(d) Except as would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect on Spinco, each
Spinco Benefit Plan has been operated and administered in all material respects
in accordance with its terms and applicable law, including, but not limited to,
ERISA, the Code, and the laws of any applicable foreign jurisdiction. Except as
would not result in a material liability to Spinco, all contributions required
to be made with respect to any Spinco Benefit Plan have been timely made. There
are no pending or, to Heinz's Knowledge, threatened claims by, on behalf of or
against any of the Spinco Benefit Plans or any assets thereof, other than
routine claims for benefits under such plans, that, if adversely determined
would, individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect on Spinco and no matter is pending (other than
30
routine qualification determination filings, copies of which have been furnished
to Del Monte or will be promptly furnished to Del Monte when made) with respect
to any of the Spinco Benefit Plans before the IRS, the United States Department
of Labor or the PBGC, that would, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on Spinco.
(e) Each Spinco Benefit Plan intended to be "qualified" within the
meaning of Section 401(a) of the Code has received a determination letter from
the IRS stating that they and the trusts maintained thereunder are exempt from
taxation under Section 401(a) or Section 501(a) of the Code, respectively, and
each trust maintained under any Spinco Benefit Plan intended to satisfy the
requirements of Section 501(c)(9) of the Code has satisfied such requirements,
and in any such case, no event has occurred or condition is known to exist that
would reasonably be expected to adversely affect such tax-qualified status for
any such Spinco Benefit Plan or any such trust.
(f) Except as otherwise provided in or contemplated by this
Agreement or any other Transaction Agreement, the consummation of the
transactions contemplated by this Agreement or the Separation Agreement shall
not result, by itself or with the passage of time, in the payment or
acceleration of any amount, the accrual or acceleration of any benefit or any
increase in any vested interest or entitlement to any benefit or payment by any
employee, officer or director under domestic or foreign law that, individually
or in the aggregate, would reasonably be expected to have a Material Adverse
Effect on Spinco.
4.13 Labor Matters. (a) Except as would not, in the case of clauses
(i)(B), (ii), (iii), (iv) and (v), individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on Spinco (i) neither Spinco nor
any of its Subsidiaries is a party to, or bound by, any (A) collective
bargaining agreement or (B) other Contract with a labor union or labor
organization, nor is any such Contract presently being negotiated; (ii) neither
Spinco nor any of its Subsidiaries is the subject of any proceeding asserting
that Spinco or any of its Subsidiaries has committed an unfair labor practice or
seeking to compel it to bargain with any labor organization as to wages or
conditions of employment, nor, to Heinz's Knowledge, is such proceeding
threatened; (iii) there is no strike, work stoppage, lockout or other labor
dispute involving Spinco or any of its Subsidiaries pending or, to Heinz's
Knowledge, threatened; (iv) there have been no claims initiated by any labor
organization to represent any employees of Spinco not currently represented by a
labor organization within the past five years, nor, to Heinz's Knowledge, are
there any campaigns being conducted to solicit cards from employees to authorize
representation by any labor organization; and (v) Spinco and its Subsidiaries
are in compliance with its obligations pursuant to the Worker Adjustment and
Retraining Notification Act of 1988, as amended ("WARN"), and all other
notification and bargaining obligations arising under any collective bargaining
agreement, statute or otherwise.
(b) Spinco is in compliance in all material respects with all
applicable U.S. and non-U.S. laws relating to employment practices, terms and
conditions of employment, and the employment of former, current, and prospective
employees, independent contractors and "leased employees" (within the meaning of
Section 414(n) of the Code) of Spinco including all such U.S. and non-U.S. laws,
agreements and contracts relating to wages, hours, collective bargaining,
employment discrimination, immigration, disability, civil rights, human rights,
fair
31
labor standards, occupational safety and health, workers' compensation, pay
equity, wrongful discharge and violation of the potential rights of such former,
current, and prospective employees, independent contractors and leased
employees, except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Spinco.
4.14 Intellectual Property Matters. Except as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Spinco, (i) Spinco or its Subsidiaries own all right, title,
and interest in, or otherwise control or have the right to use all the
Intellectual Property (which for purposes of this Section 4.14 shall be deemed
not to include Data Communications Infrastructure) that is necessary to carry on
the business of Spinco and its Subsidiaries substantially as currently conducted
(including in connection with services provided by Spinco and its Subsidiaries
to third parties), free of all Liens; (ii) no Action or Ruling is pending or, to
Heinz's Knowledge, is threatened by any Person with respect to any Intellectual
Property owned or used by Spinco or its Subsidiaries in connection with the
Spinco Business ("Spinco Business IP") or that alleges that any Spinco Business
IP infringes, impairs, dilutes or otherwise violates ("Infringes") the rights of
others and Spinco is not subject to any outstanding injunction, judgment, order,
decree, ruling, charge, settlement, or other dispute involving any third party
Intellectual Property; (iii) to Heinz's Knowledge, all of the material Spinco
Business IP is valid and enforceable, does not Infringe the rights of others and
is not being Infringed by others; and (iv) there are no unpaid maintenance or
renewal fees currently overdue for any of the Spinco Business IP, nor have any
material applications or registrations therefor lapsed or been abandoned,
cancelled, or expired otherwise than in the ordinary course of business.
4.15 Material Contracts. Neither Spinco nor any of its Subsidiaries
is a party to or bound by (a) any "material contract" as defined in Item
601(b)(10) of Regulation S-K of the SEC (the term "material contract" to be
applied as if Spinco were a separate company for the purpose of this Section
4.15) or any agreement, contract or commitment that would be such a "material
contract" but for the exception for contracts entered into in the ordinary
course of business or (b) any non-competition agreement or any other agreement
or obligation that materially limits or will materially limit Spinco or any of
its Subsidiaries from engaging in the Spinco Business. Each of the "material
contracts" (as defined above) of Spinco and the Spinco Subsidiaries is valid and
in full force and effect and neither Spinco nor any of its Subsidiaries has
violated any provisions of, or committed or failed to perform any act that, with
or without prejudice, lapse of time, or both, would constitute a default under
the provisions of any such "material contract".
4.16 Board Approval. The Boards of Directors of Heinz and Spinco, in
each case, at a meeting duly called and held, have unanimously approved this
Agreement and declared it advisable.
4.17 Vote Required. The affirmative vote of Heinz, as the sole
stockholder of Spinco, is the only vote of the shareholders of Heinz or the
stockholders of Spinco necessary to adopt this Agreement. Upon such adoption,
the approval of Spinco's stockholders after the Distribution Date will not be
required to effect the transactions contemplated by this Agreement. The approval
of Heinz's shareholders is not required to effect the transactions contemplated
by the Separation Agreement, this Agreement or any other Transaction Document.
32
4.18 Assets. (a) Except for (i) the Spinco Employees, with respect
to which Heinz and Spinco make no representation and (ii) the Excluded Assets
referred to in clauses (i) through (xii) of Section 2.01(b) of the Separation
Agreement and after giving effect to the transactions described in or
contemplated by the Separation Agreement and the services to be provided
pursuant to the other Transaction Agreements, the Spinco Assets will, at the
Effective Time, constitute those assets reasonably required to operate the
Spinco Business in all material respects as it is currently conducted.
(b) After the Contribution, Spinco or one of its Subsidiaries will
have good, valid and marketable title to, or in the case of leased properties
and assets, valid leasehold interests in, all of the tangible Spinco Assets
except where the failure to have such good, valid and marketable title or valid
leasehold interests would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Spinco, in each case subject to no
Liens, except for (i) Liens reflected in the Audited Statements, (ii) Liens
consisting of zoning or planning restrictions, easements, permits and other
restrictions or limitations on the use of real property or irregularities in
title thereto which do not materially detract from the value of, or materially
impair the use of, such property as it is presently used in connection with the
Spinco Business, (iii) Liens for current Taxes, assessments or governmental
charges or levies on property not yet due or which are being contested in good
faith and for which appropriate reserves in accordance with GAAP have been
created, (iv) mechanic's, materialmen's and similar Liens arising in the
ordinary course of business or by operation of law, (v) any conditions that are
shown on the surveys previously delivered to Del Monte of such real property and
(vi) Liens which would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Spinco.
(c) Section 4.18 of the Spinco Disclosure Letter lists all material
services currently provided to Spinco or any Spinco Subsidiary by Heinz or any
of its Affiliates.
4.19 Certain Payments. Except as otherwise provided for in or
contemplated by this Agreement or the other Transaction Agreements, no Heinz
Benefit Plan or Spinco Benefit Plan and no other contractual arrangements
between Heinz or Spinco and any third party exist that will, as a result of the
transactions contemplated hereby and by the other Transaction Agreements, (a)
result in the payment (or increase of any payment) by Heinz or Spinco or any of
the Spinco Subsidiaries to any current, former or future director, officer,
stockholder, employee or consultant of Spinco or any of its Subsidiaries of any
money or other property or rights (other than amounts to be paid by Spinco or
the Surviving Corporation pursuant to Section 9.3), or (b) accelerate or provide
any other rights to benefits to any such individual, whether or not (i) such
payment, increase, acceleration or provision would constitute a "parachute
payment" (within the meaning of Section 280G of the Code) or (ii) the passage of
time or some other subsequent action or event would be required to cause such
payment, acceleration or provision to be triggered.
4.20 No Other Representations and Warranties. (a) Except for the
representations and warranties contained in Article 3 and in this Article 4 and
except for any representations and warranties specifically set forth in the
other Transaction Agreements, Del Monte acknowledges that neither Heinz nor
Spinco nor any other Person makes any express or implied representation or
warranty with respect to Spinco or its Subsidiaries, the Spinco Business
33
or otherwise or with respect to any other information provided to Del Monte,
whether on behalf of Heinz, Spinco or such other Persons, including as to (i)
merchantability or fitness for any particular use or purpose, (ii) the use of
the Spinco Assets and the assets of the Spinco Business and the operation of the
Spinco Business after the Closing in any manner or (iii) the success or
profitability of the ownership, use or operation of the Spinco Business after
the Closing. Neither Heinz, Spinco nor any other Person will have or be subject
to any liability or indemnification obligation to Del Monte or any other Person
to the extent resulting from the distribution to Del Monte, or Del Monte's use
of, any information related to the Spinco Business and any other information,
document or material made available to Del Monte in certain "data rooms,"
management presentations or any other form in connection with the transactions
contemplated by this Agreement and the other Transaction Agreements.
(b) In connection with Del Monte's investigation of the Spinco
Business, Del Monte may have received or may receive from or on behalf of Heinz,
Spinco or any of their respective Subsidiaries certain projections or
forward-looking statements, including projected statements of operating revenues
and income from operations. Del Monte acknowledges that there are uncertainties
inherent in attempting to make such estimates, projections and other forecasts
and plans, that Del Monte is familiar with such uncertainties, that Del Monte is
taking full responsibility for making its own evaluation of the adequacy and
accuracy of all estimates, projections and other forecasts and plans so
furnished to it (including the reasonableness of the assumptions underlying such
estimates, projections and forecasts), and that Del Monte, in the absence of
fraud, shall have no claim against Heinz, Spinco or any of their respective
Subsidiaries or any other Person acting on their behalf with respect thereto.
Accordingly, neither Heinz, Spinco nor their respective Subsidiaries make any
representation or warranty with respect to such estimates, projections,
forward-looking statements and other forecasts and plans (including the
reasonableness of the assumptions underlying such estimates, projections and
other forecasts and plans).
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF DEL MONTE
Except as set forth in the Del Monte Disclosure Letter, Del Monte
represents and warrants to Heinz and Spinco as follows:
5.1 Organization, Qualification, Etc. Del Monte is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Merger Sub is a corporation duly organized, validly existing
and in good standing under the laws of the State of New York. Each of Del Monte
and Merger Sub has all requisite power and authority to own or lease and operate
and use its properties and assets and carry on its business as presently
conducted and is duly qualified and licensed to do business and is in good
standing in each jurisdiction in which the ownership or leasing of its property
or the conduct of its business requires such qualification, except for
jurisdictions in which the failure to be so qualified or to be in good standing
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Del Monte. Copies of each of Del Monte's and Merger
Sub's certificate of incorporation and bylaws in existence on the date hereof
are included as part of
34
Section 5.1 of the Del Monte Disclosure Letter and are complete and correct and
in full force and effect on the date hereof. Each of the Del Monte Subsidiaries
is a corporation or (as indicated in Section 5.1 of the Del Monte Disclosure
Letter) other legal entity duly organized, validly existing and, to the extent
such concept or similar concept exists in the relevant jurisdiction, in good
standing under the laws of the state or other jurisdiction of its incorporation
or other organization, has all requisite power and authority to own or lease and
operate and use its properties and assets and to carry on its business as
presently conducted and is duly qualified and licensed to do business and is in
good standing in each jurisdiction in which the ownership or leasing of its
property or the conduct of its business requires such qualification, except for
jurisdictions in which the failure to be so qualified or to be in good standing
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Del Monte.
5.2 Capital Stock and Other Matters. (a) The authorized capital
stock of Del Monte consists of 500,000,000 shares of Del Monte Common Stock, par
value $0.01 per share, and 2,000,000 shares of preferred stock, par value $0.01
per share ("Del Monte Preferred Stock"). At the close of business on June 10,
2002, (i) (A) 52,299,442 shares of Del Monte Common Stock (excluding shares held
by Del Monte as treasury shares) were issued and outstanding, 8,122,882 shares
of Del Monte Common Stock were reserved for issuance pursuant to the Del Monte
Stock Plans and options to purchase 5,473,139 shares of Del Monte Common Stock
were outstanding and (B) no shares of Del Monte Preferred Stock were
outstanding, (ii) no shares of Del Monte Common Stock were held by Del Monte in
its treasury, and (iii) no bonds, debentures, notes or other indebtedness of Del
Monte or any of its Subsidiaries having the right to vote (or convertible into
securities having the right to vote) on any matters on which holders of shares
of capital stock of Del Monte (including Del Monte Common Stock) may vote ("Del
Monte Voting Debt") were issued or outstanding. All outstanding shares of Del
Monte Common Stock are, and all shares thereof which may be issued will be, when
issued, duly authorized, validly issued, fully paid and not subject to
preemptive rights. Except as set forth in this Section 5.2, there are not
outstanding (i) any shares of capital stock of Del Monte, Del Monte Voting Debt,
Del Monte Common Stock or other voting securities of Del Monte, (ii) any
securities of Del Monte or any of its Subsidiaries convertible into or
exchangeable for shares of capital stock of Del Monte, Del Monte Voting Debt,
Del Monte Common Stock or other voting securities of Del Monte or (iii) any
options, warrants, calls, rights (including preemptive rights), commitments or
other Contracts (other than this Agreement and
35
certain other Transaction Agreements) to which Del Monte or any of its
Subsidiaries is a party or by which Del Monte or any of its Subsidiaries will be
bound obligating Del Monte or any of its Subsidiaries to issue, deliver, sell,
purchase, redeem or acquire, or cause to be issued, delivered, sold, purchased,
redeemed or acquired, or otherwise relating to, shares of capital stock of Del
Monte, Del Monte Voting Debt, Del Monte Common Stock or other voting securities
of Del Monte or any of its Subsidiaries or obligating Del Monte or any of its
Subsidiaries to grant, extend or enter into any such option, warrant, call,
right, commitment or Contract. During the period from June 10, 2002 to the date
of this Agreement, there have been no issuances by Del Monte of any shares of
capital stock of Del Monte, Del Monte Voting Debt, Del Monte Common Stock or
other voting securities of Del Monte, (ii) any securities of Del Monte or any of
its Subsidiaries convertible into or exchangeable for shares of capital stock of
Del Monte, Del Monte Voting Debt, Del Monte Common Stock or other voting
securities of Del Monte or (iii) any options, warrants, calls, rights (including
preemptive rights), commitments or other Contracts (other than this Agreement
and certain other Transaction Agreements) to which Del Monte or any of its
Subsidiaries is a party or by which Del Monte or any of its Subsidiaries will be
bound obligating Del Monte or any of its Subsidiaries to issue, deliver, sell,
purchase, redeem or acquire, or cause to be issued, delivered, sold, purchased,
redeemed or acquired, or otherwise relating to, shares of capital stock of Del
Monte, Del Monte Voting Debt, Del Monte Common Stock or other voting securities
of Del Monte or any of its Subsidiaries or obligating Del Monte or any of its
Subsidiaries to grant, extend or enter into any such option, warrant, call,
right, commitment or Contract, other than shares issued since June 10, 2002 upon
the exercise of outstanding options. Section 5.2 of the Del Monte Disclosure
Letter contains a true and complete list of each material Subsidiary of Del
Monte at the Effective Time, including its jurisdiction of organization, Del
Monte's interest therein and a brief description of the principal line or lines
of business conducted by each such material Subsidiary. All the issued and
outstanding shares of capital stock of, or other equity or voting interests in,
each Subsidiary of Del Monte are owned by Del Monte, by another wholly-owned
Subsidiary of Del Monte or by Del Monte and another wholly-owned Subsidiary of
Del Monte, free and clear of all Liens, and are duly authorized, validly issued,
fully paid and non-assessable. The authorized capital stock of Merger Sub will
consist of only shares of common stock all of which immediately prior to the
Effective Time will be owned by Del Monte.
(b) There are no stockholder agreements, voting trusts or other
Contracts to which Del Monte is a party or by which it is bound relating to the
voting or transfer of any shares of capital stock of Del Monte. Except for the
shares of capital stock of, or other equity interest in, its Subsidiaries, as of
the date of this Agreement, Del Monte does not own, directly or indirectly, any
capital stock of, or other equity interest or voting interests in, any
corporation, partnership, joint venture, association, limited liability company
or other entity.
5.3 Corporate Authority; No Violation, Etc. (a) Del Monte has the
requisite corporate power and authority to enter into this Agreement and to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance by Del Monte of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all requisite corporate action on the part of Del Monte,
subject to obtaining the Requisite Approval. This Agreement has been duly
executed and delivered by Del Monte and constitutes a legal, valid and binding
agreement of Del Monte, enforceable against Del Monte in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar
laws of general application relating to or affecting creditors' rights and to
general equity principles. None of the execution and delivery by Del Monte of
this Agreement, the consummation by Del Monte of the transactions contemplated
hereby or compliance by Del Monte with any of the provisions hereof (i) violates
or conflicts with any provisions of Del Monte's certificate of incorporation or
bylaws, (ii) requires any consent, approval, authorization or permit of,
registration, declaration or filing with, or notification to, any Governmental
Authority or any other Person, (iii) results in a default (or an event that,
with notice or lapse of time or both, would become a default) or gives rise to
any right of termination or buy-out by any third party, cancellation, amendment
or acceleration of any obligation or the loss of any benefit under any Contract
to which Del Monte or any of its Subsidiaries is a party or by which Del Monte
or any of its Subsidiaries or any of their respective assets or properties is
bound or affected, (iv) results in the creation of a Lien on any of the issued
and outstanding shares of Del Monte Common Stock or capital stock of any
Subsidiaries or on any of the assets of Del Monte or its Subsidiaries or (v)
violates or conflicts with any Order, law,
36
ordinance, rule or regulation applicable to Del Monte or any of its
Subsidiaries, or any of the properties, businesses or assets of any of the
foregoing, other than such exceptions in the case of each of clauses (ii),
(iii), (iv) and (v) above as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Del Monte.
(b) Merger Sub has the requisite corporate power and authority to
enter into this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution, delivery and
performance by Merger Sub of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all requisite
corporate action on the part of Merger Sub, subject to the adoption of this
Agreement by Del Monte as sole stockholder of Merger Sub. This Agreement has
been duly executed and delivered by Merger Sub and constitutes a legal, valid
and binding agreement of Merger Sub, enforceable against Merger Sub in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general application relating to or affecting
creditors' rights and to general equity principles. None of the execution and
delivery by Merger Sub of this Agreement, the consummation by Merger Sub of the
transactions contemplated hereby or compliance by Merger Sub with any of the
provisions hereof does or will (i) violate or conflict with any provisions of
Merger Sub's certificate of incorporation or bylaws, (ii) require any consent,
approval, authorization or permit of, registration, declaration or filing with,
or notification to, any Governmental Authority or any other Person, (iii) result
in a default (or an event that, with notice or lapse of time or both, would
become a default) or give rise to any right of termination or buy-out by any
third party, cancellation, amendment or acceleration of any obligation or the
loss of any benefit under any Contract to which Merger Sub or any of its
Subsidiaries is a party or by which Merger Sub or any of its Subsidiaries or any
of their respective assets or properties is bound or affected, (iv) result in
the creation of a Lien on any of the issued and outstanding shares of Merger Sub
or capital stock of any Subsidiaries or on any of the assets of Merger Sub or
its Subsidiaries or (v) violate or conflict with any Order, law, ordinance, rule
or regulation applicable to Merger Sub or any of its Subsidiaries, or any of the
properties, businesses or assets of any of the foregoing, other than such
exceptions in the case of each of clauses (ii), (iii), (iv) and (v) above as
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Del Monte.
5.4 Affiliate Transactions. There are no transactions, agreements,
arrangements or understandings between (i) Del Monte or its Subsidiaries, on the
one hand, and (ii) Del Monte's Affiliates (other than wholly-owned Subsidiaries
of Del Monte) and other Persons, on the other hand, of the type that are
required to be disclosed under Item 404 of Regulation S-K under the Securities
Act.
5.5 Del Monte Reports and Financial Statements. As of their
respective dates, all reports, prospectuses, forms, schedules, registration
statements, proxy statements or information statements required to be filed by
Del Monte under the Securities Act or under the Exchange Act (the "Del Monte SEC
Documents") complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and none of such Del
Monte SEC Documents when filed contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading. The audited consolidated financial statements
and unaudited consolidated interim financial
37
statements included in the Del Monte SEC Documents (including any related notes
and schedules) fairly present in all material respects the financial position of
Del Monte and its consolidated Subsidiaries as of the dates thereof and the
results of operations and changes in financial position or other information
included therein for the periods or as of the dates then ended, subject, where
appropriate, to normal year-end adjustments, in each case in accordance with
past practice and GAAP during the periods involved (except as otherwise stated
therein). Since June 30, 2000, Del Monte has timely filed all reports,
registration statements and other filings required to be filed with the SEC
under the rules and regulations of the SEC. Except as set forth in the unaudited
financial statements as of and for the nine month period ended March 31, 2002
included in the Del Monte SEC Documents, Del Monte and its Subsidiaries do not
have any liability or obligation of any nature (whether accrued, absolute,
contingent or otherwise) other than (i) liabilities or obligations incurred in
the ordinary course of business since Xxxxx 00, 0000, (xx) liabilities or
obligations not required to be disclosed on a balance sheet prepared in
accordance with GAAP or in the notes thereto, or (iii) liabilities or
obligations that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Del Monte. The books and records
of Del Monte and its Subsidiaries have been, and are being, maintained in
accordance with GAAP and any other applicable legal and accounting requirements.
5.6 Absence of Certain Changes or Events. (a) Except (i) as
specifically contemplated or permitted by this Agreement, (ii) as set forth in
the financial statements as of and for the year ended June 30, 2001 and as of
and for the nine month period ended March 31, 2002, in each case, included in
the Del Monte SEC Documents and (iii) for changes resulting from the
announcement of this Agreement or the transactions contemplated hereby, since
March 31, 2002, the business of Del Monte has been conducted in all material
respects only in the ordinary course, and there has not been any event
(including any damage, destruction or loss whether or not covered by insurance),
that would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Del Monte.
(b) Since March 31, 2002, there has not been (i) any declaration,
setting aside or payment of or dividend on, or other distribution (whether in
cash, stock or property) in respect of, any of Del Monte's or any of its
Subsidiaries capital stock or other equity or voting interests, except for
dividends by a wholly owned Subsidiary of Del Monte to its stockholders, (ii)
any purchase, redemption or other acquisition by Del Monte or any of its
Subsidiaries of any shares of capital stock of, or other equity or voting
interests in, Del Monte or any of its Subsidiaries or any options, warrants,
calls or rights to acquire such shares or other interests, (iii) any split,
combination or reclassification of any of Del Monte's capital stock or other
equity or voting interests or any issuance or the authorization of any issuance
of any other securities in respect of, in lieu of or in substitution for shares
of capital stock of, or other equity or voting interest in, Del Monte, (iv)
other than as would be permitted by Section 6.2(j), any change by Del Monte or
its Subsidiaries in its accounting principles, practices or methods or (v) any
increase in the compensation payable by Del Monte or any of its Subsidiaries to
officers or key employees or any material amendment of any of the Del Monte
Benefit Plans except for increases or amendments (A) required by applicable law,
(B) in the ordinary and usual course of business consistent with past practice
or (C) permitted by Section 6.2(h).
38
5.7 Actions; Litigation. (a) No Action against Del Monte or any of
Del Monte's Subsidiaries, is pending or, to Del Monte's Knowledge, threatened,
except with respect to such Actions the outcome of which would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect on
Del Monte.
(b) There is no Ruling against Del Monte or any of its Subsidiaries
that would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Del Monte.
5.8 Licenses; Compliance with Laws. (a) Del Monte and its
Subsidiaries hold all Licenses that are required for the conduct of the
businesses of Del Monte and its Subsidiaries as currently conducted and are in
compliance with the terms of all such Licenses so held, except, in the case of
each of the foregoing, as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Del Monte.
(b) Except with respect to Environmental Laws, tax matters, employee
benefits and labor matters (which are addressed in Sections 5.10, 5.11, 5.12 and
5.13, respectively), Del Monte and its Subsidiaries are in compliance with all
laws, ordinances or regulations of any Governmental Authority applicable to any
of them or their respective operations, except to the extent such noncompliance
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Del Monte.
5.9 Proxy Statement/Prospectus; Registration Statement. None of the
information regarding Del Monte or its Subsidiaries provided by Del Monte for
inclusion in, or incorporation by reference into, the Proxy Statement/Prospectus
or the Registration Statement or the Form 10 filed by Spinco, if any, will, in
the case of the definitive Proxy Statement/Prospectus or any amendment or
supplement thereto, at the time of the mailing of the definitive Proxy
Statement/Prospectus and any amendment or supplement thereto, and at the time of
the Del Monte Stockholders Meeting, or, in the case of the Registration
Statement, at the time it becomes effective, at the time of the Del Monte
Stockholders Meeting and at the Effective Time, or in the case of the Form 10,
if any, at the time of filing with the SEC, contain an untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. The Registration
Statement will comply in all material respects with the provisions of the
Securities Act and the Exchange Act, as the case may be, except that no
representation or warranty is made by Del Monte with respect to any information
provided by Heinz or Spinco which is contained or incorporated by reference in,
or furnished in connection with the preparation of, the Registration Statement.
5.10 Environmental Matters. (a)....Except as would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect on
Del Monte:
(i) Each of Del Monte and its Subsidiaries has obtained all licenses,
permits and other authorizations under Environmental Laws required for the
conduct and operation of its business and is in compliance with the terms and
conditions contained therein, and is in compliance with all applicable
Environmental Laws;
39
(ii) To Del Monte's Knowledge, none of Del Monte and its Subsidiaries
is subject to any contractual environmental indemnification obligation regarding
businesses currently owned or operated by Del Monte or regarding properties
currently owned or leased by Del Monte;
(iii) There are no Environmental Claims pending or, to Del Monte's
Knowledge, threatened against Del Monte or any of its Subsidiaries;
(iv) There is no condition on, at or under any property (including
the air, soil and ground water) currently or, to Del Monte's Knowledge, formerly
owned, leased or used by Del Monte or any of its Subsidiaries (including
off-site waste disposal facilities) or created by Del Monte's or any Del Monte
Subsidiary's operations that would create liability for Del Monte under
applicable Environmental Laws; and
(v) There are no past or present actions, activities, circumstances,
events or incidents (including the release, emission, discharge, presence or
disposal of any Hazardous Material) with respect to Del Monte or any of its
Subsidiaries that are reasonably expected to form the basis of a claim under
Environmental Laws or create liability under applicable Environmental Laws.
(b) Del Monte has made available to Spinco all material site
assessments, compliance audits and environmental studies or reports in its
possession, custody or control relating to (i) the environmental conditions on,
under or about the properties or assets currently owned, leased, operated or
used by Del Monte, any of its Subsidiaries or any predecessor in interest
thereto and (ii) any Hazardous Materials used, managed, handled, transported,
treated, generated, stored, discharged, emitted, or otherwise released by Del
Monte, any of its Subsidiaries or any other Person on, under, about or from any
of the properties currently owned or leased, or otherwise in connection with the
use or operation of any of the properties owned or leased, or otherwise in
connection with the use or operation of any of the properties and assets of Del
Monte or any of its Subsidiaries, or their respective businesses and operations.
(c) Notwithstanding any provision of this Agreement to the contrary,
this Section 5.10 constitutes the sole and exclusive representations and
warranties of Del Monte relating to Environmental Laws, Environmental Claims or
Hazardous Materials.
5.11 Tax Matters. (a) (i) All material Returns relating to Del Monte
and the Del Monte Subsidiaries required to be filed on or prior to the Closing
Date have been timely filed, (ii) all such Returns are true, correct and
complete in all material respects, (iii) all material Taxes relating to Del
Monte or any Del Monte Subsidiary required to be paid on or prior to the Closing
Date have been timely paid, (iv) all material Taxes relating to Del Monte and
the Del Monte Subsidiaries for any taxable period (or a portion thereof)
beginning on or prior to the Closing Date (which are not yet due and payable)
have been properly reserved for in the Del Monte SEC Documents, and (v) Del
Monte and the Del Monte Subsidiaries have duly and timely withheld all material
Taxes required to be withheld and such withheld Taxes have been either duly and
timely paid to the proper Governmental Authority or properly set aside in
accounts for such purpose and will be duly and timely paid to the proper
Governmental Authority except for
40
failures with respect to matters covered under clauses (a)(i)-(iv) which would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Del Monte .
(b) (i) No audits or other administrative proceedings or court
proceedings are presently pending with regard to any material Taxes or material
Return of Del Monte or any Del Monte Subsidiary as to which any taxing authority
has asserted in writing any claim which, if adversely determined, would have a
Material Adverse Effect on Del Monte, and (ii) no Governmental Authority is now
asserting in writing any deficiency or claim for material Taxes or any
adjustment to material Taxes with respect to which Del Monte or any Del Monte
Subsidiary may be liable with respect to income and other material Taxes which
have not been fully paid or finally settled which would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Del
Monte.
(c) None of Del Monte or any Del Monte Subsidiary (i) is a party to
or bound by or has any obligation under any written Tax allocation, sharing or
similar agreement or arrangement (other than the group of which Del Monte is the
common parent) or (ii) is or has been a member of any consolidated, combined or
unitary group for purposes of filing Returns or paying Taxes (other than the
group of which Del Monte is the common parent).
(d) Neither Del Monte nor Merger Sub has been a party to a spin-off
transaction that could give rise to a Tax liability under Section 355(e) of the
Code.
(e) None of the assets of Del Monte or any of its Subsidiaries are
subject to any material Tax lien (other than liens for Taxes that are not yet
due or that are being contested in good faith by appropriate proceedings and
which have been properly reserved (other than reserves for deferred Taxes
reflecting differences between book and tax bases in assets and liabilities ) in
the books and records of Del Monte).
5.12 Benefit Plans. (a) Section 5.12(a) of the Del Monte Disclosure
Letter lists each material "employee benefit plan" (as defined in Section 3(3)
of ERISA), and all other material employee benefit, bonus, incentive, deferred
compensation, stock option (or other equity-based), severance, change in
control, welfare (including post-retirement medical and life insurance) and
fringe benefit plans, programs and arrangements, whether or not subject to ERISA
and, whether written or oral (i) sponsored, maintained or contributed to or
required to be contributed to by Del Monte or any of its Subsidiaries or to
which Del Monte or any of its Subsidiaries is a party and (ii) in which any
individual who is currently or has been an officer, director or employee of Del
Monte (a "Del Monte Employee") is a participant (the "Del Monte Benefit Plans").
Neither Del Monte, any of its Subsidiaries nor any ERISA Affiliate thereof has
any commitment or formal plan, whether legally binding or not, to create any
additional employee benefit plan or modify or change any existing Del Monte
Benefit Plan that would affect any Del Monte Employee except in the ordinary
course of business. Del Monte has heretofore delivered or made available to
Heinz and Spinco true and complete copies of each Del Monte Benefit Plan and any
amendments thereto (or if the plan is not a written plan, a description
thereof), any related trust or other funding vehicle, the most recent annual
reports or summaries required to be prepared or filed under ERISA or the Code
and the most recent determination letter received from the IRS with respect to
each such plan intended to qualify under Section 401 of the Code.
41
(b) Except as would not, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect on Del Monte, (i) neither Del
Monte nor any of its ERISA Affiliates has incurred any liability under Title IV
or Section 302 of ERISA or under Section 412 of the Code that has not been
satisfied in full, and (ii) no condition exists that would reasonably be
expected to result in Del Monte incurring any such liability.
(c) (i) No Del Monte Benefit Plan is a "multiemployer pension plan,"
as defined in Section 3(37) of ERISA and (ii) none of Del Monte, or any ERISA
Affiliate thereof has made or suffered a "complete withdrawal" or a "partial
withdrawal," as such terms are respectively defined in Sections 4203 and 4205 of
ERISA, the liability for which would reasonably be expected to have a Material
Adverse Effect on Del Monte.
(d) Except as would not, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect on Del Monte, each Del Monte
Benefit Plan has been operated and administered in all respects in accordance
with its terms and applicable law, including, but not limited to, ERISA, the
Code and the laws of any applicable foreign jurisdiction. Except as would not
result in a material liability to Del Monte, all contributions required to be
made with respect to any Del Monte Benefit Plan have been timely made. There are
no pending or, to Del Monte's Knowledge, threatened claims by, on behalf of or
against any of the Del Monte Benefit Plans or any assets thereof, other than
routine claims for benefits under such plans, that, if adversely determined
could, individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect on Del Monte or any of its Subsidiaries and no matter is
pending (other than routine qualification determination filings, copies of which
have been furnished to Heinz and Spinco or will be promptly furnished to Heinz
and Spinco when made) with respect to any of the Del Monte Benefit Plans before
the IRS, the United States Department of Labor or the PBGC that would,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Del Monte.
(e) Each Del Monte Benefit Plan intended to be "qualified" within the
meaning of Section 401(a) of the Code has received a determination letter from
the IRS stating that they and the trusts maintained thereunder are exempt from
taxation under Section 401(a) of the Code, respectively, and each trust
maintained under any Del Monte Benefit Plan intended to satisfy the requirements
of Section 501(c)(9) of the Code has satisfied such requirements and, in any
such case, no event has occurred or condition is known to exist that would
reasonably be expected to adversely affect such tax-qualified status for any
such Del Monte Benefit Plan or any such trust.
(f) Except as otherwise provided in or contemplated by this Agreement
or any other Transaction Agreement, the consummation of the transactions
contemplated by this Agreement or the Separation Agreement shall not result by
itself or with the passage of time in the payment or acceleration of any amount,
the accrual or acceleration of any benefit or any increase in any vested
interest or entitlement to any benefit or payment by any employee, officer or
director under domestic or foreign law that would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Del
Monte.
5.13 Labor Matters. (a) Except as would not, in the case of clauses
(i)(B), (ii), (iii), (iv) and (v), individually or in the aggregate, reasonably
be expected to have a Material
42
Adverse Effect on Del Monte (i) neither Del Monte nor any of its Subsidiaries is
a party to, or bound by, any (A) collective bargaining agreement or (B) other
Contract with a labor union or labor organization, nor is any such Contract
presently being negotiated; (ii) neither Del Monte nor any of its Subsidiaries
is the subject of any proceeding asserting that Del Monte or any of its
Subsidiaries has committed an unfair labor practice or seeking to compel it to
bargain with any labor organization as to wages or conditions of employment,
nor, to Del Monte's Knowledge, is such proceeding threatened; (iii) there is no
strike, work stoppage, lockout or other labor dispute involving Del Monte or any
of its Subsidiaries pending or, to Del Monte's Knowledge, threatened; (iv) there
have been no claims initiated by any labor organization to represent any
employees of Del Monte not currently represented by a labor organization within
the past five years, nor, to Del Monte's Knowledge, are there any campaigns
being conducted to solicit cards from employees to authorize representation by
any labor organization; and (v) Del Monte and its Subsidiaries are in compliance
with its obligations pursuant to WARN, and all other notification and bargaining
obligations arising under any collective bargaining agreement, statute or
otherwise.
(b) Del Monte is in compliance in all material respects with all
applicable U.S. and non-U.S. laws relating to employment practices, terms and
conditions of employment, and the employment of former, current, and prospective
employees, independent contractors and "leased employees" (within the meaning of
Section 414(n) of the Code) of Del Monte including all such U.S. and non-U.S.
laws, agreements and contracts relating to wages, hours, collective bargaining,
employment discrimination, immigration, disability, civil rights, human rights,
fair labor standards, occupational safety and health, workers' compensation, pay
equity, wrongful discharge and violation of the potential rights of such former,
current and prospective employees, independent contractors and leased employees,
except as would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on Del Monte.
5.14 Intellectual Property Matters. Except as would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect on
Del Monte, (i) Del Monte or its Subsidiaries own all right, title, and interest
in, or otherwise control or have the right to use all the Intellectual Property
that is necessary to carry on the business of Del Monte and its Subsidiaries
substantially as currently conducted (including in connection with services
provided by Del Monte and its Subsidiaries to third parties), free of all Liens;
(ii) no Action or Ruling is pending or, to Del Monte's Knowledge, is threatened
by any Person with respect to any Intellectual Property owned or used by Del
Monte or its Subsidiaries in connection with the business of Del Monte ("Del
Monte IP") or that alleges that any Del Monte IP Infringes the rights of others
and Del Monte is not subject to any outstanding injunction, judgment, order,
decree, ruling, charge, settlement, or other dispute involving any third party
Intellectual Property; (iii) to Del Monte's Knowledge, all of the material Del
Monte IP is valid and enforceable, does not Infringe the rights of others and is
not being Infringed by others; and (iv) there are no unpaid maintenance or
renewal fees currently overdue for any of the Del Monte IP, nor have any
material applications or registrations therefor lapsed or been abandoned,
cancelled, or expired otherwise than in the ordinary course of business.
5.15 Material Contracts. Neither Del Monte nor any of its
Subsidiaries is a party to or bound by (a) any "material contract" as defined in
Item 601(b)(10) of Regulation S-K of the SEC or any agreement, contract or
commitment that would be such a "material contract"
43
but for the exception for contracts entered into in the ordinary course of
business or (b) any non-competition agreement or any other agreement or
obligation that materially limits or will materially limit Del Monte or any of
its Subsidiaries from engaging in the business of Del Monte. Each of the
"material contracts" (as defined above) of Del Monte and the Del Monte
Subsidiaries is valid and in full force and effect and neither Del Monte nor any
of its Subsidiaries has violated any provisions of, or committed or failed to
perform any act that, with or without prejudice, lapse of time, or both, would
constitute a default under the provisions of any such "material contract".
5.16 Brokers or Finders. No agent, broker, investment banker,
financial advisor or other similar Person is or will be entitled, by reason of
any agreement, act or statement by Del Monte or any of its Subsidiaries,
directors, officers or employees, to any financial advisory, broker's, finder's
or similar fee or commission from, to reimbursement of expenses by or to
indemnification or contribution by, in each case, Del Monte or its Subsidiaries
in connection with any of the transactions contemplated by this Agreement.
5.17 Board Approval. (a) The Boards of Directors of each of Del Monte
and Merger Sub, in each case, at a meeting duly called and held, have
unanimously approved this Agreement and declared it advisable and (b) the Board
of Directors of Del Monte, at a meeting duly called and held, (i) has determined
that this Agreement and the transactions contemplated hereby, including the
Merger, taken together, are fair to, and in the best interests of, the Del Monte
Stockholders, (ii) has resolved to recommend that the Del Monte Stockholders
entitled to vote thereon adopt the Amended and Restated Certificate of
Incorporation and approve the issuance of the Del Monte Common Stock in the
Merger (the "Share Issuance"), subject to Section 6.4(c) (collectively, the "Del
Monte Board Recommendation") and (iii) has determined that the Amended and
Restated Certificate of Incorporation is advisable and fair to, and in the best
interests of, the Del Monte Stockholders. The Special Committee has recommended
that the Boards of Directors of Del Monte and Merger Sub approve this Agreement
and the transactions contemplated hereby.
5.18 Vote Required. (a) The only vote of the Del Monte Stockholders
required for (i) adoption of the Amended and Restated Certificate of
Incorporation is the affirmative vote of a majority of the voting power of all
outstanding shares of Del Monte Common Stock and (ii) the Share Issuance is, to
the extent required by the applicable regulations of the NYSE, the affirmative
vote of a majority of the voting power of the shares of Del Monte Common Stock
present in person and voting on the issue or represented by proxy and voting on
the issue at the Del Monte Stockholders Meeting (the "Share Issuance Approval")
(together, sometimes referred to herein as the "Requisite Approval").
(b) The affirmative vote of Del Monte, as the sole stockholder of
Merger Sub, is the only vote of the holders of the capital stock of Merger Sub
necessary to adopt this Agreement.
5.19 Certain Payments. No Del Monte Benefit Plan and no other
contractual arrangements between Del Monte and any third party exist that will,
as a result of the transactions contemplated hereby and by the other Transaction
Agreements, (a) result in the payment (or increase of any payment) by Del Monte
or any of its Subsidiaries to any current,
44
former or future director, officer, stockholder, employee or consultant of Del
Monte or any of its Subsidiaries or of any other Person in which Del Monte or
any of its Subsidiaries has an equity or similar interest of any money or other
property or rights (other than payments for the fees and expenses of Del Monte's
accountants, legal advisors, investment bankers and similar professional
advisors), or (b) accelerate or provide any other rights or benefits to any such
individual, whether or not (i) such payment, increase, acceleration or provision
would constitute a "parachute payment" (within the meaning of Section 280G of
the Code) or (ii) the passage of time or some other subsequent action or event
would be required to cause such payment, acceleration or provision to be
triggered.
5.20 Opinion of Del Monte Financial Advisor. Del Monte has received
an opinion of Xxxxxx Xxxxxxx & Co. Incorporated to the effect that as of the
date hereof, the Exchange Ratio is fair, from a financial point of view, to the
holders of Del Monte Common Stock.
5.21 Rights Agreement. Concurrently with its approval of this
Agreement, Del Monte's Board of Directors has approved the adoption of the
Rights Agreement, dated and effective as of the date of this Agreement (the "Del
Monte Rights Agreement"), between Del Monte and The Bank of New York, as Rights
Agent, which will automatically terminate on the first anniversary of the date
of this Agreement. The Del Monte Rights Agreement provides that neither Heinz
nor Spinco shall become a "15% Person" thereunder as a result of the execution,
delivery and performance of this Agreement and the Voting Agreement.
5.22 Takeover Statute. No "fair price," "moratorium," "control share
acquisition," "business combination," "stockholder protection" or other similar
antitakeover statute or regulation enacted under Delaware law, or, under the law
of any other jurisdiction, will apply to this Agreement, the Merger or the
transactions contemplated hereby. Del Monte is not subject to the restrictions
on "business combinations" (as defined in Section 203 of the DGCL) set forth in
Section 203 of the DGCL.
5.23 Title to Assets. (a) As of the date hereof, Del Monte has good,
valid and marketable title to, or in the case of leased properties and assets,
valid leasehold interests in, all of the tangible assets of Del Monte except
where the failure to have such good, valid and marketable title or valid
leasehold interests would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Del Monte, in each case subject to
no liens, except for (i) Liens reflected in the Del Monte SEC Documents, (ii)
Liens consisting of zoning or planning restrictions, easements, permits and
other restrictions or limitations on the use of real property or irregularities
in title thereto which do not materially detract from the value of, or
materially impair the use of, such property by Del Monte or any of its
Subsidiaries, (iii) Liens for current Taxes, assessments or governmental charges
or levies on property not yet due or which are being contested in good faith and
for which appropriate reserves in accordance with GAAP have been created, (iv)
mechanic's, materialmen's and similar Liens arising in the ordinary course of
business or by operation of law, (v) any conditions that are shown on the
surveys previously delivered to Heinz of such real property and (vi) Liens which
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Del Monte.
45
5.24 No Other Representations and Warranties. (a) Except for the
representations and warranties contained in this Article 5 and except for any
representations and warranties specifically set forth in the other Transaction
Agreements, Heinz and Spinco acknowledge that neither Del Monte nor Merger Sub
nor any other Person makes any express or implied representation or warranty
with respect to Del Monte and its Subsidiaries or otherwise or with respect to
any other information provided to Heinz or Spinco, whether on behalf of Del
Monte or such other Persons. Neither Del Monte nor any other Person will have or
be subject to any liability or indemnification obligation to Heinz or Spinco or
any other Person to the extent resulting from the distribution to Heinz or
Spinco, or Heinz or Spinco's use of, any information related to Del Monte and
any other information, document or material made available to Heinz or Spinco in
certain "data rooms," management presentations or any other form in connection
with the transactions contemplated by this Agreement.
(b) In connection with each of Heinz's and Spinco's investigation of
the business of Del Monte, Heinz and Spinco may have received or may receive
from or on behalf of Del Monte or its Subsidiaries certain projections or
forward-looking statements, including projected statements of operating revenues
and income from operations. Each of Heinz and Spinco acknowledges that there are
uncertainties inherent in attempting to make such estimates, projections and
other forecasts and plans, that each of Heinz and Spinco is familiar with such
uncertainties, that each of Heinz and Spinco is taking full responsibility for
making its own evaluation of the adequacy and accuracy of all estimates,
projections and other forecasts and plans so furnished to it (including the
reasonableness of the assumptions underlying such estimates, projections and
forecasts), and that each of Heinz and Spinco, in the absence of fraud, shall
have no claim against Del Monte or any Subsidiaries of Del Monte or any other
Person acting on their behalf with respect thereto. Accordingly, Del Monte and
its Subsidiaries make no representation or warranty with respect to such
estimates, projections, forward-looking statements and other forecasts and plans
(including the reasonableness of the assumptions underlying such estimates,
projections and other forecasts and plans).
ARTICLE 6
COVENANTS AND AGREEMENTS
6.1 Conduct of Business by Spinco and Heinz Pending the Merger.
Following the date of this Agreement and prior to the earlier of the Effective
Time or the Termination Date, except as specifically contemplated or permitted
by this Agreement, the Separation Agreement or the other Transaction Agreements
or described in Section 6.1 of the Spinco Disclosure Letter or to the extent
that Del Monte shall otherwise consent in writing, which consent shall not be
unreasonably withheld or delayed, Heinz and Spinco agree, as to themselves and
their respective Subsidiaries:
(a) Ordinary Course. Each of Heinz (with respect to the Spinco
Business only) and Spinco shall conduct its business, and Heinz shall cause its
Subsidiaries (with respect to the Spinco Business only), and Spinco shall cause
its Subsidiaries, to conduct its business only in, and Heinz (with respect to
the Spinco Business only) and Spinco shall not take any action except in, the
ordinary course of business and in a manner consistent in all material respects
with
46
past practice and shall use all commercially reasonable efforts to preserve
intact its present business organization, maintain its material rights, licenses
and permits, keep available the services of its business unit managers and other
key employees and preserve its relationships with customers, suppliers and
others having business dealings with it in such a manner that its goodwill and
ongoing businesses are not impaired in any material respect as of the Effective
Time. In furtherance of the foregoing, Heinz shall not (with respect to the
Spinco Business only) and Spinco shall not, and Heinz shall cause its
Subsidiaries not to (with respect to the Spinco Business only) and Spinco shall
cause its Subsidiaries not to, other than in the ordinary course of business,
take any action to accelerate the collection of Trade Accounts Receivable or
defer the payment of Trade Accounts Payable.
(b) Dividends; Changes in Stock. Neither Heinz nor Spinco shall, nor
shall either of them permit any of its respective Subsidiaries to, nor shall it
or any of its Subsidiaries propose to, (i) declare, set aside or pay any
dividends on or make other distributions in respect of any shares of the capital
stock or partnership interests of Spinco or its Subsidiaries (whether in cash,
securities or property or any combination thereof), except for the declaration
and payment of cash dividends or distributions paid on or with respect to a
class of capital stock or partnership interests all of which shares of capital
stock or partnership interests (with the exception of directors' qualifying
shares and other similarly nominal holdings required by law to be held by
Persons other than Spinco or its wholly-owned Subsidiaries), as the case may be,
of the applicable corporation or partnership are owned directly or indirectly by
Spinco; (ii) split, combine or reclassify any of the capital stock of Spinco or
its Subsidiaries or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of, or in substitution for, shares of the
capital stock of Spinco or its Subsidiaries; or (iii) amend the terms or change
the period of exercisability of, purchase, repurchase, redeem or otherwise
acquire, or permit Spinco or any of its Subsidiaries to amend the terms or
change the period of exercisability of, purchase, repurchase, redeem or
otherwise acquire, any of its securities or any securities of any of its
Subsidiaries, including shares of Spinco Common Stock, or any option, warrant or
right, directly or indirectly, to acquire any such securities or propose to do
any of the foregoing.
(c) Issuance of Securities. Neither Heinz nor Spinco shall, nor shall
either of them permit any of its respective Subsidiaries to, issue, sell,
pledge, dispose of or encumber, or authorize the issuance, sale, pledge,
disposition or encumbrance of, any shares of Spinco's capital stock or capital
stock of any Spinco Subsidiary of any class, or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of
capital stock, or any other ownership interest (including any phantom interest),
in Spinco or any of its Subsidiaries (it being understood that this Section
6.1(c) shall not restrict the issuance of shares of Heinz Common Stock or Heinz
Options or other securities convertible into or exercisable or exchangeable for
Heinz Common Stock to directors and employees of Heinz and its Subsidiaries that
will become Spinco Employees under the Heinz Stock Plans in the ordinary course
of business consistent with past practice), other than pursuant to Section 2.9
of this Agreement or the Employee Benefits Agreement.
(d) Governing Documents. Neither Heinz nor Spinco shall amend or
propose to amend or otherwise change Spinco's certificate of incorporation or
bylaws, nor shall Spinco permit any of its Subsidiaries to amend or propose to
amend or otherwise change its certificate of
47
incorporation or bylaws, except to the extent required to comply with Spinco's
obligations under this Agreement or the other Transaction Agreements.
(e) Acquisitions. Other than in the ordinary course of business in a
manner consistent with past practice, Heinz (with respect to the Spinco Business
only) and Spinco shall not, nor shall Heinz permit its Subsidiaries (with
respect to the Spinco Business only) or Spinco permit its Subsidiaries to, in a
single transaction or a series of transactions, acquire or agree to acquire by
merging or consolidating with, or by purchasing any equity interest in or assets
of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof; provided,
however, that in any event, neither Heinz nor Spinco shall, nor shall either of
them permit any of its Subsidiaries to, make any such acquisition, agreement or
purchase if it would prevent or materially delay obtaining any consents,
approvals or expirations of waiting periods from any Governmental Authority
required for the consummation of the transactions contemplated by this Agreement
or the other Transaction Agreements.
(f) Dispositions. Heinz (with respect to the Spinco Business only)
and Spinco shall not, nor shall Heinz permit its Subsidiaries (with respect to
the Spinco Business only) or Spinco permit its Subsidiaries to, in a single
transaction or a series of related transactions, sell (including
sale-leaseback), lease, pledge, encumber or otherwise dispose of, or agree to
sell (or engage in a sale-leaseback), lease (whether such lease is an operating
or capital lease), pledge, encumber or otherwise dispose of, any of its assets
(other than Contracts, which are governed by Section 6.1(l)), other than
dispositions in the ordinary course of business consistent with past practice;
provided, that, except as otherwise provided in this Agreement and the other
Transaction Agreements, Heinz shall not consummate or agree to consummate any
such transaction with respect to any securities of Spinco or any of its
Subsidiaries. In furtherance of the foregoing, Heinz shall not consummate any
"spin-off" of all or part of the Spinco Assets (other than the Distribution)
prior to the Effective Time.
(g) Indebtedness; Leases. Heinz (with respect to the Spinco Business
only) and Spinco shall not, nor shall Heinz permit its Subsidiaries (with
respect to the Spinco Business only) or Spinco permit its Subsidiaries to, (i)
incur any indebtedness for borrowed money or guarantee or otherwise become
contingently liable for any such indebtedness or issue or sell any debt
securities or warrants or rights to acquire any debt securities of Spinco or any
of its Subsidiaries or guarantee any debt securities of others or enter into any
lease (whether such lease is an operating or capital lease) other than in
connection with operating leases in the ordinary course of business consistent
with past practice; (ii) issue any debt securities or assume, guarantee or
endorse, or otherwise as an accommodation become responsible for, the
obligations of any Person; (iii) make any loans, advances, capital contributions
to or investments in any Person except in the ordinary course of business
consistent with past practice; or (iv) authorize capital expenditures or
purchases of fixed assets other than in the ordinary course of business
consistent with past practice (it being understood that the annual operating
plans for each of the Spinco Businesses previously delivered to Del Monte prior
to the date of this Agreement shall be deemed to constitute past practice),
which, in the case of clauses (i), (ii), (iii) or (iv) would obligate Spinco or
the Surviving Corporation to pay any amounts, or assume any obligations to be
performed by Spinco or the Surviving Corporation, at or after the Effective
Time, except for such payments and obligations contemplated by the Commitment
Letters.
48
(h) Employee Arrangements. Except (i) as required pursuant to any
collective bargaining agreements in effect as of the date hereof, (ii) as
contemplated by this Agreement or the other Transaction Agreements or (iii) as
required by applicable laws neither Heinz nor Spinco shall, nor shall either of
them permit any of its respective Subsidiaries to:
(A) grant any increases in the compensation of any of the current,
former or prospective directors, officers, consultants or key employees of
Spinco or its Subsidiaries, except in the ordinary course of business consistent
with applicable past practice of Heinz and its Subsidiaries;
(B) pay or agree to pay to any current, former or prospective
director, officer, consultant or key employee of Spinco or its Subsidiaries, any
pension, retirement allowance or other material employee benefit not required or
contemplated by any of the existing Spinco Benefit Plans as in effect on the
date hereof;
(C) except in the ordinary course of business consistent with
applicable past practice of Heinz and its Subsidiaries, enter into any new, or
amend any existing, employment, severance or termination agreement or
arrangement with any current, former or prospective director, officer,
consultant or key employee or current or prospective employee of Spinco or any
of its Subsidiaries; or
(D) become obligated under any collective bargaining agreement, new
pension plan, welfare plan, multiemployer plan, employee benefit plan, severance
plan, benefit arrangement or similar plan or arrangement of Spinco or its
Subsidiaries that was not in existence on the date hereof, including any plan
that provides for the payment of bonuses or incentive compensation, trust, fund,
policy or arrangement for the benefit of any current or former directors,
officers, employees or consultants or any of their beneficiaries, or amend any
such plan or arrangement in existence on the date hereof, except in each case as
would not result in a material increase in the annual aggregate cost (based on
Heinz's historical annual aggregate cost) of maintaining such collective
bargaining agreement, pension plan, welfare plan, multiemployer plan, employee
benefit plan, severance plan, trust, fund, policy or arrangement.
(i) No Liquidation or Dissolution. Other than as may be necessary or
appropriate to enable Heinz to consummate the Contribution and the Distribution,
neither Heinz (with respect to the Spinco Business only) nor Spinco shall adopt
a plan or agreement of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other material reorganization
or any other transaction that would preclude or be inconsistent in any material
respect with, or hinder or delay in any material respect, the Distribution or
the transactions contemplated by the Transaction Agreements (it being understood
that the foregoing shall not prevent Heinz from taking any of the foregoing
actions with respect to Heinz unless any such action would interfere in any
material respect with, or hinder or delay in any material respect the
consummation of, the transactions contemplated by this Agreement or the other
Transaction Agreements).
(j) Accounting Methods. Neither Heinz nor Spinco shall make any
material change in Spinco's or the Spinco Business' methods of accounting or
procedures in effect at May 1, 2002 (including procedures with respect to
revenue recognition, payments of accounts
49
payable and collection of accounts receivable), except (i) as required by
changes in GAAP as concurred with by Heinz's or Spinco's independent auditors,
(ii) as may be made in response to SEC guidance or (iii) as may be required to
convert Spinco from a business unit within Heinz to an affiliated entity, so
long as any such changes are in accordance with GAAP, and neither Heinz nor
Spinco shall change Spinco's fiscal year, except as aforesaid.
(k) Affiliate Transactions. Heinz (with respect to the Spinco
Business only) and Spinco shall not, nor shall Heinz permit its Subsidiaries
(with respect to the Spinco Business only) or Spinco permit its Subsidiaries
to, enter into or amend any agreement or arrangement with any of their
respective affiliates (as such term is defined in Rule 405 under the Securities
Act) other than with wholly-owned Subsidiaries of Spinco, which agreement or
arrangement would be required to be disclosed by Spinco in accordance with such
Rule 405 if Spinco were a company required to file reports with the SEC pursuant
to Sections 13(a) and 15(d) of the Exchange Act.
(l) Contracts. Heinz (with respect to the Spinco Business only) and
Spinco shall not, nor shall Heinz permit its Subsidiaries (with respect to the
Spinco Business only) or Spinco permit its Subsidiaries to, except in the
ordinary course of business consistent with past practice, modify, amend or
terminate any "material contract", as defined in Item 601(b)(10) of Regulation
S-K of the SEC, to which Spinco or any of its Subsidiaries is a party or which
otherwise is or will be, or which relates primarily to, a Spinco Asset, or
waive, release or assign any material rights or claims of Spinco or any of its
Subsidiaries. Spinco shall not, nor shall it permit any of its Subsidiaries to,
enter into any such "material contract" not in the ordinary course of business
involving total consideration of $2 million or more with a term longer than one
year which is not terminable by Spinco or any Subsidiary of Spinco without
penalty upon no more than 30 days' prior notice.
(m) Settlement of Litigation. Heinz (with respect to the Spinco
Business only) and Spinco shall not, nor shall Heinz permit its Subsidiaries
(with respect to the Spinco Business only) or Spinco permit its Subsidiaries
to, settle any litigation, investigation, arbitration, proceeding or other claim
if such settlement would require any payment by Spinco or the Surviving
Corporation at or after the Effective Time or would obligate Spinco or the
Surviving Corporation to take any material action or restrict Spinco or the
Surviving Corporation in any material respect from taking any action at or after
the Effective Time.
(n) Tax Matters. Neither Heinz (with respect to the Spinco Business
only) nor Spinco shall, other than in the ordinary course of business and
consistent with applicable past practice of Heinz and its Subsidiaries, make any
Tax election or enter into any settlement or compromise of any Tax liability, in
either case, that would have a Material Adverse Effect on Spinco. Heinz shall,
consistent with past practice, continue to file Tax Returns of Spinco, any
Spinco Subsidiary or relating to the Spinco Business which are legally required
to be filed (taking into account any relevant extension periods) prior to the
Distribution Date and shall pay, to the extent required, the Taxes shown on such
tax returns.
(o) Restrictive Agreements. Heinz (with respect to the Spinco
Business only) and Spinco shall not, nor shall Heinz permit its Subsidiaries
(with respect to the Spinco Business only) or Spinco permit its Subsidiaries
to, enter into any agreement or arrangement that limits or
50
otherwise restricts Spinco or any of its Subsidiaries, or that would, after the
Effective Time, limit or restrict Del Monte or any of its Subsidiaries from
engaging in any business in any geographic location.
(p) Other Transaction Agreements. At or prior to the Distribution
Date, Heinz and Spinco shall execute and deliver the other Transaction
Agreements.
(q) Intellectual Property. Heinz (with respect to the Spinco Business
only) and Spinco shall not, nor shall Heinz permit its Subsidiaries (with
respect to the Spinco Business only) or Spinco permit its Subsidiaries to,
sell, transfer, license, abandon, let lapse, encumber or otherwise dispose of
any material Intellectual Property that is necessary to carry on the business of
Spinco and its Subsidiaries substantially as currently conducted, except, in
each case, in the ordinary course of business.
(r) Agreements. Heinz (with respect to the Spinco Business only) and
Spinco shall not, nor shall Heinz permit its Subsidiaries (with respect to the
Spinco Business only) or Spinco permit its Subsidiaries to, agree in writing or
otherwise to take any action inconsistent with the foregoing.
6.2 Conduct of Business by Del Monte Pending the Merger. Following
the date of this Agreement and prior to the earlier of the Effective Time or the
Termination Date, except as specifically contemplated or permitted by this
Agreement, the Separation Agreement or the other Transaction Agreements or
described in Section 6.2 of the Del Monte Disclosure Letter or to the extent
that Heinz shall otherwise consent in writing, which consent shall not be
unreasonably withheld or delayed, Del Monte agrees as to itself and its
Subsidiaries that:
(a) Ordinary Course. Del Monte shall conduct its business and shall
cause the businesses of its Subsidiaries to be conducted only in, and Del Monte
and its Subsidiaries shall not take any action except in, the ordinary course of
business and in a manner consistent in all material respects with past practice
and shall use all commercially reasonable efforts to preserve intact its present
business organization, maintain its material rights, licenses and permits, keep
available the services of its key officers and other key employees and preserve
its relationships with customers, suppliers and others having business dealings
with it in such a manner that its goodwill and ongoing businesses are not
impaired in any material respect as of the Effective Time.
(b) Dividends; Changes in Stock. Del Monte shall not, nor shall it
permit any of its Subsidiaries to, nor shall Del Monte or any of its
Subsidiaries propose to, (i) declare, set aside, or pay any dividends on or make
other distributions in respect of any shares of its capital stock or partnership
interests (whether in cash, securities or property or any combination thereof),
except for the declaration and payment of cash dividends or distributions paid
on or with respect to a class of capital stock or partnership interests all of
which shares of capital stock or partnership interests (with the exception of
directors' qualifying shares and other similarly nominal holdings required by
law to be held by Persons other than Del Monte or its wholly-owned
Subsidiaries), as the case may be, of the applicable corporation or partnership
are owned directly or indirectly by Del Monte; (ii) split, combine or reclassify
any of its capital stock or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of, or in
51
substitution for, shares of its capital stock; or (iii) amend the terms or
change the period of exercisability of, purchase, repurchase, redeem or
otherwise acquire, or permit any Subsidiary to amend the terms or change the
period of exercisability of, purchase, repurchase, redeem or otherwise acquire,
any of its securities or any securities of any of its Subsidiaries, including
shares of Del Monte Common Stock, or any option, warrant or right, directly or
indirectly, to acquire any such securities or propose to do any of the
foregoing.
(c) Issuance of Securities. Del Monte shall not, nor shall it permit
any of its Subsidiaries to, issue, sell, pledge, dispose of or encumber, or
authorize the issuance, sale, pledge, disposition or encumbrance of, any shares
of its capital stock or capital stock of any Del Monte Subsidiary of any class,
or any options, warrants, convertible securities or other rights of any kind to
acquire any shares of capital stock, or any other ownership interest (including
any phantom interest), in Del Monte or any of its Subsidiaries, other than (i)
pursuant to the Del Monte Stock Plans or (ii) pursuant to the Del Monte
Directors' Fee Plan, in each case in the ordinary course of business consistent
with past practice.
(d) Governing Documents. Del Monte shall not amend or propose to
amend or otherwise change its certificate of incorporation or bylaws, nor shall
it permit any of its Subsidiaries to amend or propose to amend or otherwise
change its certificate of incorporation or bylaws, except to the extent required
to comply with Del Monte's obligations hereunder.
(e) Acquisitions. Other than in the ordinary course of business in a
manner consistent with past practice, Del Monte shall not, nor shall it permit
any of its Subsidiaries to, in a single transaction or a series of transactions,
acquire or agree to acquire by merging or consolidating with, or by purchasing
any equity interest in or assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or division
thereof; provided, however, that in any event, Del Monte shall not, nor shall it
permit any of its Subsidiaries to, make any such acquisition, agreement or
purchase if it would prevent or materially delay obtaining any consents,
approvals or expirations of waiting periods from any Governmental Authority
required for the consummation of the transactions contemplated by this Agreement
or the other Transaction Agreements.
(f) Dispositions. Del Monte shall not, nor shall it permit any of its
Subsidiaries to, in a single transaction or a series of related transactions,
sell (including sale-leaseback), lease, pledge, encumber or otherwise dispose
of, or agree to sell (or engage in a sale-leaseback), lease (whether such lease
is an operating or capital lease), pledge, encumber or otherwise dispose of, any
of its assets (other than Contracts, which are governed by Section 6.2(l)),
other than dispositions in the ordinary course of business consistent with past
practice.
(g) Indebtedness; Leases. Del Monte shall not, nor shall it permit
any of its Subsidiaries to, (i) incur any indebtedness for borrowed money or
guarantee or otherwise become contingently liable for any such indebtedness or
issue or sell any debt securities or warrants or rights to acquire any debt
securities of Del Monte or any of its Subsidiaries or guarantee any debt
securities of others or enter into any lease (whether such lease is an operating
or capital lease) other than in connection with (A) operating leases in the
ordinary course of business consistent with past practice and (B) borrowings
under Del Monte's revolving credit facility as in effect on the date of this
Agreement incurred in the ordinary course of business
52
consistent with past practice; (ii) issue any debt securities or assume,
guarantee or endorse, or otherwise as an accommodation become responsible for,
the obligations of any Person; (iii) make any loans, advances, capital
contributions or investments in any Person except in the ordinary course of
business consistent with past practice; or (iv) authorize capital expenditures
or purchases of fixed assets other than in the ordinary course of business
consistent with past practice, except for such payments and obligations as are
incurred in accordance with, and pursuant to, the Commitment Letters.
(h) Employee Arrangements. Except as required (i) pursuant to any
collective bargaining agreements in effect as of the date hereof, (ii) as
contemplated by this Agreement or (iii) by applicable laws, Del Monte shall not,
nor shall it permit its Subsidiaries to:
(A) grant any increases in the compensation of any of its current,
former or prospective directors, officers, consultants or employees, except in
the ordinary course of business consistent with past practice;
(B) pay or agree to pay to any current, former or prospective
director, officer, consultant or key employee of Del Monte or its Subsidiaries,
whether past or present, any pension, retirement allowance or other material
employee benefit not required or contemplated by any of the existing Del Monte
Benefit Plans as in effect on the date hereof;
(C) except in the ordinary course of business consistent with past
practice of Del Monte and its Subsidiaries enter into any new, or amend any
existing employment, severance or termination agreement or arrangement with any
current, former or prospective director, officer, consultant or key employee or
current or prospective employee of Del Monte or any of its Subsidiaries; or
(D) become obligated under any collective bargaining agreement, new
pension plan, welfare plan, multiemployer plan, employee benefit plan, severance
plan, benefit arrangement or similar plan or arrangement of Del Monte or any of
its Subsidiaries that was not in existence on the date hereof, including any
plan that provides for the payment of bonuses or incentive compensation, trust,
fund, policy or arrangement for the benefit of any current or former directors,
officers, employees or consultants or any of their beneficiaries, or amend any
such plan or arrangement in existence on the date hereof.
(i) No Liquidation or Dissolution. Del Monte shall not adopt a plan
or agreement of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other material reorganization
or any other transaction that would preclude or be inconsistent in any material
respect with, or hinder or delay in any material respect, the consummation of,
the transactions contemplated by the Transaction Agreements.
(j) Accounting Methods. Del Monte shall not make any material change
in its methods of accounting or procedures in effect at March 31, 2002
(including procedures with respect to revenue recognition, payments of accounts
payable and collection of accounts receivable), except (i) as required by
changes in GAAP as concurred with by Del Monte's independent auditors or (ii) as
may be made in response to SEC guidance, and Del Monte shall not change its
fiscal year, except as aforesaid.
53
(k) Affiliate Transactions. Del Monte shall not, nor shall it permit
any of its Subsidiaries to, enter into or amend any agreement or arrangement
with any of their respective affiliates (as such term is defined in Rule 405
under the Securities Act) other than with wholly-owned Subsidiaries of Del
Monte, which agreement or arrangement would be required to be disclosed in
accordance with such Rule 405.
(l) Contracts. Del Monte shall not, nor shall it permit any of its
Subsidiaries to, except in the ordinary course of business consistent with past
practice, modify, amend or terminate any "material contract", as defined in Item
601(b)(10) of Regulation S-K of the SEC, to which Del Monte or any of its
Subsidiaries is a party or waive, release or assign any material rights or
claims of Del Monte or any of its Subsidiaries. Del Monte shall not, nor shall
it permit any of its Subsidiaries to, enter into any such "material contract"
not in the ordinary course of business involving total consideration of $500,000
or more with a term longer than one year which is not terminable by Del Monte or
any Subsidiary of Del Monte without penalty upon no more than 30 days' prior
notice.
(m) Tax Matters. Other than in the ordinary course of business and
consistent with past practice, Del Monte shall not make any Tax election or
enter into any settlement or compromise of any Tax liability, in either case,
that would have a Material Adverse Effect on Del Monte.
(n) Settlement of Litigation. Del Monte shall not, nor shall it
permit any of its Subsidiaries to, settle any litigation, investigation,
arbitration, proceeding or other claim if Del Monte or any of its subsidiaries
would be required to pay in excess of $2,000,000 individually or $8,500,000 in
the aggregate or if such settlement would obligate Del Monte to take any
material action or restrict Del Monte in any material respect from taking any
action at or after the Effective Time.
(o) Restrictive Agreements. Del Monte shall not enter into any
agreement or arrangement that limits or otherwise restricts Del Monte or any of
its Subsidiaries, or that would, after the Effective Time, limit or restrict
Spinco or any of its Subsidiaries from engaging in any business in any
geographic location.
(p) Rights Agreement. Del Monte shall not amend, modify or waive any
provision of the Del Monte Rights Agreement or take any action to redeem the
rights issued thereunder (the "Del Monte Rights") or render the Del Monte Rights
inapplicable to any transaction other than the Merger and the transactions
contemplated by the Voting Agreement unless, and only to the extent that, Del
Monte is required to do so by order of a court of competent jurisdiction.
(q) Intellectual Property. Del Monte shall not, nor shall it permit
any of its Subsidiaries to, sell, transfer, license, abandon, let lapse,
encumber or otherwise dispose of any material Intellectual Property that is
necessary to carry on the business of Del Monte and its Subsidiaries
substantially as currently conducted, except, in each case, in the ordinary
course of business.
54
(r) Agreements. Del Monte shall not, nor shall it permit any of its
Subsidiaries to, agree in writing or otherwise to take any action inconsistent
with the foregoing.
6.3 Preparation of Form S-4 and the Proxy Statement/Prospectus;
Stockholders Meetings. (a) Promptly following the execution of this Agreement,
Heinz and Del Monte shall prepare the Proxy Statement/Prospectus, and Del Monte
shall prepare and file with the SEC the Registration Statement, in which the
Proxy Statement/Prospectus will be included. Heinz shall furnish to Del Monte
all information concerning it and Spinco as is required by the SEC in connection
with the preparation of the Registration Statement. Del Monte shall use its
reasonable best efforts to have the Registration Statement declared effective
under the Securities Act as promptly as practicable after such filing and to
keep the Registration Statement effective as long as is necessary to consummate
the Merger, and Heinz shall use its reasonable best efforts to assist Del Monte
in this regard. The Parties shall promptly provide copies, consult with each
other and prepare written responses with respect to any written comments
received from the SEC with respect to the Proxy Statement/Prospectus and the
Registration Statement and advise one another of any oral comments with respect
to the Proxy Statement/Prospectus and the Registration Statement received from
the SEC. The Parties will cooperate in preparing and filing with the SEC any
necessary amendment or supplement to the Proxy Statement/Prospectus or the
Registration Statement. No amendment or supplement to the Proxy
Statement/Prospectus or Registration Statement shall be filed without the
approval of both Parties, which approvals shall not be unreasonably withheld or
delayed. Del Monte will cause the Proxy Statement/Prospectus to be mailed to Del
Monte's stockholders and Heinz's shareholders, in each case as promptly as
practicable after the Registration Statement is declared effective under the
Securities Act. The Proxy Statement/Prospectus and the Registration Statement
shall comply as to form in all material respects with the rules and regulations
promulgated by the SEC under the Securities Act and the Exchange Act,
respectively.
(b) Whether or not the Board of Directors of Del Monte shall take any
action permitted by Section 6.4(c), Del Monte will establish a record date for
(the "Record Date") and shall cause a meeting of its stockholders (the "Del
Monte Stockholders Meeting") to be duly called and held as soon as practicable
after the date of this Agreement for the purpose of voting on (i) the adoption
of the Amended and Restated Certificate of Incorporation and (ii) the approval
of the Share Issuance. The Board of Directors of Del Monte shall, subject to
Section 6.4(c), (A) include in the Proxy Statement/Prospectus the Del Monte
Board Recommendation and the written opinion of Xxxxxx Xxxxxxx & Co.
Incorporated, dated as of the date of this Agreement, to the effect that, as of
the date hereof, the Exchange Ratio is fair, from a financial point of view, to
the holders of Del Monte Common Stock and (B) use its reasonable best efforts to
obtain the necessary vote in favor of the adoption of the Amended and Restated
Certificate of Incorporation and approval of the Share Issuance. The Board of
Directors of Del Monte shall not withdraw, amend, modify or qualify in a manner
adverse to Heinz the Del Monte Board Recommendation (or announce publicly its
intention to do so), except to the extent permitted by Section 6.4(c).
6.4 No Solicitation. (a) From the date of this Agreement and prior to
the earlier of the Effective Time or the Termination Date, Del Monte agrees that
neither it nor any Del Monte Subsidiary shall, and Del Monte shall cause its
directors, officers, partners, employees, advisors, controlled Affiliates,
representatives, agents and other intermediaries
55
(including any investment banker, accountant, legal advisor or other consultant)
not to, (i) directly or indirectly, solicit, initiate or encourage any inquiry
or proposal regarding a Del Monte Acquisition Proposal, (ii) provide any
non-public information or data to any Person relating to a Del Monte Acquisition
Proposal, (iii) waive, amend or modify any standstill or confidentiality
agreement (other than the Confidentiality Agreement) to which it or any of its
Subsidiaries is a party, (iv) engage in any discussions or negotiations
concerning a Del Monte Acquisition Proposal, or (v) otherwise knowingly
facilitate any effort or attempt to make or implement a Del Monte Acquisition
Proposal or agree to, recommend or accept an Acquisition Proposal; provided,
however, that nothing contained in this Agreement shall prevent Del Monte from,
prior to obtaining the Share Issuance Approval, engaging in any discussions or
negotiations with, or providing any non-public information to, any Person in
response to an unsolicited written bona fide Del Monte Acquisition Proposal by
any such Person, if and only to the extent that (i) prior to furnishing
information to, or requesting information from, a third party which has made a
written bona fide Del Monte Acquisition Proposal, the Board of Directors of Del
Monte concludes that such Del Monte Acquisition Proposal would reasonably be
expected to constitute a Superior Proposal, provided that such third party has
executed an agreement with standard confidentiality provisions substantially
similar to those contained in the Confidentiality Agreement, (ii) Del Monte's
Board of Directors, after consultation with independent counsel, determines in
good faith that furnishing such information, or engaging in such discussions or
negotiations, is necessary for Del Monte's Board of Directors to comply with its
fiduciary duties to Del Monte's stockholders under applicable law, and (iii) Del
Monte has complied with its obligations in this Section 6.4(a), including those
set forth in the next sentence. Del Monte shall notify Heinz and Spinco promptly
(and in any event by 5:00 p.m., New York time, on the next day) after Del Monte
shall become aware of the receipt of any such inquiries, proposals or offers
received by, any such information requested from, or any such discussions or
negotiations sought to be initiated or continued with, Del Monte, any Subsidiary
of Del Monte or any of their officers, directors, employees, advisors or agents
indicating, in connection with such notice, the name of such Person, the
material terms and conditions of any proposals or offers and, from time to time,
whether Del Monte is providing or intends to provide the Person making the Del
Monte Acquisition Proposal with access to information concerning Del Monte and
thereafter keeps Heinz fully informed of the status and terms of such
discussions or negotiations and of any modifications to such inquiries,
proposals or offers. Del Monte represents that it is not in violation of its
obligations under the letter agreement dated as of May 3, 2002, among Heinz, Del
Monte and Stockholder (the "Letter Agreement"). Notwithstanding the foregoing,
if Del Monte's Board of Directors shall receive a bona fide, unsolicited Del
Monte Acquisition Proposal as to which financing is not committed and if Del
Monte's Board of Directors shall determine in good faith that such Del Monte
Acquisition Proposal would, but for the question of the financial capability of
the proposed acquiror, constitute a Superior Proposal, then in such event Del
Monte's Board of Directors and its financial advisor may, for the purpose of
determining whether such proposal constitutes a Superior Proposal, conduct such
limited inquiries of the proponent of such Del Monte Acquisition Proposal as are
necessary for the sole purpose of ascertaining whether the proposed transaction
is reasonably capable of being consummated by such proponent so as to constitute
a Superior Proposal; provided, however, that Del Monte shall not conduct any
further inquiries, discussions or negotiations, or provide any non-public
information to such proponent, unless Del Monte's Board of Directors reaches the
56
conclusion that such Del Monte Acquisition Proposal would reasonably be expected
to constitute a Superior Proposal, taking into account the financial capability
of the proponent thereof.
(b) From the date of this Agreement and prior to the earlier of the
Effective Time or the Termination Date, each of Heinz and Spinco agrees that
neither it nor any of their respective Subsidiaries shall, and each of Heinz and
Spinco shall cause its respective directors, officers, partners, employees,
advisors, controlled Affiliates, representatives, agents and other
intermediaries (including any investment banker, accountant, legal advisor or
other consultant) not to (i) directly or indirectly, solicit, initiate or
encourage any inquiry or proposal regarding a Spinco Acquisition Proposal, (ii)
provide any non-public information or data to any Person relating to a Spinco
Acquisition Proposal, (iii) waive, amend or modify any standstill or
confidentiality agreement (other than the Confidentiality Agreement) to which it
or any of its Subsidiaries is a party relating primarily to the Spinco Business,
(iv) engage in any discussions or negotiations concerning a Spinco Acquisition
Proposal, or (v) otherwise knowingly facilitate any effort or attempt to make or
implement a Spinco Acquisition Proposal or agree to, recommend or accept a
Spinco Acquisition Proposal and request the return of any confidential
information distributed to any such parties in connection with any such
activities, discussions or negotiations. Heinz represents that it is not in
violation of its obligations under the Letter Agreement.
(c) Prior to receipt of the Share Issuance Approval, if (i) Del Monte
has complied with Section 6.4(a) and (ii) the Board of Directors of Del Monte
(A) reasonably determines in good faith that a Del Monte Acquisition Proposal
constitutes a Superior Proposal (and continues to constitute a Superior Proposal
after taking into account any modifications proposed by Heinz and Spinco during
any five business day period referred to below) and (B), after consultation with
independent counsel, has concluded, in good faith, that it is required to do so
in order to comply with its fiduciary duties to the Del Monte Stockholders under
applicable law, then, on the fifth business day following Heinz's and Spinco's
receipt of written notice from Del Monte or Del Monte's Board of Directors of
their intention to do so, the Board of Directors of Del Monte may withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Heinz or
Spinco, the Del Monte Board Recommendation (a "Change in the Del Monte Board
Recommendation"); provided, that during such five business day period, Del Monte
shall be obligated to negotiate in good faith with Heinz and Spinco any
modifications to this Agreement proposed by Heinz and Spinco to result in an
equivalent proposal.
(d) Notwithstanding anything in this Agreement to the contrary, Del
Monte or its Board of Directors shall be permitted, to the extent applicable, to
comply with Rule 14d-9 and 14e-2 promulgated under the Exchange Act with regard
to a Del Monte Acquisition Proposal; provided, however, that neither Del Monte
nor its Board of Directors nor any committee thereof shall, except as permitted
by Section 6.4(c), withdraw or modify, or propose publicly to withdraw or
modify, the Del Monte Board Recommendation or approve or recommend, or propose
publicly to approve or recommend, a Del Monte Acquisition Proposal.
6.5 Reasonable Best Efforts. Heinz, Spinco and Del Monte will each
use its reasonable best efforts to cause all of the conditions, as specified in
Article 8 of this Agreement, to the obligations of the others to consummate the
Merger to be met as soon as reasonably practicable after the date of this
Agreement.
57
6.6 Cooperation of Third Parties. Where the cooperation of third
parties such as insurers or trustees would be necessary in order for a party
hereto to completely fulfill its obligations under this Agreement and the
Transaction Agreements, each Party will use its commercially reasonable efforts
to seek the cooperation of such third parties.
6.7 Consummation of the Distribution. Heinz will use its reasonable
best efforts to consummate the Distribution on the Closing Date, subject to
satisfaction of the conditions thereto set forth in the Separation Agreement.
6.8 Interim Financial Information. Each of Heinz and Spinco on the
one hand, and Del Monte, on the other hand shall, prior to the Closing, provide
each other within a reasonable period after such Party closes its books for the
applicable accounting period for the Spinco Business (with respect to Heinz and
Spinco) and for Del Monte's business (with respect to Del Monte) with (a)
unaudited profit and loss statements for each quarterly period, together with a
balance sheet as of the end of such period, and (b) monthly management profit
and loss statements. Such quarterly financial information shall be in the same
format and prepared on the same basis as the comparable portions of the Audited
Statements (with respect to Heinz and Spinco) and the Del Monte SEC Documents
(with respect to Del Monte), and shall be in accordance with GAAP, except that
such information may exclude footnotes and is subject to normal year-end
adjustments.
ARTICLE 7
ADDITIONAL AGREEMENTS
7.1 WARN. Neither Heinz (with respect to the Spinco Business only),
Spinco nor Del Monte shall, at any time within the 90-day period prior to the
Effective Time, effectuate a "plant closing" or "mass layoff" as those terms are
defined in WARN or any state or local law, affecting in whole or in part any
site of employment, facility, operating unit or employee of Spinco or Del Monte,
without notifying the other in advance and without complying with the notice
requirements and all other provisions of WARN and any state or local law.
7.2 Cooperation. Heinz, Spinco, Del Monte and Merger Sub shall
together or pursuant to the allocation of responsibility set forth below or
otherwise to be agreed upon between them take, or cause to be taken, the
following actions:
(a) Transition. From and after the execution of this Agreement,
Heinz, Spinco and Del Monte shall, and shall cause each of their respective
Subsidiaries to, reasonably cooperate in the transition and integration process
in connection with the Merger;
(b) NYSE and Other Listings. As promptly as practicable, Del Monte
shall file a supplemental listing application with the NYSE and the PE and any
other stock exchanges for the listing or quotation of the shares of Del Monte
Common Stock to be issued pursuant to the transactions contemplated by this
Agreement and use its reasonable best efforts to cause such shares to be
Approved for Listing;
58
(c) Blue Sky Filings. Del Monte shall take all such action as may
reasonably be required under state securities or Blue Sky laws in connection
with the issuance of shares of Del Monte Common Stock pursuant to the Merger;
(d) Required Consents. Heinz, Spinco, Del Monte and Merger Sub shall
cooperate with one another in determining whether any filings are required to be
made with or consents required to be obtained from, any Governmental Authority
or any lender, lessor or other third party prior to the Effective Time in
connection with the consummation of the transactions contemplated by this
Agreement;
(e) Further Assistance. Heinz, Spinco, Del Monte and Merger Sub shall
provide such further assistance as the other party may reasonably request in
connection with the foregoing and with carrying out the purpose of the
Agreement. Each of Spinco, Heinz and Del Monte shall furnish to the other's
counsel all such information as may reasonably be required to effect the
foregoing actions; and
(f) Financing Cooperation. The Parties agree to provide, and each
Party will cause its respective Subsidiaries and its and its Subsidiaries'
respective officers, employees and advisers to provide, all cooperation
reasonably necessary in connection with the arrangement of the financing
described in the Commitment Letters (including any capital markets financing
contemplated by the Engagement Letter) in respect of the transactions
contemplated by this Agreement and the Separation Agreement and any other
financing, all to be consummated contemporaneously with or at or after the
Effective Time in respect of the transactions contemplated by this Agreement or
the Separation Agreement, including participation in meetings, due diligence
sessions, road shows, the preparation of offering memoranda, private placement
memoranda, prospectuses and similar documents, the execution and delivery of any
commitment letters, credit agreements, underwriting or placement agreements,
pledge and security documents, other definitive financing documents, or other
requested certificates or documents, including comfort letters of accountants
and legal opinions as may be reasonably requested by any other Party, and taking
such other actions as are reasonably required to be taken by the Parties and
each Party's respective Subsidiaries in the Commitment Letters; provided,
however, that neither Party shall have any obligation at any time to continue to
attempt to arrange or otherwise pursue the capital markets financing
contemplated by the Engagement Letter if at such time such capital markets
financing is not available on commercially reasonable terms in accordance with
Section 7.2(f) of the Spinco Disclosure Letter; provided, further, that neither
Party shall have any obligation to attempt to arrange or otherwise pursue any
capital markets financing contemplated by the Engagement Letter in an original
principal amount in excess of $300,000,000. Notwithstanding the timing reflected
in the preceding sentence, the Parties agree to use commercially reasonable
efforts to investigate the feasibility of accelerating the borrowing of the
capital markets financing contemplated by the Engagement Letter so that the
condition to Heinz's and Spinco's obligation to consummate the Merger set forth
in Section 8.2(h)(ii) shall be satisfied as promptly as practicable. The Parties
will keep one another informed of the status of their efforts to arrange the
financing contemplated by the Commitment Letters, including making reports with
respect to significant developments. In the event any portion of such financing
becomes unavailable in the manner or from the sources originally contemplated at
the times contemplated in the first sentence of this Section 7.2(f), Section
7.2(f) of the Spinco Disclosure Letter and this sentence, the Parties will use
their reasonable best efforts
59
to arrange replacement financing, if necessary, on terms and conditions that
would cause the conditions set forth in Sections 8.1(h), 8.2(h) and 8.3(e) to be
satisfied, it being understood that (i) the Parties shall have a reasonable and
customary time to endeavor to arrange the capital markets financing described in
the Engagement Letter following receipt of the Section 355 Ruling (or waiver by
Heinz of the condition set forth in Section 8.2(f)) and that (ii) in the event
that such capital markets financing is not available on commercially reasonable
terms in accordance with Section 7.2(f) of the Spinco Disclosure Letter, the
issuance of the senior secured notes contemplated by the Second Commitment
Letter on terms and conditions not materially more burdensome to Heinz, Spinco,
Del Monte or the Surviving Corporation than those set forth in the Second
Commitment Letter shall be deemed to satisfy the condition set forth in Section
8.2(h)(ii).
7.3 Proxy Statement/Prospectus. If, at any time after the mailing of
the definitive Proxy Statement/Prospectus and prior to the Del Monte
Stockholders Meeting, any event should occur that results in the Proxy
Statement/Prospectus or the Registration Statement containing an untrue
statement of a material fact or omitting to state any material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they are made, not misleading, or that otherwise
should be described in an amendment or supplement to the Proxy
Statement/Prospectus or the Registration Statement, Spinco, Heinz and Del Monte
shall promptly notify each other of the occurrence of such event and then
promptly prepare, file and clear with the SEC such amendment or supplement and
Del Monte shall, as may be required by the SEC, mail to the Del Monte
Stockholders and Heinz's shareholders each such amendment or supplement.
7.4 Tax-Free Reorganization Treatment; Section 355 Ruling. (a)
Neither Del Monte nor Merger Sub shall take or cause to be taken any action,
whether before or after the Effective Time, that (i) would disqualify the
transactions contemplated hereby from constituting a tax-free distribution under
Sections 355 and 368 of the Code, (ii) would result in any failure to obtain the
Section 355 Ruling or (iii) would disqualify the Merger from constituting a
tax-free reorganization under Section 368 of the Code.
(b) Del Monte and Merger Sub shall cooperate with Heinz and shall use
their respective reasonable best efforts to assist Heinz in obtaining the
Section 355 Ruling.
(c) Neither Heinz nor Spinco shall take or cause to be taken any
action, whether before or after the Effective Time, that (i) would disqualify
the transactions contemplated hereby from constituting a tax-free distribution
under Sections 355 and 368 of the Code, (ii) would result in any failure to
obtain the Section 355 Ruling or (iii) would disqualify the Merger from
constituting a tax-free reorganization under Section 368 of the Code.
7.5 2002 Audited Financial Statements. Each of Heinz and Spinco shall
use its reasonable best efforts to deliver or cause to be delivered to Del Monte
as soon as practicable after the date of this Agreement (i) an audited combined
statement of assets and liabilities of the Spinco Business and the notes thereto
as of May 1, 2002 (the "Audited 2002 Balance Sheet") and the audited combined
statement of operations and the notes thereto for the year ended May 1, 2002
(the "Audited 2002 Statement of Operations" and, together with the Audited 2002
Balance Sheet, the "2002 Audited Financial Statements"), audited by Heinz's
independent
60
auditors, whose report thereon will be included therewith and (ii) all other
financial statements and financial information regarding Spinco and the Spinco
Business required by the SEC to be included in the Form S-4.
7.6 Employee Matters and Employee Benefit Plans. (a) Maintenance of
Compensation and Benefits. In general, on and after the Effective Time, Del
Monte shall treat all Spinco Employees fairly and shall cause the Surviving
Corporation to, (i) for the two year period following the Effective Time,
provide a cash compensation structure (base salary and bonus opportunities)
which is no less than that provided to the Spinco Employees prior to the
Effective Time, (ii) for the one year period following the Effective Time (the
"One-Year Period") maintain benefits (other than specific benefits described
herein which are subject to different maintenance periods) that are the same as
those provided to the Spinco Employees prior to the Effective Time (subject to
Section 3.4(b) of the Employee Benefits Agreement) and (iii) for the second year
following the Effective Time, maintain benefits that are, in the aggregate, not
materially less favorable than what the Spinco Employees were provided prior to
the Effective Time (subject to Section 3.4(b) of the Employee Benefits
Agreement); provided, however, that, with respect to those employees whose terms
and conditions of employment are governed by collective bargaining agreements or
by provisions of law outside the United States of America for employees employed
in such foreign jurisdiction, Del Monte shall, or shall cause Spinco to, assume
and comply with the terms of such collective bargaining agreements and comply
with the provisions of such foreign laws with respect to the subject matter
relating hereto, to the extent such agreements and/or laws require terms and
conditions other than those provided for herein. Notwithstanding the foregoing,
Heinz shall administer (or cause to be administered) the employee benefit plans
and programs provided to the Spinco Employees after the Effective Time, except
as otherwise provided in the Employee Benefits Agreement, and shall provide (or
cause to be provided) transition services to Del Monte pursuant to the
Transition Services Agreement, for the One-Year Period (or, if requested by Del
Monte, for up to two years following the Effective Time); provided, however,
that Heinz shall only provide (or cause to be provided) such transition services
so long as the benefit plans and programs that Heinz shall be administering (or
causing to be administered) shall contain the same terms and conditions as in
effect for such plans and programs prior to the Effective Time (subject to
Section 3.4(b) of the Employee Benefits Agreement).
(b) Continuation of Certain Spinco Benefit Plans. In furtherance of
the obligations under subparagraph (a) above:
(i) Del Monte shall or shall cause the Surviving Corporation to
provide cash payments and benefits to any Spinco Employee who is
terminated without "cause" prior to the second anniversary of the
Effective Time (in accordance with the severance plans listed in Section
4.12(a) of the Spinco Disclosure Letter, as modified by the terms set
forth on Annex I to Section 4.12(a) of the Spinco Disclosure Letter (the
"Severance Plans")). For this purpose, "cause" shall have the meaning set
forth in the Severance Plans applicable to the Spinco Employee if the
termination of employment had occurred prior to the Effective Time.
(ii) At the Effective Time, Heinz shall pay to each Spinco
Employee an amount, in cash, equal to the annual bonus that each such
employee has earned (based
61
on the achievement of previously established performance criteria) under
the applicable Heinz Bonus Plan in which such employee participates for
the 2003 bonus year. From the Effective Time through the second
anniversary of the Effective Time, Del Monte shall, or shall cause the
Surviving Corporation to, maintain the annual incentive compensation plans
set forth in Section 4.12(a) of the Spinco Disclosure Letter (the "Bonus
Plans") and allow the Spinco Employees to continue to participate in the
Bonus Plans on the same terms (including the same levels of bonus
opportunity and reasonable and comparable performance targets, but
excluding any retention incentives that Heinz may provide to certain
Spinco Employees under the Bonus Plans in connection with the transactions
contemplated under this Agreement and the other Transaction Agreements on
or prior to the Effective Time) as in effect immediately prior to the
Effective Time; provided, however, that Del Monte through such period
shall not, and shall not cause the Surviving Corporation to, terminate the
Bonus Plans or amend such plans in any manner that would be reasonably
likely to result in the Spinco Employees having less of an opportunity to
earn bonuses under the Bonus Plans after the Effective Time than such
Spinco Employees would have had under the Bonus Plans applicable to such
Spinco Employees immediately prior to the Effective Time.
(iii) At the Effective Time, Spinco shall assume all liabilities
associated with the notional shares of Heinz Common Stock held by Spinco
Employees in accordance with the Heinz Deferred Share Units Plan (each
such notional share, a "Deferred Share Unit") held by Spinco Employees
immediately prior to the Effective Time, provided that each such unit
shall be converted into notional shares of Del Monte Common Stock, in
accordance with the following formula: (x) immediately prior to the
Effective Time, the number of Deferred Share Units shall be multiplied by
the closing price of one share of Heinz Common Stock on the last business
day prior to the date the Heinz Common Stock trades ex dividend, and (y)
such product shall then be divided by the Spinco Post-Distribution Stock
Price, (z) the result of which shall be multiplied by the Exchange Ratio,
which final product shall equal the number of notional shares of Del Monte
Common Stock ("Del Monte Deferred Share Units") that the Spinco Employees
shall hold after the Effective Time. Thereafter, (A) the Del Monte
Deferred Share Units shall continue to track the performance of the Del
Monte Common Stock, (B) the Spinco Employees shall vest as to one-third of
such units on each of the first three consecutive anniversaries of the
Effective Time, and (C) the Del Monte Deferred Share Units shall be paid
out in shares of Del Monte Common Stock at such times as the Spinco
Employees shall vest in such units (or otherwise in accordance with the
terms of the Heinz Deferred Share Units Plan).
(iv) On and after the Effective Time, Del Monte shall, or shall
cause the Surviving Corporation to, maintain the post-retirement medical
benefit programs for the benefit of the Spinco Employees (the "Retiree
Medical Plans"), subject to the same terms and conditions, and the same
rights and privileges as were held by Heinz prior to the Effective Time,
as in effect immediately prior to the Effective Time (which terms and
conditions include the right to receive medical coverage at retirement,
provided that the Spinco Employee was hired by Heinz or any of its
Subsidiaries prior to 1992 and has at least ten years of service with
Heinz, any of its Subsidiaries and any member of the
62
Spinco group, in the aggregate, after age 45), for the Spinco Employees
who are eligible to participate in such plans immediately prior to the
Effective Time.
(v) On and after the Effective Time through at least the One-Year
Period, Del Monte shall, or shall cause the Surviving Corporation to,
maintain the Spinco Executive Deferred Compensation Plan for the benefit
of Spinco Employees who participated in such plan immediately prior to the
Effective Time, without adverse amendment thereto, the liabilities
associated therewith having been assumed by Spinco pursuant to the
Employee Benefits Agreement, on the same terms and conditions as in effect
immediately prior to the Effective Time.
(vi) On and after the Effective Time, Del Monte shall, or shall
cause the Surviving Corporation to, maintain the Spinco Supplemental
Executive Retirement Plan (the "SERP"), as in effect immediately prior to
the Effective Time for the benefit of the Spinco Employees who
participated in the SERP immediately prior to the Effective Time (each
such employee, a "SERP Participant"), without adverse amendment thereto,
for so long as may be required to allow each SERP Participant who remains
employed with Spinco through age 55 to continue to accrue benefits, and to
vest in such benefits, under the SERP; provided, however, that Del Monte
shall cause the SERP to provide that if any SERP Participant who has
achieved at least age 50 (with at least five (5) years of service with,
collectively, Heinz, its Subsidiaries and the Spinco Group) on or prior to
the second anniversary of the Effective Time is terminated without "cause"
(within the meaning of Section 7.6(b)(i) of this Agreement) by Spinco (or
any successor thereto), such SERP Participant shall be vested in his or
her SERP benefit (as accrued through the date of termination of
employment) on the date of termination.
(vii) On and after the Effective Time, Del Monte shall, or shall
cause the Surviving Corporation to, continue to allow Spinco Employees who
have banked vacation pursuant to the vacation policy provided to Spinco
Employees immediately prior to the Effective Time to use such banked
vacation in accordance with such vacation policy at least until the second
anniversary of the Effective Time.
(viii) On and after the Effective Time, Del Monte shall honor the
terms of the Spinco Retention Incentive Plan (as set forth in Section
7.6(b) of the Spinco Disclosure Letter); provided, however, that with
respect to the payment of the Pool (as defined therein), Heinz shall
reimburse Del Monte for an amount, equal to the sum of (x) one-third of
the total amount of the Pool paid out to the participating Spinco
Employees (up to a maximum of one-third of $5,000,000) plus (y) the amount
of the Pool that is paid out to the participating Spinco Employees, if
any, that is in excess of $5,000,000, in accordance with the terms of such
plan.
(ix) Subject to Section 7.6(a) of this Agreement, Del Monte shall
have no obligation to continue any plan comparable to the Heinz Global
Stock Purchase Plan, Heinz Executive Split Dollar Life Insurance Plan, and
the Heinz Premier Life Insurance Plan or the Heinz Restricted Stock Bonus
Plan (other than as provided under Section 7.1(d) of the Employee Benefits
Agreement).
63
(c) Collective Bargaining Agreements. Spinco, as the Surviving
Corporation, shall expressly assume all collective bargaining agreements set
forth in Section 4.13(a) of the Spinco Disclosure Letter, and for each such
collective bargaining agreement in effect as of the Effective Time, Spinco
agrees to recognize the union which is a party to each such collective
bargaining agreement as the exclusive collective bargaining representative for
the Spinco Employees covered under the terms of each such collective bargaining
agreement.
(d) Continuation of Employment of Spinco Employees. After the
Effective Time, Del Monte shall cause the Surviving Corporation to continue (i)
to employ any Spinco Employee who, at the Effective Time, is not actively at
work by reason of any leave of absence (including military leave, Family Medical
Leave Act leave, or otherwise), as listed in Section 7.6(d) of the Spinco
Disclosure Letter, and (ii) to provide any such Spinco Employee with a job
comparable to the job from which such employee was on leave of absence at the
Effective Time, so long as such employee actively returns to work within the
period of time specified under the applicable terms of such employee's leave
(whether pursuant to a Spinco Benefit Plan, a collective bargaining agreement or
applicable law.
(e) Pre-existing Conditions; Service Credit. On and after the
Effective Time Del Monte shall, or shall cause the Surviving Corporation to: (i)
waive any limitations to pre-existing conditions, exclusions and waiting periods
with respect to participation and coverage requirements applicable to the Spinco
Employees under any welfare benefit plan in which such employees may be eligible
to participate after the Effective Time, to the extent that such limitations did
not apply or had been satisfied by such Spinco Employees and their covered
dependents prior to the Effective Time, (ii) provide each Spinco Employee with
credit for any co-payments and deductibles paid prior to the Effective Time for
the plan year in which the Merger occurs in satisfying any applicable deductible
or out-of-pocket requirements under any welfare benefit plan in which such
employees may be eligible to participate after the Effective Time, and (iii)
recognize all service of the Spinco Employees rendered as employees of Heinz and
any of its Affiliates for all purposes (including purposes of eligibility to
participate, vesting credit, service credit, entitlement for benefits, and
benefit accrual (including vacation accrual) in any benefit plan (including
service award plans) in which such employees may be eligible to participate
after the Merger), to the same extent taken into account under a comparable
Spinco Benefit Plan immediately prior to the Effective Time and maintained
pursuant to the terms of the Employee Benefits Agreement after the Effective
Time.
(f) Defined Benefit Pension Plans. Through at least the One-Year
Period, Del Monte shall, or shall cause the Surviving Corporation to, maintain
those Spinco Benefit Plans that are intended to be qualified defined benefit
pension plans for purposes of Section 401(a) of the Internal Revenue Code in
which hourly Spinco Employees participate as of the Effective Time (the "Spinco
Pension Plans") and under which, as of the Effective Time, the Surviving
Corporation shall, by operation of law, assume the Pension Liabilities (as
defined in the Employee Benefits Agreement), which liabilities will be
calculated using the assumptions provided in the Employee Benefits Agreement. In
addition, after the Effective Time, Heinz shall cause to be transferred, in
accordance with Section 414(l) of the Code and Section 4044 of ERISA, to the
trustee of the Spinco Pension Plans, assets, with respect to each Spinco Pension
Plan, that are equal to the Pension Liabilities as of the Effective Time (and
the pro rata amount of any excess assets available with respect to each such
Spinco Pension Plan) in accordance with
64
the terms of the Employee Benefits Agreement, and Del Monte shall cause the
trustee of the Spinco Pension Plans to accept such assets; provided, however,
that Heinz shall only cause such assets to be transferred after receipt from Del
Monte of a copy of the most recent favorable IRS determination letter for each
Spinco Pension Plan received by Del Monte or an opinion of counsel, which
opinion and counsel shall be reasonably acceptable to Heinz, to the effect that
(i) Del Monte has timely filed, or has caused the Surviving Corporation to
timely file, an application with the IRS requesting a favorable determination
that each Spinco Pension Plan is qualified under Section 401(a) of the Code and
that the trust thereunder is exempt under Section 501 of the Code, (ii) counsel
reasonably expects each such Spinco Pension Plan and trust to receive such a
favorable determination letter, and (iii) each such Spinco Pension Plan (and any
trust agreement related thereto) shall be amended, in a timely manner, as may be
required by the IRS in order to satisfy the requirements of Section 401 of the
Code and that the trust thereunder is exempt under Section 501 of the Code.
(g) Defined Contribution Plans. Through at least the One-Year Period,
Del Monte shall, or shall cause the Surviving Corporation to, maintain those
Spinco Benefit Plans that are intended to be qualified defined contribution
plans for purposes of Section 401(a) of the Internal Revenue Code in which the
Spinco Employees participate as of the Effective Time (the "Spinco Savings
Plans") and under which, as of the Effective Time, the Surviving Corporation
shall, by operation of law, assume the liabilities in respect of the applicable
Spinco Employees. In addition, after the Effective Time Heinz shall cause to be
transferred the full account balances (as of the date of transfer) of the Spinco
Employees under the Spinco Savings Plans to the trustee of the Spinco Savings
Plans in accordance with the terms of the Employee Benefits Agreement and Del
Monte shall cause the trustee of the Spinco Savings Plans to accept such assets;
provided, however, that Heinz shall only cause such assets to be transferred
after receipt from Del Monte of a copy of the most recent favorable IRS
determination letter for each Spinco Savings Plan received by Del Monte or an
opinion of counsel, which opinion and counsel shall be reasonably acceptable to
Heinz, to the effect that (i) Del Monte has timely filed, or has caused the
Surviving Corporation to timely file, an application with the IRS requesting a
favorable determination that each Spinco Savings Plan is qualified under Section
401(a) of the Code and that the trust thereunder is exempt under Section 501 of
the Code, (ii) counsel reasonably expects each such Spinco Savings Plan and
trust to receive such a favorable determination letter and (iii) each such
Spinco Savings Plan (and any trust agreement related thereto) shall be amended,
in a timely manner, as may be required by the IRS in order to satisfy the
requirements of Section 401 of the Code and that the trust thereunder will be
exempt under Section 501 of the Code.
(h) Del Monte Parachute Payments. At all times on and after the date
of this Agreement, Del Monte shall use its best efforts to cause the
transactions contemplated hereunder not to constitute a "Change of Control", as
defined in any Del Monte Benefit Plan, for the purposes of avoiding, preventing
or prohibiting (i) the payment (or increase of any payment) to any current,
former or future director, officer, stockholder or employee of Del Monte or any
of its Subsidiaries, or of any entity the assets or capital stock of which have
been acquired by Del Monte or a Del Monte Subsidiary, of any money or other
property or rights, or (ii) the acceleration or provision of any other rights or
benefits to any such individual, whether or not (x) such payment, increase,
acceleration or provision would constitute a "parachute payment" (within the
meaning of Section 280G of the Code) or (y) the passage of time or some other
65
subsequent action or event would be required to cause such payment, increase,
acceleration or provision to be triggered.
(i) No Duplication of Benefits. It is the understanding of the
parties that Section 7.6 of this Agreement shall be construed and applied
without duplication of benefits to any Spinco Employees, in order to avoid any
such employee simultaneously enjoying coverage or the accrual of benefits under
comparable plans of both Del Monte and/or Spinco, on one hand, and Heinz on the
other hand.
7.7 Investigation. Upon reasonable notice, each of Heinz (with
respect to the Spinco Business only) and Del Monte shall, throughout the period
prior to the earlier of the Effective Time or the Termination Date, afford to
each other and to its respective officers, employees, accountants, counsel and
other authorized representatives, reasonable access to its officers, employees,
consultants and representatives and, during normal business hours, in a manner
that does not unreasonably interfere with one another's respective business and
operations, to its and its Subsidiaries' plants, properties, Contracts,
commitments, books, records (including tax returns), papers, plans and drawings
and any report, schedule or other document filed or received by it pursuant to
the requirements of the federal or state securities laws, and shall use their
respective reasonable best efforts to cause its respective representatives to
furnish promptly to the other such additional financial and operating data and
other information, including environmental information, as to its and its
Subsidiaries' respective businesses and properties as the other or its duly
authorized representatives, as the case may be, may reasonably request;
provided, however, that the foregoing shall not permit either Party to conduct
any invasive or destructive environmental sampling, testing or analysis on the
other Party's property. For the purposes of this Section 7.7, all
communications, including requests for information or access, pursuant to this
Section 7.7, shall only be made by and between a representative of each of
Heinz, on the one hand, and of Del Monte, on the other hand, which
representative (a) shall initially be Xxxxx Ring (or another person designated
in writing by him) for Heinz and Xxxxx Xxxxxx (or another person designated in
writing by him) for Del Monte and (b) may be replaced with a substitute
representative by either Party from time to time upon reasonable written notice
to the other Party. Notwithstanding the foregoing, neither Heinz (with respect
to the Spinco Business only), Spinco nor Del Monte nor their respective
Subsidiaries shall be required to provide any information to the extent that any
such Party or any of their respective Subsidiaries is legally obligated to keep
such information confidential or otherwise not to provide such information or to
the extent that such access would constitute a waiver of the attorney-client
privilege. Each of Del Monte and Heinz (with respect to the Spinco Business
only) will hold, and will direct its officers, employees, investment bankers,
attorneys, accountants and other advisors and representatives to hold, any and
all information received from any of the Parties, directly or indirectly, in
confidence in accordance with the Confidentiality Agreement.
7.8 Reasonable Best Efforts; Further Assurances, Etc. (a) Heinz,
Spinco, Del Monte and Merger Sub shall, as promptly as practicable, make their
respective filings and any other required or requested submissions under the HSR
Act, promptly respond to any requests for additional information from either the
Federal Trade Commission or the Department of Justice, and cooperate in the
preparation of, and coordinate, such filings, submissions and responses
(including the exchange of drafts between each party's outside counsel) so as to
reduce the length of any review periods and (b) subject to the terms and
conditions of this Agreement,
66
each of Heinz, Spinco, Del Monte and Merger Sub shall use their reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary under applicable laws and regulations to consummate
and make effective the transactions contemplated by this Agreement and the other
Transaction Agreements, including providing information and using their
reasonable best efforts to obtain all necessary exemptions, rulings, consents,
authorizations, approvals and waivers to effect all necessary registrations and
filings and to lift any injunction or other legal bar to the Merger and the
other transactions contemplated hereby, as promptly as practicable, and to take
all other actions necessary to consummate the transactions contemplated hereby
in a manner consistent with applicable law, it being understood that this
Section 7.8(a) does not address the IRS Ruling, which is addressed in Section
7.8(b). Without limiting the generality of the foregoing, Heinz, Spinco and Del
Monte agree, and shall cause each of their respective Subsidiaries, to cooperate
and to use their respective reasonable best efforts to obtain any government
clearances required to consummate the Merger (including through compliance with
the HSR Act and any applicable foreign government reporting requirements), to
respond to any government requests for information, and to contest and resist
any action, including any legislative, administrative or judicial action, and to
have vacated, lifted, reversed or overturned any Order that restricts, prevents
or prohibits the consummation of the Merger or any other transactions
contemplated by this Agreement, including by pursuing all available avenues of
administrative and judicial appeal and all available legislative action. The
Parties hereto will consult and cooperate with one another, and consider in good
faith the views of one another, in connection with any analyses, appearances,
presentations, memoranda, briefs, arguments, opinions and proposals made or
submitted by or on behalf of any Party hereto in connection with proceedings
under or relating to the HSR Act or any other federal, state or foreign
antitrust or fair trade law, and will provide one another with copies of all
material communications from and filings with, any Governmental Authorities in
connection with the transactions contemplated hereby. Notwithstanding anything
to the contrary in this Section 7.8, neither Heinz nor Spinco or their
respective Subsidiaries, on the one hand, nor Del Monte and its Subsidiaries on
the other hand, shall be required to take any action that would reasonably be
expected to have a Material Adverse Effect on Heinz or Spinco, on the one hand,
or Del Monte, on the other hand.
(b) In connection with the Distribution, Heinz and Spinco shall use
their reasonable best efforts to seek, as promptly as practicable, a private
letter ruling from the IRS, to the effect that the Contribution and the
Distribution (each to be consummated in accordance with the Separation
Agreement, this Agreement and the other Transaction Agreements as in effect, or
in the forms attached hereto, as of the date hereof) will qualify as tax-free
transactions under Sections 355 and 368 of the Code and that no gain or loss
will be recognized by Heinz, Spinco, Del Monte or Heinz Shareholders (the
"Section 355 Ruling"); provided, however, that, in the event that the IRS will
not issue one or more of the rulings requested by Heinz, then Heinz, Spinco and
Del Monte shall use their reasonable best efforts to restructure the
transactions in a manner that will preserve the economics of the transactions to
Heinz and Del Monte and result in the receipt of such rulings, but neither Heinz
nor Del Monte shall be required to take any action pursuant to this Section
7.8(b), including any changes to the structure specified in Heinz's ruling
request submitted to the IRS, that would reasonably be expected to result, in
the aggregate, in any costs or detriments, or reductions of benefits, to Heinz
or Del Monte, as the case may be, of more than $20 million.
67
7.9 Director and Officer Indemnification; Insurance. Del Monte shall,
and shall cause the Surviving Corporation to, (a) for a period of at least six
years after the Effective Time, indemnify and hold harmless, and provide
advancement of expenses to, all past and present directors, officers or
employees of Heinz and its Subsidiaries that shall become directors, officers or
employees of Del Monte or its Subsidiaries to the maximum extent allowed under
Delaware law for acts or omissions occurring after the Effective Time and (b)
adopt the certificate of incorporation and bylaws of the Surviving Corporation
attached hereto as Exhibits A and D, respectively, which provide for the
elimination of personal liability and indemnification and advancement of
expenses to the maximum extent permitted under Delaware law and not to modify
such certificate and bylaws in any way that is not applicable to all similarly
situated directors, officers or employees of Del Monte or the Surviving
Corporation.
7.10 Rule 145 Affiliates. Heinz shall, at least 30 days prior to the
Effective Time, cause to be delivered to Del Monte a list, reviewed by its
counsel, identifying all Persons who are, at the Effective Time, "affiliates" of
Spinco for purposes of Rule 145 promulgated by the SEC under the Securities Act
(each, a "Rule 145 Affiliate"). Heinz shall furnish such information and
documents as Del Monte may reasonably request for the purpose of reviewing such
list. Heinz shall use all commercially reasonable efforts to cause each Person
who is identified as a Rule 145 Affiliate in the list furnished pursuant to this
Section 7.10 to execute a written agreement (each, a "Rule 145 Affiliate
Agreement"), substantially in the form of Exhibit E to this Agreement, at least
15 days prior to the Effective Time.
7.11 Public Announcements. Heinz, Spinco and Del Monte shall consult
with each other and shall mutually agree upon any press release or public
announcement relating to the transactions contemplated by this Agreement and
shall not issue any such press release or make any such public announcement
prior to such consultation and agreement, except as may be required by
applicable law, court process or by obligations pursuant to any listing
agreement with any national securities exchange, in which case the party
proposing to issue such press release or make such public announcement shall use
its reasonable best efforts to consult in good faith with the other party before
issuing any such press release or making any such public announcement.
7.12 Defense of Litigation. Each of Heinz, Spinco and Del Monte shall
use its reasonable best efforts to defend against all actions, suits or
proceedings in which such party is named as a defendant that challenge or
otherwise seek to enjoin, restrain or prohibit the transactions contemplated by
this Agreement. None of Heinz, Spinco or Del Monte shall settle any such action,
suit or proceeding or fail to perfect on a timely basis any right to appeal any
judgment rendered or Order entered against such Party therein without having
previously consulted with the other Parties. Each of Heinz, Spinco and Del Monte
shall use all commercially reasonable efforts to cause each of its Affiliates,
directors and officers to use all commercially reasonable efforts to defend any
such action, suit or proceeding in which such Affiliate, director or officer is
named as a defendant and which seeks any such relief to comply with this Section
7.12 to the same extent as if such Person was a Party.
7.13 Notification. Each of the Parties shall endeavor to notify the
other Parties as promptly as practicable after it becomes aware (a) that any
representation or warranty of such Party in this Agreement is untrue or
inaccurate if the effect thereof would be that the condition to
68
Closing set forth in Section 8.2(a) or 8.3(a), as applicable, would be incapable
of being fulfilled as of the Closing Date and (b) of the occurrence of any event
that would have a Material Adverse Effect on such Party; provided, however, that
(i) delivery of any notification or information pursuant to this Section 7.13
shall be for notification purposes only and shall not expand or limit the rights
or affect the obligations of any Party hereunder or give rise to any other
liability on the part of any Party and (ii) the failure to have complied with
this Section 7.13 shall not constitute a breach or have any implications on any
Party's rights or obligations hereunder or give rise to any liability on the
part of any Party.
7.14 Accounting Matters. In connection with the information regarding
Spinco and the Spinco Business provided by Heinz and Spinco specifically for
inclusion in the Form X-0, Xxxxx and Spinco shall use reasonable best efforts to
cause to be delivered to Del Monte two letters from Heinz's and Spinco's
independent public accountants, one dated approximately the date on which the
Form S-4 shall become effective and one dated the Closing Date, each addressed
to Heinz, Spinco and Del Monte, in form and substance reasonably satisfactory to
Del Monte and reasonably customary in scope and substance for comfort letters
delivered by independent public accountants in connection with registration
statements similar to the Form S-4.
(a) In connection with the information regarding Del Monte and Merger
Sub provided by Del Monte and Merger Sub specifically for inclusion in or
incorporation by reference in the Form S-4, Del Monte shall use reasonable best
efforts to cause to be delivered to Heinz two letters from Del Monte's
independent public accountants, one dated approximately the date on which the
Form S-4 shall become effective and one dated the Closing Date, each addressed
to Heinz, Spinco and Del Monte, in form and substance reasonably satisfactory to
Heinz and reasonably customary in scope and substance for comfort letters
delivered by independent public accountants in connection with registration
statements similar to the Form S-4.
7.15 Non-Disclosure. Del Monte agrees that, for a three (3) year
period after the Closing Date, neither Del Monte nor any of its Subsidiaries,
nor any of their respective employees, officers, directors or agents shall at
any time, either directly or indirectly, access, obtain, use, share,
communicate, transmit or otherwise disclose any Heinz Information, including by
obtaining or accessing any such Heinz Information from any former employee of
Heinz or any of its Subsidiaries (whether or not currently employed by Del
Monte), it being understood that no Person shall be found to have violated this
Section 7.15 by reason of Heinz Information which they access or obtain by
virtue of such Heinz Information being in their minds so long as such Person
does not otherwise violate this Section 7.15. Del Monte agrees that any material
breach of this Section 7.15 will irreparably harm the business of Heinz, for
which Heinz shall not have an adequate remedy at law. Therefore, in such event,
notwithstanding any other provision of this Agreement to the contrary, Heinz may
obtain all appropriate relief from any court of competent jurisdiction, without
the posting of bond or other security, in addition to whatever other remedies it
may have. "Heinz Information" shall mean all information, ideas, concepts,
techniques, methods, processes, plans, strategies, know-how, materials and
documents in any form or medium (including oral, written, tangible, intangible
or electronic) relating to or concerning the past, current or future business,
activities and operations of Heinz other than the Spinco Business which the
Person in question knew, had reason to know or would reasonably be
69
expected to know was confidential, proprietary or non-public, including
finances, products, services, sales, marketing, advertising and promotions,
intellectual property (including trade secrets, business methods, inventions and
research and development), personnel, suppliers, vendors and competitors;
provided, that Heinz Information shall not include any of the foregoing that (i)
was in the public domain before the date of this Agreement or subsequently came
into the public domain other than as a result of disclosure by Del Monte or any
of its Subsidiaries in breach of this Agreement, (ii) was lawfully received by
Del Monte or any of its Subsidiaries from a third party free of any obligation
of confidence of or to such third party, (iii) is required to be disclosed in a
judicial or administrative proceeding or by law, provided that Del Monte shall
promptly notify Heinz of any such requirement, disclose no more information than
is so required and cooperate with all attempts by Heinz to obtain a protective
order or, similar treatment, (iv) is independently developed by employees,
consultants or agents of Del Monte or any of its Subsidiaries without reference
to any Heinz Information or (v) Heinz has given its prior written consent as to
its disclosure. Without limiting the foregoing, Del Monte agrees that for a
period of twelve months following the Closing Date, neither Del Monte nor any of
its Subsidiaries shall transfer or re-assign any employees specified in Section
7.15 of the Del Monte Disclosure Letter to any division of, or position at, Del
Monte that would give any of such employees responsibility for a business that
would compete with any of the Retained Businesses. Notwithstanding the
foregoing, nothing contained in this Section 7.15 shall have any effect on
agreements with third parties, or affect any rights that the Parties may have
under common law.
7.16 Control of Other Party's Business. Nothing contained in this
Agreement shall give Heinz or Spinco, directly or indirectly, the right to
control or direct Del Monte's operations prior to the Effective Time. Nothing
contained in this Agreement shall give Del Monte, directly or indirectly, the
right to control or direct Heinz's or Spinco's operations prior to the Effective
Time. Prior to the Effective Time, each of Heinz, Spinco and Del Monte shall
exercise, consistent with the terms and conditions of this Agreement, complete
control and supervision over their respective operations.
7.17 Debt Instruments. Prior to or at the Effective Time, Heinz and
each of its Subsidiaries (with respect to obligations of the Spinco Business
only), and Del Monte and each of its Subsidiaries shall use their reasonable
best efforts to prevent the occurrence, as a result of the Merger and the other
transactions contemplated by this Agreement, of a change in control or any event
that constitutes a default (or an event that, with notice or lapse of time or
both, would become a default) under any debt instrument of any such entity,
including debt securities registered under the Securities Act, (other than Del
Monte's existing credit facility) including by seeking an amendment or waiver of
any such change in control or default; provided, however, that neither Heinz nor
Del Monte (nor their respective Subsidiaries) shall be required to pay any
amounts in connection therewith without the prior written consent of such Party;
provided, further, that if the transfer of any Spinco Asset to Spinco or the
assumption of any Spinco Liability by Spinco would result, upon the consummation
of the Merger, in the occurrence of any event that would constitute a default
(or any event that, with notice or lapse of time, or both, would become a
default) under the Indenture dated as of May 15, 2001 among Del Monte, Merger
Sub and Bankers Trust Company, as trustee, then Heinz and Spinco shall use their
reasonable best efforts prior to the consummation of the Merger to amend the
applicable provisions of such Spinco Asset or Spinco Liability or take such
other commercially reasonable actions that will preserve the economics of the
transactions contemplated by this Agreement and
70
the other Transaction Agreements to Heinz, Spinco and Del Monte without causing
any such event, default or event of default.
7.18 Nonsolicitation of Employees. (a) Heinz agrees that for a period
of two years from and after the Closing Date it shall not, and it shall cause
its Subsidiaries not to, without the prior written consent of Del Monte,
directly or indirectly, solicit to hire or hire (or cause or seek to cause to
leave the employ of Del Monte), or enter into a consulting agreement with (i)
any Spinco Employee or (ii) any employee of Del Monte or any of its Subsidiaries
unless, in the case of clause (i) or (ii) above (other than with respect to any
Spinco Employees who were, prior to the Distribution Date, salaried employees of
Heinz or any Subsidiary), such Person ceased to be an employee of Del Monte or
its Subsidiaries prior to such action by Heinz or any of its Subsidiaries;
provided, however, that in the case of such Person's voluntary termination of
employment with Del Monte or any of its Subsidiaries, such Person shall have
ceased to be such an employee at least three months prior to such action by
Heinz or any of its Subsidiaries.
(b) Del Monte agrees that for a period of two years from and after
the Closing Date it shall not, and it shall cause its Subsidiaries not to,
without the prior written consent of Heinz, directly or indirectly, solicit to
hire or hire (or cause or seek to cause to leave the employ of Heinz), or enter
into a consulting agreement with any employee of Heinz or any of its
Subsidiaries unless such Person ceased to be an employee of Heinz or its
Subsidiaries prior to such action by Del Monte or any of its Subsidiaries;
provided, however, that in the case of such Person's voluntary termination of
employment with Heinz or any of its Subsidiaries, such Person shall have ceased
to be such an employee at least three months prior to such action by Del Monte
or any of its Subsidiaries.
(c) Notwithstanding the foregoing, the restrictions set forth in
Sections 7.19(a) and (b) shall not apply to bona fide public advertisements for
employment placed by any Party and not specifically targeted at the employees of
any other Party so long as no employees of such other Party are hired as a
result thereof within the two-year period from and after the Closing Date.
(d) Following the Effective Time, this Section 7.18 shall supersede
the provisions in the Confidentiality Agreement addressing the non-solicitation
of employees.
7.19 Trade Accounts Receivable; Trade Accounts Payable. (a) Heinz
shall use commercially reasonable efforts to establish processes and systems
that will permit it to separate its Trade Accounts Receivable and Trade Accounts
Payable to the extent relating to the Spinco Business (the "Spinco Accounts")
from those relating to the businesses of Heinz other than the Spinco Business in
order to permit the transfer of the Spinco Accounts to Spinco on the
Distribution Date. The Parties agree that all Spinco Accounts originating prior
to the date on which such processes and systems shall be fully implemented and
effective to make such separation (the "Separation Date") shall be for the
account of Heinz and neither Spinco nor Del Monte shall have any right thereto
or obligation in respect thereof. All Spinco Accounts originating on or after
the Separation Date shall be transferred to Spinco in accordance with the terms
and conditions of the Separation Agreement (such Spinco Accounts, the
"Transferred Accounts").
71
(b) (i) In the event that the Separation Date occurs prior to the
Distribution Date, on the second business day prior to the Closing Date, Heinz
shall prepare and deliver to Del Monte a statement containing an estimate
derived by subtracting from (A) the difference between (x) the estimated face
value of the Trade Accounts Receivable as of the close of business on the
business day immediately preceding the Closing Date and (y) the estimated face
value of the Trade Accounts Payable as of such time and date (such number the
"Estimated Net Accounts Balance") (B) the difference between (x) the estimated
face value of the Trade Accounts Receivable to be transferred to Spinco pursuant
to the Separation Agreement and (y) the estimated face value of the Trade
Accounts Payable to be transferred to Spinco pursuant to the Separation
Agreement (such number the "Estimated Net Accounts Transferred") (such
difference, the "Estimated Transferred Accounts Differential"). The Estimated
Transferred Accounts Differential shall be prepared in a manner consistent with
the information contained in the 2002 Audited Financial Statements and by
applying the same accounting principles, policies and practices utilized in
preparing the 2002 Audited Financial Statements. Heinz shall pay to Spinco at
the Effective Time, by payment of immediately available funds to an account
designated by Spinco, an amount equal to the Estimated Transferred Accounts
Differential, if a positive number.
(ii) Promptly, and in any event within 90 days following the Closing
Date, Heinz shall prepare and deliver to Del Monte a statement setting forth the
amount derived by subtracting from (A) the difference between (x) the actual
face value of the Trade Accounts Receivable as of the close of business on the
business day immediately preceding the Closing Date and (y) the actual face
value of the Trade Accounts Payable as of such time and date (such number the
"Closing Net Accounts Balance") (B) the difference between (x) the actual face
value of the Trade Accounts Receivable transferred to Spinco pursuant to the
Separation Agreement and (y) the actual face value of the Trade Accounts Payable
to be transferred to Spinco pursuant to the Separation Agreement (such number
the "Actual Net Accounts Transferred") (such difference, the "Actual Transferred
Accounts Differential"), such statement to be certified by Heinz's independent
public accountants . The Actual Transferred Accounts Differential shall be
prepared on a basis consistent with the information included in the 2002 Audited
Financial Statements and by applying the same accounting principles, policies
and practices utilized in preparing the 2002 Audited Financial Statements and
the Estimated Net Accounts Balance.
(iii) If Del Monte in good faith disagrees with the amount of the
Actual Transferred Accounts Differential delivered pursuant to Section
7.19(b)(ii), Del Monte may, within 30 days after its receipt thereof, deliver a
written notice of disagreement to Heinz. Any such notice of disagreement shall
specifically identify the elements of the Actual Transferred Accounts
Differential that Del Monte believes were miscalculated, identifying all alleged
uncounted or improperly included items, and Del Monte shall be deemed to have
agreed with all other items and amounts contained in the Actual Transferred
Accounts Differential. If a notice of disagreement shall be timely delivered
pursuant to this paragraph (b)(iii) hereof, the Parties shall, during the ten
(10) days following such delivery, use their reasonable best efforts to reach
agreement on the disputed items. In the absence of such agreement, the
determination of such Actual Transferred Accounts Differential may be referred
within ten (10) days following the end of such ten-day period by either Heinz or
Del Monte for determination to Ernst & Young LLP (the "Expert") and the Expert
shall be instructed to notify both Heinz and Del Monte of its
72
determination within twenty (20) days of such referral. In connection therewith,
the Expert shall consider only those items or amounts in the Actual Transferred
Accounts Differential as to which Del Monte has disagreed and those items
related thereto and raised for review by Heinz in response to the items disputed
by Del Monte. In making its determination, the Expert shall act as expert and
not arbitrator and its determination shall, in the absence of manifest error, be
deemed to have been accepted and approved by Heinz and Del Monte and shall be
deemed to constitute the relevant Final Transferred Accounts Differential (as
defined below) for all purposes of this Agreement. The Expert shall deliver to
Heinz and Del Monte a report setting forth its adjustments, if any, to the
Actual Transferred Accounts Differential and the calculations supporting such
adjustments. The fees and costs of the Expert shall be shared equally by Heinz
and the Surviving Corporation. As used herein (i) "Final Transferred Accounts
Differential" shall mean (x) if no notice of disagreement is delivered by Del
Monte within the period provided in this Section 7.19(b)(iii) or if no referral
is made to the Expert within the second ten-day period referred to above, the
Actual Transferred Accounts Differential as shown in Heinz's calculation
delivered pursuant to Section 7.19(b)(ii) or (y) if such notice of disagreement
is delivered by Del Monte, either (A) as agreed in writing by Del Monte and
Heinz or (B) as shown in the Expert's calculation delivered pursuant to this
Section 7.19(b)(iii) and (ii) "Determination Date" shall mean the date on which
the Final Transferred Accounts Differential shall be determined.
(iv) If the amount of the Final Transferred Accounts Differential is
positive and is higher than the corresponding amount set forth in the Estimated
Transferred Accounts Differential, then Heinz shall pay the difference to the
Surviving Corporation, as an adjustment, in the manner and with interest as
provided in Section 7.19(b)(v), except that if the Estimated Transferred
Accounts Differential was less than zero, Heinz shall only be required to pay
the amount of the Final Transferred Accounts Differential. If the amount of the
Final Transferred Accounts Differential is lower (or if less than zero, more
negative) than the Estimated Transferred Accounts Differential, then the
Surviving Corporation shall pay the difference to Heinz, as an adjustment, in
the manner and with interest as provided in Section 7.19(b)(v), but in no event
shall such payment be greater than the amount, if any, paid by Heinz pursuant to
Section 7.19(b)(i).
(v) Payments made pursuant to Section 7.19(b)(iv) shall be made by
wire transfer (to accounts designated by Heinz or the Surviving Corporation, as
the case may be) of immediately available funds no later than the third business
day following the Determination Date. The amount of any such payments shall bear
interest for the period from and including the Closing Date but excluding the
payment date at the LIBOR rate from time to time in effect. Such interest will
be payable at the same time as the payment to which it relates and shall be
calculated on the basis of the actual number of days for which interest is due.
(c) (i) In the event that the Separation Date occurs after the
Distribution Date, (A) Heinz shall add to the services to be provided pursuant
to the Transition Services Agreement Trade Accounts Payable and Trade Accounts
Receivable administration until the Separation Date shall occur, and (B) on the
second business day prior to the Closing Date, Heinz shall prepare and deliver
to Del Monte a statement containing the Estimated Net Accounts Balance. The
Estimated Net Accounts Balance shall be prepared in a manner consistent with the
information contained in the 2002 Audited Financial Statements and by applying
the same accounting principles, policies and practices utilized in preparing the
2002 Audited Financial
73
Statements. Heinz shall pay to Spinco at the Effective Time, by payment of
immediately available funds to an account designated by Spinco, an amount equal
to the Estimated Net Accounts Balance, if a positive number.
(ii) Promptly, and in any event within 90 days following the Closing
Date, Heinz shall prepare and deliver to Del Monte a statement setting forth the
Closing Net Accounts Balance, certified by Heinz's independent public
accountants. The Closing Net Accounts Balance shall be prepared on a basis
consistent with the information included in the 2002 Audited Financial
Statements and by applying the same accounting principles, policies and
practices utilized in preparing the 2002 Audited Financial Statements and the
Estimated Net Accounts Balance.
(iii) If Del Monte in good faith disagrees with the amount of the
Closing Net Accounts Balance delivered pursuant to Section 7.19(b)(ii), Del
Monte may, within 30 days after its receipt thereof, deliver a written notice of
disagreement to Heinz. Any such notice of disagreement shall specifically
identify the elements of the Closing Net Accounts Balance that Del Monte
believes were miscalculated, identifying all alleged uncounted or improperly
included items, and Del Monte shall be deemed to have agreed with all other
items and amounts contained in the Closing Net Accounts Balance. If a notice of
disagreement shall be timely delivered pursuant to this paragraph (c)(iii), the
parties shall, during the ten (10) days following such delivery, use their
reasonable best efforts to reach agreement on the disputed items. In the absence
of such agreement, the determination of such Closing Net Accounts Balance may be
referred within ten (10) days following the end of such ten-day period by either
Heinz or Del Monte for determination to the Expert and the Expert shall be
instructed to notify both Heinz and Del Monte of its determination within twenty
(20) days of such referral. In connection therewith, the Expert shall consider
only those items or amounts in the Closing Net Accounts Balance as to which Del
Monte has disagreed and those items related thereto raised for review by Heinz
in response to the items disputed by Del Monte. In making its determination, the
Expert shall act as expert and not arbitrator and its determination shall, in
the absence of manifest error, be deemed to have been accepted and approved by
Heinz and Del Monte and shall be deemed to constitute the relevant Final Net
Accounts Balance (as defined below) for all purposes of this Agreement. The
Expert shall deliver to Heinz and Del Monte a report setting forth its
adjustments, if any, to the Closing Net Accounts Balance and the calculations
supporting such adjustments. The fees and costs of the Expert shall be shared
equally by Heinz and the Surviving Corporation. As used herein "Final Net
Accounts Balance" shall mean (x) if no notice of disagreement is delivered by
Del Monte within the period provided in this Section 7.19(c)(iii) or if no
referral is made to the Expert within the second ten-day period referred to
above, the Closing Net Accounts Balance as shown in Heinz's calculation
delivered pursuant to Section 7.19(c)(ii) or (y) if such notice of disagreement
is delivered by Del Monte, either (A) as agreed in writing by Del Monte and
Heinz or (B) as shown in the Expert's calculation delivered pursuant to this
Section 7.19(c)(iii).
(iv) If the amount of the Final Net Accounts Balance is positive and
higher than the corresponding amount set forth in the Estimated Net Accounts
Balance, then Heinz shall pay the difference to the Surviving Corporation, as an
adjustment, in the manner and with interest as provided in Section 7.19(c)(v),
except that if the Estimated Net Accounts Balance was less than zero, Heinz
shall be required to pay the amount of the Final Net Accounts Balance. If
74
the amount of the Final Net Accounts Balance is lower than the Estimated Net
Accounts Balance, then the Surviving Corporation shall pay the difference to
Heinz, as an adjustment, in the manner and with interest as provided in Section
7.19(c)(v), but in no event shall such payment be greater than the amount, if
any, paid by Heinz pursuant to Section 7.19(c)(i).
(v) Payments made pursuant to Section 7.19(c)(iv) shall be made by
wire transfer (to accounts designated by Heinz or the Surviving Corporation, as
the case may be) of immediately available funds no later than the third business
day following the date on which the Final Net Accounts Balance shall be
determined. The amount of any such payments shall bear interest for the period
from and including the Closing Date but excluding the payment date at the LIBOR
rate from time to time in effect. Such interest will be payable at the same time
as the payment to which it relates and shall be calculated on the basis of the
actual number of days for which interest is due.
(d) The Parties agree to treat any net payments made pursuant to this
Section 7.19 as either a capital contribution or a distribution, as the case may
be, between Heinz and Spinco occurring immediately prior to the Distribution.
7.20 Spinco By-Laws. At or prior to the Effective Time Spinco shall
cause its by-laws to be amended, as of the Effective Time, so as to read in the
form attached hereto as Exhibit D.
7.21 Del Monte's Amended and Restated Certificate of Incorporation.
Immediately prior to the Effective Time, Del Monte shall file, in accordance
with Section 103 of the DGCL, a certificate setting forth the Amended and
Restated Certificate of Incorporation and certifying that such Amended and
Restated Certificate of Incorporation has been duly adopted in accordance with
the DGCL, which certificate shall become effective not later than the Effective
Time.
7.22 Board of Directors of Del Monte; Officers. The Board of
Directors of Del Monte shall adopt a resolution prior to the Effective Time
changing the number of directors on the Board of Directors of Del Monte as of
the Effective Time to nine and changing the composition of the Board of
Directors of Del Monte to be comprised of six persons which shall have been
prior thereto designated by Heinz and three persons which shall have been prior
thereto designated by Del Monte (which three shall include the current CEO of
Del Monte), in each case, subject to the approval of the other, which approval
shall not be unreasonably withheld or delayed; provided, that (a) a majority of
Heinz's director designees will not be present or former directors or executive
officers of Heinz and (b) none of Heinz's director designees will be directors
or executive officers of Heinz at the time they become directors of Del Monte.
Del Monte shall cause the Board of Directors of Del Monte at the Effective Time
to be apportioned into three classes with (to the extent possible) each class
consisting of two directors designated by Heinz and one director designated by
Del Monte. Del Monte shall obtain the resignation of all those directors who
shall not be continuing as directors, to be effective at the Effective Time (the
"Required Resignations"). Del Monte shall take all requisite action so that, at
the Effective Time, (a) the Chief Executive Officer and Chairman of the Board of
Del Monte shall be Xx. Xxxxxxx, (b) the Chief Operating Officer of Del Monte
shall be Xx. Xxxxx
75
and (c) the Chief Financial Officer of Del Monte shall be Xx. Xxxxxx, with all
other officers to be as directed by the Board of Directors of Del Monte.
7.23 Covenant Not To Compete; Restriction on Use of Intellectual
Property. (a) In furtherance of the Merger and the transactions contemplated
hereby, Heinz covenants and agrees that, for a period ending on the fourth
anniversary of the Closing Date, neither Heinz nor any of its Subsidiaries
shall, without the prior written consent of Del Monte, engage, directly or
indirectly, in the Restricted Business in the Heinz Restricted Territory (the
"Heinz Restricted Business"); provided, however, that nothing set forth in this
Section 7.23 shall prohibit Heinz or its Affiliates from (i) engaging in the
businesses conducted by Heinz or its Affiliates (excluding Spinco) on the
Closing Date and described in Section 7.23 of the Heinz Disclosure Letter, (ii)
owning not in excess of 5% in the aggregate of any class of capital stock or
other equity interest of any corporation engaged in the Heinz Restricted
Business if such stock is publicly traded and listed on any national or regional
stock exchange or on the Nasdaq Stock Market, (iii) owning an interest acquired
as a creditor in bankruptcy or otherwise than by a voluntary investment
decision, or (iv) acquiring the assets or capital stock or other equity
interests of any other Person engaged in the Heinz Restricted Business;
provided, however, that prior to the second anniversary of the Closing Date the
net sales attributable to the Heinz Restricted Business conducted by such other
Person accounts for less than 25% of the net sales of such Person for its most
recently completed fiscal year.
(b) The Parties acknowledge that Heinz has operated global category
teams and has otherwise facilitated the sharing of information (including
know-how, formulae and other confidential and proprietary information) relating
to the Spinco Business (including tuna, soup, gravy and broth and infant
feeding) between the Spinco Business and the business of Heinz engaged in the
Restricted Business in the Del Monte Restricted Territory (the "Residual Spinco
Business"); that the purpose of such team efforts and exchanges has been to
share such Intellectual Property that is common to the Spinco Business and the
Residual Spinco Business in order to promote and transfer best practices,
efficiencies, recipes, formulations, processing techniques, marketing
initiatives and other advantageous business opportunities; and that in order to
protect the Intellectual Property of the Residual Spinco Business, Del Monte
covenants and agrees that, for a period ending on the third anniversary of the
Closing Date, neither Del Monte nor any of its Subsidiaries shall, without the
prior written consent of Heinz, engage, directly or indirectly, in the
Restricted Business in the Del Monte Restricted Territory (the "Del Monte
Restricted Business") using the Intellectual Property transferred or licensed to
Spinco in accordance with the Separation Agreement or the Trademark License
Agreement (or allow third parties to use any of the foregoing to engage in such
business in such territory).
(c) Notwithstanding anything to the contrary in Section 7.23(a) and
(b), neither Heinz nor Del Monte nor their respective Subsidiaries shall be
deemed to be engaged in activities prohibited by this Section 7.23 with respect
to sales of products to trade customers having outlets in both the Heinz
Restricted Territory and the Del Monte Restricted Territory if, despite having
been advised by either Heinz or Del Monte as to the existence of this Section
7.23, any such trade customer does not restrict the flow of products between the
Heinz Restricted Territory and the Del Monte Restricted Territory.
76
(d) The Parties agree that the covenants included in this Section
7.23 are, taken as a whole, reasonable in their geographic and temporal coverage
and no Party shall raise any issue of geographic or temporal reasonableness in
any proceeding to enforce such covenant; provided, however, that if the
provisions of this Section 7.23 should ever be deemed to exceed the time or
geographic limitations or any other limitations permitted by applicable law in
any jurisdiction, then such provisions shall be deemed reformed in such
jurisdiction to the minimum extent required by applicable law to cure such
problem. The Parties acknowledge and agree that in the event of a breach by
either Heinz or Del Monte, as the case may be, of the provisions of this Section
7.23, monetary damages shall not constitute a sufficient remedy. Consequently,
in the event of any such breach, the non-breaching Party may, in addition to any
other rights and remedies existing in its favor, apply to any court of law or
equity of competent jurisdiction for specific performance and/or preliminary and
final injunctive relief or other relief in order to enforce or prevent any
violation of the provisions hereof, without the necessity of proving actual
damages or posting a bond. Each of Heinz and Del Monte further specifically
acknowledges and agrees that the non-breaching Party shall be entitled to an
equitable accounting from the breaching Party of all earnings, profits and other
benefits arising from any such breach.
7.24 Post Closing Cooperation. Subject to the terms and conditions
hereof, each of the Parties hereto agrees to use its reasonable best efforts to
execute and deliver, or cause to be executed and delivered, all documents and to
take, or cause to be taken, all actions that may be reasonably necessary or
appropriate, in the reasonable opinion of counsel for Heinz and Del Monte, to
effectuate the provisions of this Agreement.
7.25 Sole Stockholder Approvals. No later than 14 days after the
execution of this Agreement, (i) Del Monte shall deliver to Merger Sub a written
consent, as the sole stockholder of Merger Sub, in compliance with Section 615
of the NYBCL, adopting this Agreement and approving the Merger, and (ii) Heinz,
as sole stockholder of Spinco, will vote to adopt this Agreement in accordance
with the DGCL.
7.26 Amendments to Transaction Documents. Del Monte shall have the
right to request in good faith that Heinz and Spinco incorporate into any
Transaction Agreement (other than this Agreement), and Heinz and Spinco shall so
incorporate, such additions, deletions and other modifications thereto that are
consented to by Heinz, which consent shall not be unreasonably delayed or
withheld, unless such consent is sought with respect to an amendment that would,
individually or together with all other such amendments to the applicable
document previously proposed by Del Monte and agreed to by Heinz, reasonably be
expected to result in any material cost or detriment to Heinz (or, prior to the
Merger, Spinco) or result in any material reduction of the benefits to be
obtained by Heinz (or, prior to the Merger, Spinco) from the transactions
contemplated by this Agreement and the other Transaction Agreements, in which
case such consent shall be in Heinz's discretion.
7.27 Post-Closing Delivery of Closing Balance Sheet. Heinz shall
deliver or cause to be delivered to Del Monte as soon as reasonably practicable
after the Closing Date an audited combined statement of assets and liabilities
contributed as of the Closing Date, prepared in accordance with GAAP (the
"Audited Closing Statement") and audited by PricewaterhouseCoopers LLP, which
will present the Spinco Assets and the Spinco Liabilities. The Audited Closing
Statement shall be prepared at the sole cost and expense of Heinz.
77
ARTICLE 8
CONDITIONS TO THE MERGER
8.1 Conditions to the Obligations of Spinco, Heinz and Del Monte to
Effect the Merger. The respective obligations of Spinco, Heinz and Del Monte to
consummate the Merger shall be subject to the fulfillment (or waiver by Heinz,
Spinco and Del Monte) at or prior to the Effective Time of the following
conditions:
(a) The Distribution shall have been consummated in accordance with
the Separation Agreement;
(b) The Share Issuance Approval shall have been obtained;
(c) All consents, approvals and authorizations of any Governmental
Authority legally required for the consummation of the transactions contemplated
by this Agreement and the other Transaction Agreements shall have been obtained
and be in full force and effect at the Effective Time, except those consents the
failure of which to obtain would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Del Monte (after
giving effect to the Merger);
(d) All consents or approvals of each Person whose consent or
approval shall be required for the consummation of the transactions contemplated
by this Agreement and the other Transaction Agreements under any contract to
which Del Monte or Heinz or their respective Subsidiaries shall be a party, or
by which their respective properties and assets are bound shall have been
obtained (in each case without the payment or imposition of any material costs
or obligations) and be in full force and effect at the Effective Time, except
(i) where the failure to so obtain such consents and approvals would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Del Monte (after giving effect to the Merger) or (ii) to the
extent that reasonably acceptable alternative arrangements relating to the
failure to obtain any such consent or approval are otherwise provided for;
(e) Any waiting period under the HSR Act shall have expired or been
terminated;
(f) (i) The Registration Statement shall have become effective in
accordance with the Securities Act and the Exchange Act and shall not be the
subject of any stop order or proceedings seeking a stop order and no similar
proceeding in respect of the Proxy Statement/Prospectus shall have been
initiated or threatened by the SEC and not concluded or withdrawn; and (ii) the
shares of Del Monte Common Stock and such other shares required to be reserved
for issuance in connection with the Distribution and the Merger, respectively,
shall have been Approved for Listing;
(g) No temporary restraining Order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
Governmental Authority of competent jurisdiction or other legal restraint or
prohibition preventing or making illegal the consummation of the transactions
contemplated by this Agreement and the other Transaction
78
Agreements shall be in effect; provided, however, that the Parties hereto shall
use their reasonable best efforts to have any such injunction, Order, restraint
or prohibition vacated; and
(h) The Surviving Corporation shall have entered into a senior credit
facility or facilities (or replacement facilities therefor) on the terms and
conditions set forth in the First Commitment Letter, or on terms and conditions
which are not materially more burdensome to Del Monte and the Surviving
Corporation than those set forth in the First Commitment Letter, except as
contemplated thereby, in an amount equal to (i) $800 million (in addition to the
amount of proceeds of such senior credit facility or facilities distributed to
Heinz from Spinco pursuant to the Separation Agreement, which additional amount
of proceeds shall only be a condition to the obligations of Heinz and Spinco to
consummate the Merger, as set forth in Section 8.2(h)(i)) or (ii) such lesser
amount as may be agreed between Del Monte and the lenders in respect of such
facility or facilities.
8.2 Additional Conditions to the Obligations of Heinz and Spinco. The
obligations of Heinz and Spinco to consummate the Merger shall be subject to the
fulfillment (or waiver by Heinz or Spinco) at or prior to the Effective Time of
the following additional conditions:
(a) (i) (A) The representations and warranties of Del Monte contained
in this Agreement qualified as to Material Adverse Effect shall be true and
correct in all respects and (B) those not so qualified shall be true and correct
in all material respects, in each case as of the Effective Time as if made as of
the Effective Time (except to the extent such representations and warranties
address matters as of a particular date), except in the case of clause (B) where
the failure to be true and correct in all material respects would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Del Monte and (ii) Del Monte shall have performed in all
material respects its covenants and agreements contained in this Agreement
required to be performed at or prior to the Effective Time, except in the case
of clauses (i) and (ii) to the extent specifically contemplated or permitted by
this Agreement;
(b) Del Monte shall have delivered to Heinz and Spinco a certificate,
dated as of the Effective Time, of the Chief Executive Officer and Chief
Financial Officer of Del Monte (on Del Monte's behalf and without any personal
liability) certifying the satisfaction by Del Monte of the conditions set forth
in subsection (a) of this Section 8.2;
(c) Heinz and Spinco shall have received an opinion of Xxxxxxx
Xxxxxxx & Xxxxxxxx, to the effect that (i) the Merger will constitute a
"reorganization" for federal income tax purposes within the meaning of Section
368(a) of the Code and (ii) the Debt Security will constitute a security for
federal income tax purposes. In rendering such opinion, Xxxxxxx Xxxxxxx &
Xxxxxxxx may require and rely upon representations contained in certificates of
officers of Spinco, Merger Sub, Del Monte and others;
(d) Del Monte shall have delivered the Del Monte Professional Fee
Statement pursuant to Section 9.3(d) of this Agreement;
(e) Del Monte shall have entered into the Tax Separation Agreement;
79
(f) Heinz shall have received the Section 355 Ruling in form and
substance reasonably satisfactory to Heinz (taking into account any changes
pursuant to Section 7.8(b));
(g) Del Monte shall have delivered to Heinz the Required
Resignations; and
(h) (i) Spinco shall have received (and distributed to Heinz) the
proceeds of $800 million of financing on the terms and conditions set forth in
the First Commitment Letter and (ii) Spinco shall have issued or caused to be
issued either (A) the capital markets debt financing, as contemplated in the
Engagement Letter, or (B) the senior secured notes contemplated by the Second
Commitment Letter, in either case in an amount equal to $300,000,000; provided,
however, that the terms and conditions of all such financing shall not be
materially more burdensome to Heinz, Spinco, Del Monte or the Surviving
Corporation than those set forth in the First Commitment Letter or the
Engagement Letter, as the case may be.
8.3 Additional Conditions to the Obligations of Del Monte. The
obligation of Del Monte to consummate the Merger shall be subject to the
fulfillment (or waiver by Del Monte) at or prior to the Effective Time of the
following additional conditions:
(a) (i) (A) The representations and warranties of Spinco and Heinz
contained in this Agreement qualified as to Material Adverse Effect shall be
true and correct in all respects and (B) those not so qualified shall be true
and correct in all material respects, in each case as of the Effective Time as
if made as of the Effective Time (except to the extent such representations and
warranties address matters as of a particular date), except in the case of
clause (B) where the failure to be true and correct in all material respects
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Spinco and (ii) Spinco and Heinz shall have performed
in all material respects their respective covenants and agreements contained in
this Agreement required to be performed at or prior to the Effective Time,
except in the case of clauses (i) and (ii) to the extent specifically
contemplated or permitted by this Agreement;
(b) Heinz shall have delivered to Del Monte a certificate, dated as
of the Effective Time, of the Chief Financial Officer and the Senior Vice
President of Strategy Process and Business Development (on Heinz's behalf and
without any personal liability) of Heinz certifying the satisfaction by Heinz
and Spinco of the conditions set forth in subsection (a) of this Section 8.3;
(c) Del Monte shall have received an opinion from Xxxxxx Xxxx &
Xxxxxxxx L.L.P., to the effect that the Merger will constitute a reorganization
for federal income tax purposes within the meaning of Section 368(a) of the
Code. In rendering such opinion, Xxxxxx Xxxx & Xxxxxxxx L.L.P. may require and
rely upon representations contained in certificates of officers of Spinco,
Merger Sub, Del Monte and others;
(d) Spinco and Heinz shall have entered into the applicable
Transaction Agreements; and
(e) All of the financing obtained in satisfaction of the condition
set forth in Section 8.2(h) shall be on terms and conditions not materially more
burdensome to Del Monte and the Surviving Corporation than those set forth in
the Commitment Letters, except as contemplated thereby.
80
ARTICLE 9
TERMINATION, AMENDMENT AND WAIVERS
9.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Effective Time whether before or after the Requisite Approval or the adoption
hereof by the stockholders of Spinco and Merger Sub:
(a) by the mutual written consent of each Party hereto, which consent
shall be effected by action of the Board of Directors of each such Party;
(b) by either Heinz or Del Monte:
(i) if the Effective Time shall not have occurred on or before
March 12, 2003 (the "Termination Date"); provided, however, that the right
to terminate this Agreement pursuant to this clause (b)(i) shall not be
available to any Party whose failure to perform any of its obligations
under this Agreement at or prior to such date has been a cause of or
resulted in the failure of the Merger to have become effective on or
before the Termination Date;
(ii) if, at the Del Monte Stockholders Meeting duly convened
therefor (including any adjournment, continuation or postponement
thereof), the Share Issuance Approval shall not have been obtained; or
(iii) if any court of competent jurisdiction or any other
Governmental Authority shall have issued an Order (and such Order shall
have become final and nonappealable), restraining, enjoining or otherwise
prohibiting the Merger, provided, that, (A) if the party seeking to
terminate this Agreement pursuant to this clause (b)(iii) is a party to
the applicable proceeding, such party shall have used its reasonable best
efforts to remove such Order, and (B) the right to terminate this
Agreement under this clause (b)(iii) shall not be available to any party
whose failure to fulfill any of its obligations under this Agreement shall
have been the cause of, or shall have resulted in, such Order;
(c) by Heinz, if Del Monte shall have (i) failed to include the Del
Monte Board Recommendation in the Proxy Statement/Prospectus or (ii) shall have
effected a Change in the Del Monte Board Recommendation (or resolved to take any
such action), whether or not permitted by the terms hereof, or (iii) breached
its obligations under Section 6.3 of this Agreement and such breach either by
its terms cannot be cured by the Termination Date or, with respect to any such
breach that is reasonably capable of being remedied, the breach is not remedied
within 30 days after Heinz has furnished Del Monte with written notice of such
breach; provided, however, that the right to terminate this Agreement pursuant
to clause (c)(iii) shall not be available to Heinz to the extent Heinz has
failed in any material respect to fulfill its obligation under Section 6.3(a) to
provide information for inclusion in the Form S-4 and/or to assist in the
preparation of the Form S-4, and such failure was the primary cause of Del
Monte's breach.
81
(d) by Del Monte, if Del Monte is not in material breach of the terms
of this Agreement, and there has been a breach of any representation, warranty,
covenant or agreement contained in this Agreement on the part of Heinz or Spinco
which breach would cause the condition to closing set forth in Section 8.3(a)
not to be satisfied, and (i) such breach by its nature is not capable of being
cured or (ii) Heinz has not, within thirty days after receipt by Heinz of
written notice of such breach from Del Monte, cured such breach or made any good
faith attempt to cure such breach; and
(e) by Heinz, if Heinz is not in material breach of the terms of this
Agreement, and there has been a breach of any representation, warranty, covenant
or agreement contained in this Agreement on the part of Del Monte or Merger Sub
which breach would cause the condition to closing set forth in Section 8.2(a)
not to be satisfied, and (i) such breach by its nature is not capable of being
cured or (ii) Del Monte has not, within thirty days after receipt by Del Monte
of written notice of such breach from Heinz, cured such breach or made any good
faith attempt to cure such breach.
The Party hereto desiring to terminate this Agreement pursuant to
this Section 9.1 (other than pursuant to Section 9.1(a)) shall give written
notice of such termination to the other Parties in accordance with Section 10.2,
specifying the provision hereof pursuant to which such termination is effected.
9.2 Effect of Termination. In the event of termination of this
Agreement pursuant to Section 9.1, this Agreement shall forthwith become void
and of no effect without any liability or obligation on the part of any Party
hereto (or any stockholder, director or officer, employee, agent, consultant or
representative of such party) to the other Parties hereto, except that (a) the
agreements contained in this Section 9.2, Section 9.3, the Confidentiality
Agreement (subject to the terms thereof), the last sentence of Section 7.7 and
in Article 10 shall survive the termination hereof and (b) no such termination
shall relieve any Party hereto of any liability or damages resulting from fraud
or from any willful and material breach by such Party of any covenant or other
agreement included in this Agreement.
9.3 Fees and Expenses. (a) (i) In the event that this Agreement is
terminated by Heinz pursuant to Section 9.1(c)(iii) then promptly, but in no
event later than two business days after such termination, Merger Sub shall pay
(and Del Monte shall cause Merger Sub to pay) Heinz a fee (the "Termination
Fee") equal to $20,000,000 by wire transfer of same day funds.
(ii) In the event that, following the execution of this Agreement and
prior to the Effective Time, (A) a Del Monte Acquisition Proposal is commenced,
publicly disclosed, publicly proposed or otherwise communicated to Del Monte or
the Del Monte Stockholders and (B) this Agreement is terminated by either Heinz
or Del Monte pursuant to Section 9.1(b)(ii) or by Heinz pursuant to Section
9.1(c)(i) or (ii) or 9.1(e) and, (C) (I) within 15 months after the date of such
termination, Del Monte enters into a Del Monte Acquisition Agreement relating
to, or consummates, such Del Monte Acquisition Proposal (changing the number in
clauses (ii), (iii) and (iv) of the definition of such term from 5% or 10%, as
the case may be, to 15%) or any other Del Monte Acquisition Proposal (modified
as aforesaid) with the Person making such first Del Monte Acquisition Proposal,
or (II) within 9 months after the date of such termination, Del
82
Monte enters into a Del Monte Acquisition Agreement relating to, or consummates,
any Del Monte Acquisition Proposal (modified as aforesaid) then Del Monte shall
promptly, but in no event later than two business days after the date such Del
Monte Acquisition Agreement is entered into or such Del Monte Acquisition
Proposal is consummated, as the case may be, pay Heinz the Termination Fee by
wire transfer of same day funds.
Del Monte acknowledges that the agreements contained in this Section
9.3(a) are an integral part of the transactions contemplated by this Agreement,
and that, without these agreements, Heinz would not enter into this Agreement;
accordingly, if Del Monte fails promptly to pay the amount due pursuant to this
Section 9.3(a), and in order to obtain such payment, Heinz commences a suit
which results in a judgment against Del Monte for the fee set forth in this
Section 9.3(a), Del Monte shall pay to Heinz its out-of-pocket costs and
expenses (including reasonable attorneys' fees and out-of-pocket expenses) in
connection with such suit, together with interest on the amount of the fee at
the rate on six-month U.S. Treasury obligations in effect on the date such
payment was required to be made plus 300 basis points.
(b) (i) The Del Monte Financing Fees, and such Heinz Financing Fees
as shall be agreed by Heinz and Del Monte, shall be paid by the Surviving
Corporation at or after the Effective Time.
(ii) The Del Monte Transaction Expenses shall be paid by the
Surviving Corporation at or after the Effective Time.
(c) On the third business day prior to the Effective Time, Del Monte
shall deliver to Heinz a certificate of its Chief Financial Officer (the "Del
Monte Professional Fee Statement") setting forth all of the Del Monte
Professional Fees paid and to be paid. In the event and to the extent that the
Del Monte Professional Fees exceed $26,500,000 in the aggregate (any such
excess, the "Excess Liability Amount"), as set forth on the Del Monte
Professional Fee Statement immediately prior to the Effective Time, then, at
Heinz's option, either (i) immediately following the Effective Time, the
Surviving Corporation shall pay directly or reimburse Heinz for all or a portion
of Heinz's reasonably documented Professional Fees in a dollar amount equal to
three times the Excess Liability Amount or (ii) immediately prior to the
Distribution, the amount of indebtedness to be incurred by Spinco (the proceeds
of which shall be subsequently distributed to Heinz) pursuant to Section 2.09 of
the Separation Agreement shall be increased by a dollar amount equal to three
times the Excess Liability Amount, provided that Heinz may elect a combination
of the alternatives set forth in clauses (i) and (ii). Each of Del Monte and the
Surviving Corporation on the one hand, and Heinz on the other hand, shall advise
one another from time to time in the event that any of them shall become aware
of any Del Monte Professional Fees or any retention payments or other employment
continuation amounts to be paid to Del Monte employees, including severance,
stay bonuses and special incentive compensation, other than payments made in
connection with the matters set forth on Section 1.1 of the Del Monte Disclosure
Letter, which shall not have been set forth on the Del Monte Professional Fee
Statement, and Del Monte shall make a cash payment to Heinz in an amount equal
to three times the amount of any such Del Monte Professional Fees.
(d) Del Monte and the Surviving Corporation shall not be responsible
for the fees and out-of-pocket expenses of Heinz's investment bankers,
attorneys, accountants and
83
consultants ("Professional Fees"). Notwithstanding the foregoing and
irrespective of whether Heinz shall be entitled to make an election as set forth
in Section 9.3(c), Heinz may, at its election, require Del Monte and the
Surviving Corporation to pay such reasonably documented Professional Fees or to
reimburse it for all or a portion of Heinz's reasonably documented Professional
Fees, in which case the amount of indebtedness to be incurred by Spinco in
accordance with Section 2.09 of the Separation Agreement (or, in lieu thereof,
the amount of cash to be distributed by Spinco to Heinz pursuant to the last
sentence of Section 2.09 of the Separation Agreement) shall be reduced by a
dollar amount equal to the amount of Professional Fees to be paid by Del Monte
and the Surviving Corporation pursuant to this sentence.
(e) Notwithstanding anything else set forth in this Section 9.3, in
the event the Merger is not consummated, all fees and expenses incurred by
Heinz, Spinco, Del Monte or their respective Subsidiaries in connection with the
Merger, this Agreement and the transactions contemplated by this Agreement shall
be paid by the Party incurring such fees or expenses, except that all Heinz
Financing Fees and Del Monte Financing Fees, including any obligations incurred
pursuant to the Commitment Letters, shall be shared equally by Heinz and Del
Monte.
9.4 Amendment. Subject to applicable law, any provision of this
Agreement may be amended with the requisite approval of Heinz, Spinco, Del Monte
and Merger Sub, at any time before or after the Requisite Approval or the
adoption hereof by the stockholders of Spinco and Merger Sub; provided, however,
that after such Requisite Approval or adoption, no amendment shall be made that
by law requires further approval by such stockholders without such further
approval. This Agreement may not be amended except by an instrument in writing
signed by Heinz, Spinco, Del Monte and Merger Sub.
9.5 Waivers. Subject to applicable law, any provision of this
Agreement may be waived prior to the Effective Time if, but only if, such waiver
is in writing and is signed by each party against whom the waiver is to be
effective.
ARTICLE 10
MISCELLANEOUS
10.1 Non-Survival of Representations and Warranties and Agreements.
None of the representations, warranties or certifications in this Agreement or
in any certificate or instrument delivered pursuant to this Agreement (other
than in the Exhibits hereto), or any claim with respect thereto, shall survive
the Effective Time. None of the agreements set forth in Articles 6 and 7 (other
than (a) the last sentence of Section 6.1(a) and Section 6.1(j), which shall
survive until the Final Transferred Accounts Differential or the Final Net
Accounts Balance, as the case may be, has been determined, (b) those set forth
in the Exhibits hereto and (c) Sections 7.4, 7.6, 7.9, 7.15, 7.18, 7.19, 7.23,
7.24 and 7.27, which shall survive in effect with their terms), or any claim
with respect thereto, shall survive the Effective Time. Except as specifically
provided herein, the Confidentiality Agreement shall survive the execution and
delivery of this Agreement and any termination of this Agreement, and the
provisions of the Confidentiality Agreement shall apply to all information and
material furnished by any party or its representatives thereunder or hereunder.
84
10.2 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given upon (a) a transmitter's confirmation of a
receipt of a facsimile transmission (but only if followed by confirmed delivery
of a standard overnight courier the following business day or if delivered by
hand the following business day), (b) confirmed delivery of a standard overnight
courier or when delivered by hand or (c) the expiration of five business days
after the date mailed by certified or registered mail (return receipt
requested), postage prepaid, to the parties at the following addresses (or at
such other addresses for a party as shall be specified by like notice):
If to Heinz, to:
X. X. Xxxxx Company
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
with a copy (which shall not constitute effective notice) to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Xxxxxxxx X. Xxxxxxxxxx, Esq.
Facsimile: (000) 000-0000
If to Spinco, to:
SKF Foods Inc.
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Secretary
Facsimile: (000) 000-0000
with a copy (which shall not constitute effective notice) to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Xxxxxxxx X. Xxxxxxxxxx, Esq.
Facsimile: (000) 000-0000
If to Del Monte or Merger Sub, to:
Del Monte Foods Company
One Market @ The Landmark
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
85
Attention: Secretary
Facsimile: (000) 000-0000
with a copy (which shall not constitute effective notice) to:
Xxxxxx Xxxx & Xxxxxxxx LLP
One Xxxxxxxxxx Street
Xxxxxxxxxx Tower, 00xx, 00xx & 00 Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Xxxxxxxxx Xxxxxxxxx, Esq.
Facsimile: 000-000-0000
10.3 Certain Construction Rules. The article and section headings and
the table of contents contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. As used in this Agreement, unless otherwise provided to the contrary,
(a) all references to days or months shall be deemed references to calendar days
or months and (b) any reference to a "Section," "Article," "Exhibit" or "Letter"
shall be deemed to refer to a section or article of this Agreement or an exhibit
or schedule to this Agreement. The words "hereof," "herein" and "hereunder" and
words of similar import referring to this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation." Unless otherwise
specifically provided for herein, the term "or" shall not be deemed to be
exclusive.
10.4 Letters. Disclosures included in any Section of any Disclosure
Letter shall be considered to be made for purposes of all other Sections of such
Disclosure Letter to the extent that the relevance of any such disclosure to any
other Section of such Disclosure Letter is reasonably apparent from the text of
such disclosure. Inclusion of any matter or item in any Disclosure Letter does
not imply that such matter or item would, under the provisions of this
Agreement, have to be included in any Disclosure Letter or that such matter or
item is otherwise material.
10.5 Severability. If any provision of this Agreement or the
application of any such provision to any Person or circumstance, shall be
declared judicially to be invalid, unenforceable or void, such decision shall
not have the effect of invalidating or voiding the remainder of this Agreement,
it being the intent and agreement of Spinco, Heinz, Merger Sub and Del Monte
that this Agreement shall be deemed amended by modifying such provision to the
extent necessary to render it valid, legal and enforceable while preserving its
intent or, if such modification is not possible, by substituting therefor
another provision that is legal and enforceable and that achieves the same
objective.
10.6 Assignment; Binding Effect. Neither this Agreement nor any of
the rights, benefits or obligations hereunder may be assigned by Spinco, Heinz,
Merger Sub or Del Monte (whether by operation of law or otherwise) without the
prior written consent of all of the other parties. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the
86
benefit of and be enforceable by Spinco, Heinz, Merger Sub and Del Monte and
their respective successors and permitted assigns.
10.7 No Third Party Beneficiaries. Except as provided in Section
7.10, nothing in this Agreement, express or implied, is intended to or shall
confer upon any Person (other than Heinz, Merger Sub, Spinco and Del Monte or
their respective successors or permitted assigns) any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement,
and no Person (other than as so specified) shall be deemed a third party
beneficiary under or by reason of this Agreement.
10.8 Limited Liability. Notwithstanding any other provision of this
Agreement, no stockholder, director, officer, Affiliate, agent or representative
of Spinco, Heinz, Merger Sub or Del Monte, in its capacity as such, shall have
any liability in respect of or relating to the covenants, obligations,
representations or warranties of such party under this Agreement or in respect
of any certificate delivered with respect hereto or thereto and, to the fullest
extent legally permissible, each of Spinco, Heinz, Merger Sub and Del Monte, for
itself and its stockholders, directors, officers and Affiliates, waives and
agrees not to seek to assert or enforce any such liability that any such Person
otherwise might have pursuant to applicable law.
10.9 Entire Agreement. This Agreement (together with the other
Transaction Agreements, the Confidentiality Agreement, the exhibits and the
Disclosure Letters and the other documents delivered pursuant hereto) constitute
the entire agreement of all the parties hereto and supersedes all prior and
contemporaneous agreements and understandings, both written and oral, between
the parties, or either of them, with respect to the subject matter hereof. All
exhibits and schedules attached to this Agreement and the Disclosure Letters are
expressly made a part of, and incorporated by reference into, this Agreement.
10.10 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, except that New
York Law and Delaware Law shall apply to the Merger, in each case, without
giving effect to the conflicts of law principles thereof. Each of the Parties
hereto irrevocably and unconditionally (i) agrees to be subject to, and hereby
consents and submits to, the jurisdiction of the United States District Court
for the Southern District Court of New York located in the borough of Manhattan
in the City of New York, or if such court does not have jurisdiction, the
Supreme Court of the State of New York, New York County, or the jurisdiction of
the courts in the State of Delaware and of the federal courts sitting in the
State of Delaware, as applicable, for the purposes of any suit, action or other
proceeding arising out of this Agreement or any of the transactions contemplated
hereby, (ii), to the extent such party is not otherwise subject to service of
process in the State of New York or the State of Delaware, appoints The
Corporation Trust Company, as such Party's agent in the State of New York or the
State of Delaware, as applicable, for acceptance of legal process and (iii)
agrees that service made on any such agent set forth in (ii) above shall have
the same legal force and effect as if served upon such Party personally within
such state.
10.11 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one agreement binding on Spinco, Heinz and Del Monte,
notwithstanding that not all parties are signatories to the original or the same
counterpart.
87
10.12 Specific Performance; Remedies. The Parties 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 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 in any state or
federal court located in New York, New York or the State of Delaware, as
applicable. Except for the foregoing remedies of injunction and specific
performance, the right not to close in the event that the conditions to closing
are not satisfied and the termination rights set forth in this Agreement, the
Parties agree that they shall have no rights or claims against one another for
breaches of this Agreement except in the case of fraud or any willful and
material breach by a party of any covenant or other agreement included in this
Agreement.
88
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
X. X. XXXXX COMPANY
By: _____________________________________
Name: Xxxxxxx X. Xxxxxxxx
Title: Senior Vice President
Strategy, Process and Business
Development
SKF FOODS INC.
By: _____________________________________
Name: Xxxxxxxx X. Ring
Title: Executive Vice President
DEL MONTE CORPORATION
By: _____________________________________
Name:
Title:
DEL MONTE FOODS COMPANY
By: _____________________________________
Name:
Title:
