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EXHIBIT 10.1
PURCHASE AGREEMENT
BY AND AMONG
SENECA FOODS CORPORATION
(THE "BUYER"),
XXXXXXXX BRANDS INTERNATIONAL, INC.
("PARENT"),
AND
FRIDAY HOLDINGS, L.L.C.
(THE "SELLER")
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TABLE OF CONTENTS
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1. Definitions..............................................................................................1
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2. Purchase and Sale........................................................................................7
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(a) Basic Transaction........................................................................7
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(b) Purchase Price...........................................................................7
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(c) The Closing..............................................................................7
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(d) Deliveries at the Closing................................................................7
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3. Representations and Warranties of Parent.................................................................8
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(a) Organization of Parent...................................................................8
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(b) Authorization of Transaction.............................................................8
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(c) Noncontravention.........................................................................8
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(d) Brokers' Fees............................................................................8
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4. Representations and Warranties of the Seller and Parent..................................................8
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(a) Organization, Qualification, and Corporate Power.........................................8
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(b) Noncontravention.........................................................................9
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(c) Broker's Fees............................................................................9
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(d) Title to Membership Interests and Assets.................................................9
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(e) Subsidiaries. ..........................................................................9
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(f) Financial Statements....................................................................10
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(h) Absence of Change or Event..............................................................10
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(i) Legal Compliance .......................................................................11
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(j) Tax Matters.............................................................................11
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(k) Real Property...........................................................................12
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(l) Intellectual Property...................................................................13
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(m) Contracts...............................................................................13
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(n) Litigation..............................................................................14
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(o) Employee Matters........................................................................14
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(p) Environmental Matters...................................................................18
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(q) Certain Relationships with the Company..................................................20
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(r) Suppliers...............................................................................20
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(s) Inventories.............................................................................20
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(t) Insurance...............................................................................21
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(u) Securities Law Matters..................................................................21
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5. Representations and Warranties of the Buyer.............................................................21
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(a) Organization of the Buyer...............................................................21
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(b) Authorization of Transaction............................................................21
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(c) Noncontravention........................................................................22
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(e) Capital Stock...........................................................................22
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(f) Reports and Financial Statements........................................................23
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(g) No Violation of Law.....................................................................23
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(h) Absence of Certain Changes or Events....................................................23
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(i) Investigations; Litigation..............................................................23
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(j) No Required Vote of Shareholders........................................................24
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(k) Material Contracts......................................................................24
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(l) Takeover Statute........................................................................24
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(m) Transactions With Affiliates............................................................24
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(n) Securities Law Matters..................................................................24
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6. Pre-Closing Covenants...................................................................................25
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(a) General.................................................................................25
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(b) Notices and Consents....................................................................25
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(c) Operation of Business...................................................................25
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(d) Access..................................................................................27
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(e) Supplements to Disclosure Schedule......................................................28
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(f) No Solicitation.........................................................................28
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(g) Pre-Closing Transactions................................................................28
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(h) Tax Matters.............................................................................28
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(i) Tax Treatment of Transaction............................................................29
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(j) Distribution from Master Pension Benefit Trust..........................................29
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(k) Physical Inventory......................................................................29
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(l) Pack Agreement..........................................................................29
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7. Post-Closing Covenants..................................................................................29
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(a) General.................................................................................29
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(b) Litigation Support; Business Records....................................................30
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(c) Insurance...............................................................................30
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(d) Use of "Xxxxxxxx" Trademark.............................................................31
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8. Conditions to Obligation to Close.......................................................................31
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(a) Conditions to Obligation of the Buyer...................................................31
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(b) Conditions to Obligation of the Parent and Seller.......................................32
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9. Survival of Representations, Warranties and Covenants; Indemnification..................................33
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(a) Representations, Warranties and Covenants...............................................33
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(b) Indemnification by the Seller and Parent................................................33
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(c) Indemnification by the Buyer............................................................34
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(d) Procedure for Claims By Third Parties...................................................34
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(e) Procedure for Claims Between the Parties................................................35
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(f) Exclusive Remedy........................................................................36
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(g) Limits on Indemnification...............................................................36
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10. Tax Indemnification and Allocation......................................................................37
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(a) The Seller's Tax Indemnity; Indemnification for Tax Obligations.........................37
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(b) Buyer's Indemnity.......................................................................37
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(c) Transfer Tax Liability..................................................................37
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(d) Tax Allocation Between Partial Periods..................................................37
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(e) Filing of Tax Returns...................................................................38
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(f) Post-Closing Audits and Other Procedures................................................38
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(g) Cooperation.............................................................................39
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(h) No Duplicative Recovery.................................................................39
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11. Termination.............................................................................................40
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(a) Termination of Agreement................................................................40
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(b) Effect of Termination...................................................................40
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12. Miscellaneous...........................................................................................40
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(a) Press Releases and Public Announcements.................................................40
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ii
(b) No Third-Party Beneficiaries............................................................41
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(c) Entire Agreement........................................................................41
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(d) Succession and Assignment...............................................................41
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(e) Counterparts............................................................................41
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(f) Headings................................................................................41
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(g) Notices.................................................................................41
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(h) Governing Law; Venue; Waiver of Jury Trial..............................................42
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(i) Amendments and Waivers..................................................................43
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(j) Severability............................................................................43
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(k) Expenses................................................................................43
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(l) Construction............................................................................44
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(m) Incorporation of Exhibits and Schedules.................................................44
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iii
PURCHASE AGREEMENT
This Purchase Agreement (this "AGREEMENT") is entered into as of March
6, 2003 by and among SENECA FOODS CORPORATION, a New York corporation (the
"BUYER"), XXXXXXXX BRANDS INTERNATIONAL, INC., a New Jersey corporation
("PARENT"), and FRIDAY HOLDINGS, L.L.C., a Delaware limited liability company
(the "SELLER"). The Buyer, the Seller, and Parent are each referred to herein
individually as a "PARTY" and, collectively, as the "PARTIES."
WHEREAS, the Seller owns one hundred percent (100%) of the outstanding
"limited liability company interests", as defined in the Delaware Limited
Liability Company Act (the "MEMBERSHIP INTERESTS"), in XXXXXXXX PROCESSED FOODS,
L.L.C., a Delaware limited liability company (the "COMPANY");
WHEREAS, the Company is engaged in the vegetable processing and canning
business (the "BUSINESS");
WHEREAS, Parent indirectly controls one hundred percent (100%) of the
membership interests in the Seller;
WHEREAS, the Seller desires to sell and transfer the Membership
Interests to the Buyer, and the Buyer desires to purchase the same from the
Seller, subject to the terms and conditions set forth in this Agreement;
WHEREAS, simultaneously with the execution hereof, Parent, Seller and
certain principal shareholders of Buyer are entering into the Voting Agreement.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows.
1. Definitions.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"AGREEMENT" has the meaning set forth in the introduction to this
Agreement.
"ANCILLARY AGREEMENTS" means the Assignment and Assumption Agreements,
the Pack Agreement and the Registration Rights Agreement.
"ASSETS" means all of the Company's assets.
"ASSIGNMENT AND ASSUMPTION AGREEMENTS" means Assignment and Assumption
Agreements in the form of EXHIBITS A-1 and A-2 attached hereto.
"BUSINESS" has the meaning set forth in the introduction to this
Agreement.
"BUYER" has the meaning set forth in the introduction to this
Agreement.
"BUYER BASKET" has the meaning set forth in SECTION 9(G)(I) below.
"BUYER INDEMNITEES" has the meaning set forth in SECTION 9(B) below.
"BUYER LOSSES" has the meaning set forth in SECTION 9(B) below.
"BUYER SEC REPORTS" has the meaning set forth in SECTION 5(G) below.
"CAP" has the meaning set forth in SECTION 9(G)(I) below.
"CAPITAL LEASES" means the Contracts set forth on SCHEDULE I hereto.
"CERTIFICATE OF AMENDMENT" means a Certificate of Amendment to the
Certificate of Incorporation of the Buyer establishing the terms of the
Preferred Stock in the form of Exhibit B hereto.
"CLASS A COMMON STOCK" has the meaning set forth in SECTION 5(F) below.
"CLASS B COMMON STOCK" has the meaning set forth in SECTION 5(F) below.
"CLEANUP" has the meaning set forth in SECTION 4(P)(IX) below.
"CLOSING" has the meaning set forth in SECTION 2(G) below.
"CLOSING DATE" has the meaning set forth in SECTION 2(G) below.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY" has the meaning set forth in the introduction to this
Agreement.
"COMPETING TRANSACTION" means any acquisition or purchase of all or a
significant portion of the assets of the Company or any material equity interest
in the Company or any similar transaction with respect to the Company involving
any Person other than the Buyer or its Affiliates.
"CONFIDENTIAL CONTRACT" has the meaning set forth in SECTION 4(M)(III)
below.
"CONFIDENTIAL INFORMATION" means any information concerning the
businesses and affairs of the Company that is not already generally available to
the public.
"CONFIDENTIALITY AGREEMENT" has the meaning set forth in SECTION 6(D)
below.
"CONTEMPLATED ACTIONS" has the meaning set forth in SECTION 6(C) below.
"CONTRACT" means any contract, lease (including equipment leases),
license, joint venture agreement, co-pack agreement, grower contract, product
supply agreement, customer agreement,
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or other agreement or binding commitment, whether or not in writing, to which
the Company is a party and which relates to the Business.
"CREDIT FACILITY" means that certain Loan and Security Agreement dated
as of September 22, 1999 by and among the Company, as borrower, the lenders
party thereto, and Wachovia Bank, National Association, as agent thereunder, as
amended.
"DISCLOSED CONTRACTS" has the meaning set forth in SECTION 4(M)(III)
below.
"DISCLOSURE SCHEDULE" means the disclosure schedule delivered by the
Seller and/or Parent to the Buyer on the date hereof and attached as ANNEX I
hereto.
"EMPLOYEE BENEFIT PLAN" has the meaning set forth in SECTION 4(O)(I)
below.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA
Section 3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA
Section 3(1).
"ENCUMBRANCES" means all pledges, liens, charges, encumbrances,
easements, encroachments, defects, security interests, mortgages, claims,
options, and restrictions of every kind.
"ENVIRONMENTAL LAWS" has the meaning set forth in SECTION 4(P)(IX)
below.
"ENVIRONMENTAL LIABILITIES AND COSTS" has the meaning set forth in
SECTION 4(P)(IX) below.
"EQUIPMENT AND FURNISHINGS" has the meaning set forth in SECTION
2(A)(I) below.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" means each entity that is treated as a single
employer with the Company for purposes of Code Section 414, other than a current
or former Subsidiary of the Company.
"ERISA AFFILIATE HEALTH PLAN" means a group health plan (within the
meaning of section 607 of ERISA) to which an ERISA Affiliate is a party or with
respect to which an ERISA Affiliate has an obligation, or that is maintained by,
contributed to, or sponsored by an ERISA Affiliate for the benefit of any
current or former employee, or in connection with which the Company may have any
obligation by reason of its current or former relationship with an ERISA
Affiliate.
"ERISA AFFILIATE PENSION PLAN" means an Employee Pension Benefit Plan
subject to section 302 or Title IV of ERISA or section 412 of the Code to which
an ERISA Affiliate is a party or with respect to which an ERISA Affiliate has an
obligation, or that is maintained by, contributed to, or sponsored by an ERISA
Affiliate for the benefit of any current or former employee, or in connection
with which the Company may have any obligation by reason of its current or
former relationship with an ERISA Affiliate.
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"FINANCIAL STATEMENTS" has the meaning set forth in SECTION 4(F) below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time and consistently applied.
"XXXX-XXXXX-XXXXXX ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"HAZARDOUS SUBSTANCES, OILS, OR POLLUTANTS OR CONTAMINANTS" has the
meaning set forth in SECTION 4(P)(IX) below.
"INDEBTEDNESS" means all indebtedness for borrowed money, whether
primary or contingent, including, without limitation, in the case of the
Company, any and all amounts outstanding under the Credit Facility or the
Industrial Revenue Bonds.
"INDEMNIFICATION ACKNOWLEDGMENT" has the meaning set forth in SECTION
9(D)(I)(B) below.
"INDEMNITEE" has the meaning set forth in SECTION 9(D)(I) below.
"INDEMNITOR" has the meaning set forth in SECTION 9(D)(I) below.
"INDUSTRIAL REVENUE BONDS" means those bonds described on SCHEDULE II
attached hereto.
"INTELLECTUAL PROPERTY" has the meaning set forth in SECTION 4(L)(I)
below.
"KNOWLEDGE OF THE COMPANY" means actual knowledge of: (i) the President
and Chief Executive Officer, Senior Vice President-Supply Chain Management,
Corporate Controller, Vice President-Human Resources, Vice
President-Manufacturing, or Vice President-Legal Counsel of the Company, and
(ii) to the extent relating to a particular facility or property of the Company,
the Environmental Engineer, Midwest South Region Manager and Central Region
Manager of the Company.
"LEASED REAL PROPERTY" means all leasehold or subleasehold estates and
other rights to use or occupy land, buildings, structures, improvements,
fixtures, or other interest in real property which are used in the Company's
business.
"LEASES" means all leases, subleases, licenses, concessions, and other
agreements (written or oral), including all amendments, extensions, renewals,
and other agreements with respect thereto, pursuant to which the Company holds,
uses or occupies any real or personal property.
"LOSSES" means losses, deficiencies, liabilities, damages, assessments,
judgments, costs, and expenses, including attorneys' and expert's fees.
"MATERIAL ADVERSE EFFECT" means (a) a material adverse effect on the
business, operations or financial condition of the Company or (b) a material
adverse effect on the ability of Parent and/or the Seller to consummate the
transactions contemplated hereby.
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"MEMBERSHIP INTERESTS" has the meaning set forth in the introduction to
this Agreement.
"MOST RECENT FINANCIAL STATEMENTS" has the meaning set forth in SECTION
4(F) below.
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA Section 3(37).
"NEW PREFERRED STOCK" means Convertible Preferred Stock Series 2003 of
the Buyer.
"NOTICE OF CLAIM" has the meaning set forth in SECTION 9(D)(I)(A)
below.
"NYBCL" means the New York Business Corporation Law.
"OWNED REAL PROPERTY" means all land, together with all buildings,
structures, improvements, and fixtures located thereon, and all easements and
other rights and interests appurtenant thereto, that are owned by the Company on
the date hereof and are used in the Business.
"PACK AGREEMENT" means the Product Agreement between the Buyer and the
Company providing for the Buyer to pack up to 1,000,000 basic cases of fancy
corn and up to 350,000 basic cases of fancy beets for the Company at the Buyer's
cost and on such other terms as the parties may agree.
"PARENT" has the meaning set forth in the introduction to this
Agreement.
"PARENT INDEMNITEES" has the meaning set forth in SECTION 9(C) below.
"PARENT LOSSES" has the meaning set forth in SECTION 9(C) below.
"PARTY" and "PARTIES" have the meanings set forth in the introduction
to this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERMITS" has the meaning set forth in SECTION 2(A)(V) below.
"PERMITTED ENCUMBRANCES" means: (a) real estate taxes, assessments and
other governmental levies, fees or charges imposed with respect to Owned Real
Property which are not due and payable as of the Closing Date or which are being
contested in good faith by appropriate proceedings which suspend the collection
thereof; (b) mechanics liens and similar liens for labor, materials, or supplies
provided with respect to Owned Real Property incurred in the ordinary course of
business for amounts which are not delinquent or which are being contested in
good faith by appropriate proceedings; (c) zoning, building codes, and other
land use laws regulating the use or occupancy of Owned Real Property or the
activities conducted thereon imposed by any governmental authority having
jurisdiction over Owned Real Property, all of which do not or would not
materially impair the use or occupancy of Owned Real Property in the operation
of the Business; (d) easements, covenants, conditions, restrictions, and other
similar matters of record affecting title to Owned Real Property and other title
defects, all of which do not or would not materially impair the use or occupancy
of Owned Real Property in the operation of the Business; (e) any Encumbrance
that is satisfied, discharged, terminated, or released by the relevant secured
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party on or prior to the Closing Date; (f) boundary line disputes,
encroachments, and any other matters which would be disclosed by an accurate
survey and inspection of Owned Real Property which could not reasonably be
expected to materially impair the use or occupancy of the Owned Real Property in
the operation of the Business; (g) Encumbrances arising under the Credit
Facility or the Industrial Revenue Bonds; and (h) the Capital Leases.
"PERSON" means an individual, a partnership, a limited liability
company, a corporation, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"PROPERTIES" has the meaning set forth in SECTION 4(P)(I) below.
"PURCHASE PRICE" has the meaning set forth in SECTION 2(D) below.
"REAL PROPERTY LEASES" means any Leases pursuant to which the Company
holds, uses or occupies any Leased Real Property.
"REGISTRATION RIGHTS AGREEMENT" means a Registration Rights Agreement
in the form of EXHIBIT C attached hereto.
"REGULATIONS" means any regulations of the United States Department of
Treasury promulgated under the Code.
"SEC" means the United States Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"SELLER" has the meaning set forth in the introduction to this
Agreement.
"SELLER BASKET" has the meaning set forth in SECTION 9(G)(I) below.
"SHARES" has the meaning set forth in SECTION 2(B) below.
"SHAREHOLDERS AGREEMENT" has the meaning set forth in Section 5(e)
below.
"SUBORDINATION AGREEMENTS" means Subordination Agreements between the
Seller and certain shareholders of the Buyer in the form of EXHIBIT F attached
hereto.
"SUBSIDIARY" means any entity with respect to which a specified Person
(or a Subsidiary thereof) owns a majority of the common stock or has the power
to vote or direct the voting of sufficient securities to elect a majority of the
directors or their equivalents.
"TAX" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum,
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estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not, and any obligation to
indemnify, assume, or succeed to the liability of any other Person in respect of
the foregoing.
"TAX RETURN" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"UNION CONTRACTS" has the meaning set forth in SECTION 4(O)(II)(1)
below.
"UNRESOLVED" means, in connection with any matter, that the matter has
been actively pursued by any third party since January 1, 2000 and has not been
resolved without any further liability to the Company.
"WARN" means the "Worker Adjustment and Retraining Notification Act,"
29 U.S.C. Section 2102 et seq., as amended and any state statute or regulation
of similar import.
2. PURCHASE AND SALE.
(a) BASIC TRANSACTION. On and subject to the terms and conditions
of this Agreement, the Buyer agrees to purchase from the Seller, and the Seller
agrees to sell to the Buyer, free and clear of any Encumbrances, all of the
Seller's right, title and interest in and to the Membership Interests.
(b) PURCHASE PRICE. The purchase price (the "PURCHASE PRICE")
payable to the Seller by the Buyer for the Membership Interests and in
consideration for the agreements contained herein will be One Hundred Ten
Million Dollars ($110,000,000) in cash and Nine Hundred Sixty Seven Thousand
Seven Hundred Forty Two (967,742) shares (the "SHARES") of New Preferred Stock.
The Purchase Price shall be subject to adjustment as follows: The cash portion
of the Purchase Price shall be reduced dollar-for-dollar by the amount of any
downward adjustment of inventory balance pursuant to SECTION 6(K) below.
(c) THE CLOSING. Subject to the terms hereof, the closing of the
transactions contemplated by this Agreement (the "CLOSING") shall take place at
the offices of Xxxx, Xxxxxxxxxx & Xxxxxxxxx LLP in Cincinnati, Ohio, commencing
at 10:00 a.m. local time on May 1, 2003, but in no event earlier than the date
that is three (3) business days after the satisfaction or waiver of the
conditions set forth in SECTION 8 or such other date and place as the Buyer and
the Seller may mutually determine (the "CLOSING DATE").
(d) DELIVERIES AT THE CLOSING. At the Closing, (i) the Seller and
Parent will deliver to the Buyer the various certificates, instruments, and
documents to be delivered by either or both of them that are referred to in
SECTION 8(A) below, (ii) the Buyer will deliver to the Seller the various
certificates, instruments, and documents to be delivered by it that are referred
to in SECTION 8(B) below, and (iii) the Buyer will deliver to the Seller the
cash portion of the Purchase Price in immediately available funds and
certificates for the Shares registered in the name of the Seller.
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3. REPRESENTATIONS AND WARRANTIES OF PARENT. Parent represents and
warrants to the Buyer that as of the date of this Agreement, except as set
forth in the Disclosure Schedule:
(a) ORGANIZATION OF PARENT. Parent is duly organized, validly
existing, and in good standing under the laws of the State of New Jersey.
(b) AUTHORIZATION OF TRANSACTION. Parent has full corporate power
and authority to execute and deliver this Agreement and the Ancillary Agreements
to which it is a party and to perform its obligations hereunder and thereunder.
This Agreement constitutes, and the Ancillary Agreements to which it is a party
when executed will constitute, the valid and legally binding obligations of
Parent, enforceable in accordance with their respective terms and conditions,
except as the enforceability thereof may be limited by any applicable
bankruptcy, reorganization, insolvency, or other laws affecting creditors'
rights generally or by general principles of equity. Except for the notices and
consents described in SECTION 6(B) below, Parent need not give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
Person (including the shareholders of Parent) or any government or governmental
agency in order to consummate the transactions contemplated by this Agreement
and the Ancillary Agreements.
(c) NONCONTRAVENTION. Neither the execution and the delivery of
this Agreement or the Ancillary Agreements, nor the consummation of the
transactions contemplated hereby or thereby, (i) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court to which
Parent is subject, or any provision of its charter or bylaws or (ii) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which Parent is a party or by which it is
bound or to which any of its assets is subject.
(d) BROKERS' FEES. Except as set forth in SECTION 3(D) of the
Disclosure Schedule, Parent has no liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND PARENT. The Seller
and Parent, jointly and severally, represent and warrant to the Buyer, that as
of the date of this Agreement, except as set forth in the Disclosure Schedule:
(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. Each of the
Seller and the Company is a limited liability company duly organized, validly
existing, and in good standing under the laws of the State of Delaware. Each of
the Seller and the Company is duly authorized to conduct business and is in good
standing under the laws of each state where such qualification is required,
except where the lack of such qualification would not have a Material Adverse
Effect. Each of the Seller and the Company has full limited liability company
power and authority to carry on the businesses in which it is engaged and to own
and use the properties owned and used by it. This Agreement constitutes, and the
Ancillary Agreements to which either of them is a party when executed will
constitute, the valid and legally binding obligations of each of the Seller and
Parent, as the case may be, enforceable against each of them in accordance with
their respective terms and conditions, except as the enforceability thereof may
8
be limited by any applicable bankruptcy, reorganization, insolvency or other
laws affecting creditors' rights generally or by general principles of equity.
(b) NONCONTRAVENTION. Neither the execution and the delivery of
this Agreement or the Ancillary Agreements, nor the consummation of the
transactions contemplated hereby or thereby, (i) violates any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court to which
the Seller or the Company, as the case may be, is subject or any provision of
the certificate of formation or operating agreement of the Seller or the
Company, as the case may be, or (ii) except as set forth in SECTION 4(B) of the
Disclosure Schedule, conflicts with, results in a breach of, constitutes a
default under, results in the acceleration of, creates in any party the right to
accelerate, terminate, modify, or cancel, or requires any notice or consent
under any contract to which the Seller or the Company is a party or by which it
is bound or to which any of its assets is subject (or results in the imposition
of any Encumbrances upon any of its assets other than a Permitted Encumbrance),
except where all such violations, conflicts, breaches, defaults, accelerations,
terminations, modifications, cancellations, or failures to give notice or obtain
consents, could not reasonably be expected, in the aggregate with respect to all
contracts, to have a Material Adverse Effect; provided that in no event shall
the failure of Parent, the Seller or the Company to have obtained any consent
from any third party under any Contract or Permit constitute a breach of any of
the representations, warranties, covenants, or agreements made by Parent or the
Seller in this Agreement. To the Knowledge of the Company and except for the
notices and consents described in SECTION 4(B) of the Disclosure Schedule or
SECTION 6(B) below, neither the Seller nor the Company is required to give
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement.
(c) BROKER'S FEES. Except as set forth in SECTION 4(C) of the
Disclosure Schedule, neither the Seller nor the Company has any liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement.
(d) TITLE TO MEMBERSHIP INTERESTS AND ASSETS.
(i) The Seller has good and marketable title to the
Membership Interests, free and clear of all Encumbrances except as set forth in
SECTION 4(D)(I) of the Disclosure Schedule, which Encumbrance will be released
at Closing. The Membership Interests are duly authorized, validly issued, fully
paid and nonassessable and constitute all outstanding ownership interests in the
Company. There are no outstanding subscriptions, warrants, rights or other
arrangements or commitments, rights of first refusal, preemptive rights, calls
or obligations of the Company to issue any ownership interests in the Company.
(ii) The Company has good and marketable title to, or a
valid leasehold interest in, the Assets, free and clear of all Encumbrances
except as set forth in SECTION 4(D)(II) of the Disclosure Schedule and subject
to Permitted Encumbrances.
(e) SUBSIDIARIES. Except as set forth in SECTION 4(E) of the
Disclosure Schedule, the Company does not have any Subsidiaries and is not a
general partner in any partnership or a co-venturer in any joint venture or
other business enterprise.
9
(f) FINANCIAL STATEMENTS. Attached hereto as EXHIBIT E are the
following financial statements (collectively the "FINANCIAL STATEMENTS"): (i)
audited balance sheets and statements of income, changes in member's equity, and
cash flow for the Company as of and for the fiscal years ended March 31, 2000,
March 31, 2001 and December 31, 2001 (nine months); and (ii) an unaudited
balance sheet and statement of income for the Company as of, and for the
calendar year ended, December 31, 2002 (the "MOST RECENT FINANCIAL STATEMENTS").
Except as set forth in SECTION 4(F) of the Disclosure Schedule, the Financial
Statements (including any notes thereto) have been prepared in accordance with
the Company's accounting practices applied on a consistent basis in accordance
with GAAP (except as may be indicated therein or in the notes or schedules
thereto) throughout the periods covered thereby and present fairly the financial
condition of the Company as of such dates and the results of operations of the
Company for such periods; PROVIDED that the Most Recent Financial Statements are
subject to normal non-material year-end adjustments, lack footnotes and other
presentation items.
(g) NO MATERIAL ADVERSE CHANGE. Except as set forth in SECTION
4(G) of the Disclosure Schedule or in connection with the Contemplated Actions,
since the date of the Most Recent Financial Statements, there has been no
material adverse change in the financial condition, results of operations, or
business of the Company, excluding any adverse change resulting from changes in
general economic or industry conditions, changes resulting from losses of
personnel or changes that are temporary in nature or effect.
(h) ABSENCE OF CHANGE OR EVENT. Except as set forth in SECTION
4(H) of the Disclosure Schedule, and other than as permitted by SECTION
6(C)(IX), since the date of the Most Recent Financial Statements to and
including the date hereof, the Company has conducted its business only in the
ordinary course and has not:
(i) incurred any obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due, in excess of $1,000,000
in the aggregate, except liabilities or obligations incurred in the ordinary
course of business and consistent with prior practice and borrowings under the
Credit Agreement;
(ii) except in the ordinary course of business consistent
with past practice, entered into any new Contract obligating the Company to
purchase or sell goods or services for a period of twelve (12) months or more;
(iii) permitted any Encumbrance (other than any Permitted
Encumbrance) to be placed on any Asset;
(iv) sold, transferred, licensed, leased to others, or
otherwise disposed of any of the Assets, except for inventory sold to customers
or returned to vendors and surplus or obsolete equipment and furnishings;
(v) suffered any damages, destruction or losses (not covered
by insurance) having an aggregate value in excess of $500,000;
(vi) made or committed to make any capital expenditures or
capital additions or betterments in excess of an aggregate of $1,000,000;
10
(vii) had any employee strike, work stoppage, or lock-out;
(viii) established or adopted any new employee benefit plan
or granted any increase in the compensation payable or benefits to any officer,
director, employee (or a class thereof), or agent other than in the ordinary
course of business;
(ix) merged, consolidated or combined with any other entity,
or agreed to do so;
(x) entered into any agreement, arrangement, transaction, or
understanding with, or made any payment to, Parent or any Affiliate of Parent
except for payments of the nature described in SECTION 4(H)(X) of the Disclosure
Schedule made in the ordinary course of business consistent with prior practice;
or
(xi) made any commitment with respect to any of the
foregoing.
(i) LEGAL COMPLIANCE. To the Knowledge of the Company, the
Company has complied with all applicable laws (including rules, regulations,
codes, plans, injunctions, judgments, orders, decrees, rulings, executive
orders, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), except where all failures to comply in
the aggregate would not reasonably be expected to have a Material Adverse
Effect. To the Knowledge of the Company, the Company has all Permits necessary
for the Company to operate and conduct the Business, and has so conducted the
Business in full compliance therewith, except where all failures to have or
comply with any such Permits in the aggregate would not reasonably be expected
to have a Material Adverse Effect.
(j) TAX MATTERS.
(i) Each of Parent, the Seller and the Company has timely
filed with the appropriate Taxing authorities all Tax Returns required to be
filed through the Closing Date, except for personal property, sales and use and
other state and local non-income tax returns, the nonfiling of which would not
reasonably be expected to have a Material Adverse Effect. The information filed
was complete and accurate in all material respects. Except as specified in
SECTION 4(J) of the Disclosure Schedule, none of Parent, the Seller or the
Company has requested an extension of time within which to file a Tax Return.
Except as specified in SECTION 4(J) of the Disclosure Schedule, the Company is
not required to file any federal, state or local income Tax Return.
(ii) All taxes in respect to periods beginning before the
Closing Date, have been paid or an adequate reserve has been established
therefor, and the Company does not have any liability for Taxes in excess of the
amounts so paid or reserves so established.
(iii) Except as set forth in SECTION 4(J) of the Disclosure
Schedule, the Company and each of its Subsidiaries is an eligible entity with a
single owner as defined under Section 301.7701-3 of the Regulations and is
classified as "disregarded as an entity separate from its owner" in accordance
with the default classification provided by Section 301-7701-3(b) of the
Regulations.
11
(iv) The Seller is not a "foreign person" as defined in
Section 1445(f)(3) of the Code.
(k) REAL PROPERTY.
(i) SECTION 4(K)(I) of the Disclosure Schedule sets forth an
address of each parcel of Owned Real Property (except for agricultural land).
With respect to each parcel of Owned Real Property, except as set forth in
SECTION 4(K)(I) or SECTION 4(P) of the Disclosure Schedule:
(A) the Company has good and marketable fee simple
title, free and clear of all Encumbrances, except Permitted Encumbrances;
(B) the Company has not leased or otherwise granted to
any Person the right to use or occupy such Owned Real Property or any portion
thereof;
(C) there are no outstanding options, rights of first
offer, or rights of first refusal to purchase such Owned Real Property or any
portion thereof or interest therein; and
(D) to the Knowledge of the Company, the Owned Real
Property is not in violation of any applicable zoning or land use ordinance or
Environmental Laws, and the Company has received no written notice that any of
the Owned Real Property is in violation of any applicable zoning or land use
ordinance or Environmental Laws, which violations in the aggregate could
reasonably be expected to have a Material Adverse Effect.
(ii) SECTION 4(K)(II) of the Disclosure Schedule sets forth
an address of each parcel of Leased Real Property (except for agricultural
land), and a true and complete list of all Leases for each such parcel of Leased
Real Property. With respect to each parcel of Leased Real Property, except as
set forth in SECTION 4(K)(II) of the Disclosure Schedule:
(A) the Company is in peaceful and undisturbed
possession of the space and/or estate comprising each parcel of Leased Real
Property and there are no material defaults by the Company or, to the Knowledge
of the Company, any other party under any Lease, and, to the Knowledge of the
Company, no event has occurred and no condition exists which, with the giving of
notice or the lapse of time or both, would constitute such a default or
termination event or condition, which defaults or events or conditions in the
aggregate could reasonably be expected to have a Material Adverse Effect.
(B) to the Knowledge of the Company, all rent and other
sums and charges payable by the Company, as tenant under each Lease relating to
Leased Real Property, are current;
(C) to the Knowledge of the Company, the Company has a
good and valid leasehold interest in each Leased Real Property, free and clear
of all Encumbrances other than Permitted Encumbrances; and
12
(D) the Company has delivered to the Buyer a true and
complete copy of each Lease relating to the Leased Real Property.
(l) INTELLECTUAL PROPERTY.
(i) SECTION 4(L) of the Disclosure Schedule sets forth a
list of all trademarks, service marks, and licenses of the Company that are
material to the Business (collectively, along with any proprietary know-how or
production practices or methods utilized in the Company's vegetable processing
operations, the "INTELLECTUAL PROPERTY").
(ii) SECTION 4(L) of the Disclosure Schedule also sets forth
a list of any written communications from the Company to third parties, or from
third parties to the Company, in either case which were given or received since
January 1, 1998 (or prior to that date if relating to an Unresolved claim of
infringement), alleging any infringement by third parties of any of the
Intellectual Property, or any unresolved infringement by the Company of any
intellectual property rights claimed by third parties, together with all
responses to such communications and a description of the status of each such
alleged infringement, which relate to conditions or matters which in the
aggregate could reasonably be expected to have a Material Adverse Effect.
(iii) Except as disclosed in SECTION 4(L) of the Disclosure
Schedule:
(A) the Company owns or licenses the Intellectual
Property free and clear of any Encumbrances (other than Permitted Encumbrances);
(B) to the Knowledge of the Company, the Company is not
in default under any of its licenses for Intellectual Property, and no other
party is in default under any of its licenses for Intellectual Property, except
in either case for any default which could not reasonably be expected to have a
Material Adverse Effect; and
(C) to the Knowledge of the Company, none of the
Intellectual Property is being infringed by any other person or entity or
infringes the rights of any other person or entity.
(m) CONTRACTS.
(i) SECTION 4(M)(I) of the Disclosure Schedule lists any
Contract (excluding customary inventory purchase orders in the ordinary course
of business that do not contain pricing commitments for a specified period of
time) that:
(A) other than any Contract for the purchase of goods or
services or the sale of products in the ordinary course of business, involves
aggregate consideration in excess of $200,000 in any one year period;
(B) will require the Company to purchase or provide
goods or services for a period of more than one hundred eighty (180) days after
the Closing Date;
(C) is for the employment of any employee of the
Company;
13
(D) is between the Company and Parent or any of its
Affiliates;
(E) evidences any Encumbrance (other than any Permitted
Encumbrance) on any of the Assets, or
(F) evidences any Indebtedness.
(ii) SECTION 4(M)(II) of the Disclosure Schedule lists all
Leases of the Company that are treated as capital leases on the books and
records of the Company as of the date of the Most Recent Financial Statements.
(iii) Other than items subject to confidentiality provisions
which prevent their disclosure to the Buyer (the "CONFIDENTIAL CONTRACTS"), the
Company has made available to the Buyer a correct and complete copy of each of
the items described in SECTIONS 4(M)(I) AND 4(M)(II) above (the "DISCLOSED
CONTRACTS"). To the Knowledge of the Company, neither the Company nor any third
party is in material breach of any Disclosed Contract or any Confidential
Contract.
(n) LITIGATION. Except as set forth in SECTION 4(N) or SECTION
4(P) of the Disclosure Schedule, (A) the Company has not received written notice
of any Unresolved violation of law, rule, regulation, ordinance, or order of any
court or federal, state, municipal, or other governmental department,
commission, board, bureau, agency, or instrumentality, and (B) to the Knowledge
of the Company, the Company is not subject to any outstanding written
injunction, judgment, arbitration, order, decree, ruling, or charge or a party
to or subject to any pending action, suit, proceeding, or hearing in or before
any court or quasi-judicial or administrative agency of any federal, state,
local, or foreign government, which collectively are reasonably likely to have a
Material Adverse Effect.
(o) EMPLOYEE MATTERS.
(i) EMPLOYEE BENEFIT PLANS.
(1) SECTION 4(O)(I)(1) of the Disclosure Schedule lists all
Employee Pension Benefit Plans, all Employee Welfare Benefit Plans, all
specified fringe benefit plans (as defined in section 6039D(d) of the Internal
Revenue Code of 1986, as amended (the "Code")), and all executive compensation,
retirement, supplemental retirement, deferred compensation, incentive, bonus,
severance, compensation associated with change in control, perquisite, health
care, death benefit, medical insurance, disability insurance, life insurance,
vacation pay, sick pay or other material plans, programs, and arrangements to
which the Company or any Subsidiary is a party, or with respect to which the
Company or any Subsidiary has an obligation (other than any ERISA Affiliate
Health Plan or ERISA Affiliate Pension Plan), or that are maintained,
contributed to, or sponsored by the Company or a Subsidiary for the benefit of
any current or former employee, officer, or director of the Company or any
Subsidiary (such plans, programs, and arrangements to be referred to
individually as "EMPLOYEE BENEFIT PLAN" and collectively as "EMPLOYEE BENEFIT
PLANS").
(2) The Company has made available or will make available to
the Buyer a complete and accurate copy of each Employee Benefit Plan document
(including, in
14
each case, all amendments) in its possession and a complete and
accurate copy of all material documents in its possession relating to such plan,
including, if applicable: (A) each trust agreement, insurance or annuity
contract, investment management agreement, custodial agreement, and other
agreement relating to the funding of the plan, and all amendments to them; (B)
the most recent summary plan description and any subsequent summary of material
modifications; (C) the three most recently filed annual return reports (Form
5500 series), including all applicable schedules; (D) the most recent
determination or opinion letter issued by the Internal Revenue Service, if the
plan or its related funding arrangement is intended to be qualified under
section 401(a) or exempt from tax under section 501(a) of the Code, the
application submitted for it, any correspondence with the Internal Revenue
Service in connection with the determination or opinion letter or application,
and any pending application for a determination or opinion letter; (E) the three
most recent financial statements; and (F) the three most recent actuarial
valuation reports.
(3) With respect to any Employee Benefit Plan that is an
Employee Pension Benefit Plan intended to qualify under section 401(a) of the
Code, each such plan is qualified under section 401(a) of the Code and any trust
through which such plan is funded is exempt from federal income tax under
section 501(a) of the Code; the Internal Revenue Service has issued a favorable
determination as to the qualified status of such plan and trust under the
Internal Revenue Code as amended by the Tax Reform Act of 1986 and subsequent
legislation; and either the Internal Revenue Service has also issued a favorable
determination as to the qualified status of the plan as amended for the
legislation known as GUST or application for such a determination was made
during the GUST remedial amendment period and is pending. Nothing has occurred
that would adversely affect the qualified status of such Employee Pension
Benefit Plan or trust. No filing has been made with the Internal Revenue Service
with respect to any such plan under the Internal Revenue Service Employee Plans
Compliance Resolution System or any predecessor program, nor has any
self-corrective action been taken as to any such plan under the provisions of
such program or any predecessor program permitting self-correction of certain
qualification defects.
(4) The Company has not incurred liability for any excise
tax arising under section 4971, 4972, 4976, 4978, 4979, 4979A, 4980, or 4980B of
the Code.
(5) To the Knowledge of the Company, each of the following
representations is true, except where the failure to be true, collectively,
would not be reasonably likely to have a Material Adverse Effect:
(A) Each Employee Benefit Plan is now and always has been
operated in all material respects in accordance with its terms and the
requirements of all applicable laws, including, without limitation, ERISA, all
provisions of the Code applicable to secure intended tax consequences, and
federal securities law, and all regulations and rulings under such laws. All
persons who participate in the operation of the Employee Benefit Plans and all
Employee Benefit Plan fiduciaries have always acted in all material respects in
accordance with the provisions of all applicable law, including, without
limitation, ERISA, the Code, and federal securities law, and all regulations and
rulings under such laws. The Company has performed all material obligations
required to be performed by it under, is not in any material respect in default
under or in violation of, and there is no material default or violation by any
party to, any Employee
15
Benefit Plan. No legal action, suit, claim, or governmental proceeding or
investigation is pending or threatened with respect to any Employee Benefit
Plan (other than claims for benefits in the ordinary course).
(B) The administrator of each Employee Benefit Plan that is
an "employee benefit plan" as defined in section 3(3) of ERISA ("ERISA Plan")
has complied with all applicable reporting and disclosure requirements under
Part 1 of Title I of ERISA. No filing has been made under the U.S. Department of
Labor Delinquent Filer Program or any similar program with respect to any ERISA
Plan.
(C) Except as described in SECTION 4(O)(I)(5)(C) of the
Disclosure Schedule, there has been no prohibited transaction (within the
meaning of section 406 of ERISA or section 4975 of the Code) with respect to any
ERISA Plan, other than any transaction subject to a statutory or administrative
exemption. None of the transactions contemplated by this Agreement will be or
will result in such a prohibited transaction. No person has acted or failed to
act in connection with any Employee Benefit Plan in a manner that would subject
the Company to direct or indirect liability, by indemnity or otherwise, for a
breach of any fiduciary duty. No filing has been made under the U.S. Department
of Labor Voluntary Fiduciary Correction Program or any similar program with
respect to any ERISA Plan.
(D) Except as described in SECTION 4(O)(I)(5)(D) of the
Disclosure Schedule, no Employee Benefit Plan that is an Employee Pension
Benefit Plan has had an accumulated funding deficiency (within the meaning of
section 302 of ERISA or section 412 of the Code, whether or not waived. No asset
of the Company is the subject of a lien arising under section 302(f) of ERISA or
section 412(n) of the Code. The Company has not been required to post security
under section 307 of ERISA or section 401(a)(29) of the Code, and no fact or
event exists that could give rise to such a lien or requirement to post any such
security.
(E) The Company has not incurred liability under Title IV of
ERISA (other than liability for premiums to the Pension Benefit Guaranty
Corporation ("PBGC") arising in the ordinary course), and no fact or event
exists that would give rise to such liability. Except as disclosed in SECTION
4(O)(I)(5) of the Disclosure Schedule, no complete or partial termination has
occurred within the past five years with respect to any Employee Benefit Plan
that is an Employee Pension Benefit Plan. No reportable event (within the
meaning of section 4043 of ERISA) or event described in section 4063(a) of
ERISA, other than those for which a waiver from reporting applies, has occurred
or is expected to occur with respect to any Employee Benefit Plan subject to
Title IV of ERISA. The PBGC has not instituted proceedings to terminate any
Employee Benefit Plan, no event or condition has occurred or exists that may
constitute grounds under section 4042 of ERISA for the termination of or
appointment of a trustee to administer any such plan, nor has any notice of
intent to terminate any such plan been filed with the PBGC. All premiums due the
PBGC with respect to such plans have been paid in full on a timely basis.
(F) As to each Employee Benefit Plan subject to Title IV of
ERISA other than a plan that is a Multiemployer Plan: all costs of the plan have
been provided for on the basis of consistent methods in accordance with sound
actuarial assumptions and practices; all employee census data furnished to the
plan's actuary in connection with such valuation and prior
16
valuations has been accurate and complete in all material respects; and no
amendment or change to the plan effective or adopted after the date of the
valuation would increase benefits under the plan.
(G) All contributions, insurance premiums, or payments
required to be made with respect to the Employee Benefit Plans have been made by
their due dates.
(6) Except as disclosed in SECTION 4(O)(I)(6) of the
Disclosure Schedule, (A) no Employee Benefit Plan, and no other commitment or
agreement, provides for the payment by the Company of separation, severance, or
similar benefits to any person solely as a result of any transaction
contemplated by this Agreement or as a result of a "change in control", within
the meaning of such term under section 280G of the Code, and (B) the
consummation of the transaction contemplated by this Agreement will not
accelerate the time of payment or vesting of, or increase the amount of, any
compensation due to any employee from the Company.
(7) Except as disclosed in SECTION 4(O)(I)(7) of the
Disclosure Schedule, the Company has no liability which is reasonably likely to
have a Material Adverse Effect with respect to any employee or former employee
for post-employment benefits other than as required by section 4980B of the Code
and Part 6 of Title I of ERISA or as provided under an Employee Benefit Plan
that is an Employee Pension Benefit Plan.
(8) To the Knowledge of the Company, there has been no
representation made to or communication with any employee by the Company or the
Seller or the Parent that is not in accordance with the existing terms and
limitations of the Employee Benefit Plans which is reasonably likely to have a
Material Adverse Effect. The Company has not made any commitment to modify any,
or create any other, Employee Benefit Plan.
(9) With respect to each Employee Benefit Plan that is a
Multiemployer Plan: the Company has not withdrawn, partially withdrawn, or
received any notice of any claim or demand for withdrawal liability or partial
withdrawal liability from such plan; the Company has not received any notice
that such plan is in reorganization, that increased contributions may be
required to avoid a reduction in plan benefits or the imposition of any excise
tax, or that such plan is or may become insolvent; the Company has not failed to
make any required contributions on a timely basis; to the Knowledge of the
Company, such plan is not a party to any pending merger or asset or liability
transfer; to the Knowledge of the Company, there are no PBGC proceedings against
or affecting such plan; and the Company has no potential liability by reason of
having been a seller in a sale of assets pursuant to section 4204 of ERISA.
SECTION 4(O)(I)(9) of the Disclosure Schedule includes for each such plan, as of
its last valuation date, the amount of potential withdrawal liability of the
Company calculated by the plan pursuant to ERISA section 4221(e), and identifies
the specific obligor.
(ii) EMPLOYMENT MATTERS. Except as set forth in SECTION
4(O)(II) of the Disclosure Schedule, each of the following is true:
(1) other than pursuant to the collective bargaining
agreements to which the Company is currently a party, which collective
bargaining agreements are identified at SECTION 4(O)(II) of the Disclosure
Schedule (collectively, the "UNION CONTRACTS"), none of the
17
employees of the Company (in his or her capacity as an employee of the Company)
is represented by any labor union;
(2) without limiting the generality of paragraph (1)
above, to the Knowledge of the Company, no certification or decertification is
pending or was filed within the past twelve (12) months respecting the employees
of the Company;
(3) to the Knowledge of the Company: no oral or written
notice has been received by the Company or the Seller or Parent of any complaint
made or charge filed against the Company claiming that the Company has violated
any regulation, or local, state or federal laws regarding the rights of any
employee, including, but not limited to, civil rights or equal opportunity, or
of any complaints or proceedings involving the Company or any of the employees
of the Company before any commission, agency or labor relations board, tribunal,
or court; there are no outstanding orders or charges against the Company under
the Occupational Health and Safety Act; and all levies, assessments and
penalties made against the Company pursuant to any applicable workers'
compensation act have been paid by the Company and the Company has not been
reassessed under any such legislation during the past five years, which
complaints, charge, orders, levies, etc. collectively are reasonably likely to
have a Material Adverse Effect; and
(4) to the Knowledge of the Company, the Company is in
compliance with all federal, state and local laws and regulations relating to
the employment of labor, including provisions relating to wages, fringe
benefits, hours, working conditions, occupational safety and health, safety of
the premises, workers' compensation, collective bargaining, payment of social
security and unemployment taxes, civil rights and non-discrimination in hiring,
retention, promotion, pay and other conditions of employment, including but not
limited to the Immigration Reform and Control Act of 1986, and the Company is
not liable for arrears on wages or any tax or penalties for failure to comply
with those laws or regulations, except for any such violations, failures to
comply and liabilities which collectively are not reasonably likely to have a
Material Adverse Effect.
(iii) WARN. Except for the transactions contemplated by this
Agreement or except as disclosed in SECTION 4(O)(III) of the Disclosure
Schedule, within the period ninety (90) days prior to the Closing Date, the
Company has not temporarily or permanently closed or shut down any single site
of employment or any facility or any operating unit, department or service
within a single site of employment, as such terms are used in WARN. During such
period, except as disclosed in SECTION 4(O)(III) of the Disclosure Schedule, the
Company has not terminated or laid off more than ___ employees at a single site
of employment.
(p) ENVIRONMENTAL MATTERS.
(i) Except as disclosed in SECTION 4(P) of the Disclosure
Schedule, to the Knowledge of the Company there have been no releases of
Hazardous Substances, Oils, or Pollutants or Contaminants at, on, under or from
any of the Owned Real Property or the Leased Real Property (collectively, the
"PROPERTIES"), except (a) releases which (x) have been promptly reported, if
required by applicable Environmental Laws, and (y) if subject to (x), have been
fully remediated to the point of receiving a closure determination or
determination of no further action
18
from any and all governmental agencies having jurisdiction if and to the extent
that such agencies issue such determinations; and (b) incidental spills or leaks
which are de minimis in quantity and which neither individually nor collectively
reasonably would be expected to violate any Environmental Laws or give rise to
any Environmental Liabilities and Costs, which, in either case, would be
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect.
(ii) Except as disclosed in SECTION 4(P) of the Disclosure
Schedule, to the Knowledge of the Company, the Company has not engaged in, or
caused or allowed others to engage in, the treatment or disposal of Hazardous
Substances, Oils or Pollutants or Contaminants at, on or under the Properties.
(iii) Except as disclosed in SECTION 4(P) of the Disclosure
Schedule, to the Knowledge of the Company, the Company has not received any
presently Unresolved claim or demand asserted against the Company from any
private party or governmental agency alleging violations of or potential
liability under any Environmental Laws or property damage, personal or bodily
injury or harm under the common law doctrines of nuisance, negligence, trespass
or strict liability that may give rise to Environmental Liabilities and Costs
which are reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect, and, to the Knowledge of the Company, the Company has
received no notice of any potential claims which may be asserted by a
governmental agency or private party pursuant to any Environmental Laws or the
aforementioned doctrines which remains Unresolved and is reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect.
(iv) Except as disclosed in SECTION 4(P) of the Disclosure
Schedule, to the Knowledge of the Company, the Company has not received any
Unresolved claim or demand asserting that the Company is or may be liable for
Cleanup or for Environmental Liabilities and Costs resulting from the release or
threatened release of Hazardous Substances, Oils, or Pollutants or Contaminants
from the Properties and, to the Knowledge of the Company, the Company has not
received any notice of any potential claims which may be asserted by any
governmental agency with regulatory jurisdiction over the Properties or any
other person or entity for Cleanup or for Environmental Liabilities and Costs
which remains Unresolved and is reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect.
(v) Except as disclosed in SECTION 4(P) of the Disclosure
Schedule, to the Knowledge of the Company, there are no above ground or
underground storage tanks at, upon, or under any of the Properties.
(vi) Except as disclosed in SECTION 4(P) of the Disclosure
Schedule, to the Knowledge of the Company, the Company's operations at the
Properties are in full compliance with all applicable Environmental Laws, except
for such matters which collectively would not be reasonably likely to have a
Material Adverse Effect.
(vii) To the Knowledge of the Company, none of the
Properties are listed or proposed for listing on the National Priorities List,
CERCLIS, or any other federal, state or local list or inventory of actual or
potentially contaminated sites.
19
(viii) To the Knowledge of the Company, except as disclosed
in SECTION 4(P) of the Disclosure Schedule, the Company has made no disposal of
any Hazardous Substance, Oil, or Pollutant or Contaminant at any site currently
listed pursuant to 42 U.S.C. section 9605(a)(8)(B) or pursuant to any similar
state or local law identifying hazardous sites.
(ix) The following terms used in this SECTION 4(P) are
defined below:
(A) "CLEANUP" means all actions required of the Company
by any governmental agencies or courts with jurisdiction over the Properties to:
(A) investigate, contain, cleanup, remove, treat, or remediate Hazardous
Substances, Oils, or Pollutants or Contaminants released by the Company or
discovered at, on, under or from the Properties into the environment or caused
by or arising from the operations of the Business by the Company; or (B) perform
required post-remedial monitoring and care in connection with any such
substances released at, on, under or from the Properties.
(B) "ENVIRONMENTAL LAWS" means all applicable foreign,
federal, state and local laws, regulations, statutes, codes, ordinances, and
rules relating to pollution or protection of the environment.
(C) "ENVIRONMENTAL LIABILITIES AND COSTS" means all
legal liabilities, obligations, and responsibilities of the Company to conduct
Cleanup or pay penalties, assessments, fines, or damages including natural
resource damages, under any Environmental Laws.
(D) "HAZARDOUS SUBSTANCES, OILS, OR POLLUTANTS OR
CONTAMINANTS" means all chemical substances, oils, pollutants, or contaminants
defined as such in the National Oil and Hazardous Substances Pollution
Contingency Plan, 40 C.F.R. 300.5.
(q) CERTAIN RELATIONSHIPS WITH THE COMPANY. Except as disclosed
in SECTION 4(Q) of the Disclosure Schedule, none of Parent or any of its
Affiliates (other than the Company) owns any material asset, tangible or
intangible, which is used in the business of the Company.
(r) SUPPLIERS. Except as disclosed in SECTION 4(R) of the
Disclosure Schedule, no single supplier or group of affiliated suppliers has
supplied the Company with products which would account for more than ten percent
(10%) of its purchases during any of the Company's last three fiscal years.
(s) INVENTORIES. To the Knowledge of the Company, and subject to
such exceptions which collectively would not be reasonably likely to have a
Material Adverse Effect, (i) the portion of the Company's inventory which
consists of food products complies with all applicable federal laws and
regulations and with all applicable laws and regulations of each of the states
of the United States, including, without limitation, all such laws and
regulations relating to the wholesomeness of food for human consumption and (ii)
the condition of the premises and equipment in or with which such food products
inventory has been processed complies with all such applicable laws concerning
cleanliness and sanitation with respect to premises and equipment processing
food for human consumption.
20
(t) INSURANCE. The Company is covered by valid and currently
effective insurance policies issued in favor of Parent, or self-insurance
programs, as are listed and described on SCHEDULE 4(T) of the Disclosure
Schedule. SCHEDULE 4(T) of the Disclosure Schedule also lists (i) all current
reserves maintained by the Company with respect to such insurance policies and
self-insured programs as of January 31, 2003 and (ii) any outstanding claim
covered by such insurance policies or self-insured programs involving actual or
alleged losses or liabilities which exceed, in each instance, $250,000 in
incurred value, as determined by Parent's or the Company's third-party claims
administrator.
(u) SECURITIES LAW MATTERS. The Seller is a knowledgeable and
sophisticated investor capable of evaluating the merits and risks of its
investment in the Shares and has the capacity to protect its own interests. The
Seller acknowledges that investment in the Shares involves risks and represents
that it is able to bear the risks of such investment. The Seller is acquiring
the Shares for its own account and not with a view to, or for resale in
connection with, any distribution thereof. The Seller understands that the
Shares have not been registered under the Securities Act and may be resold only
in compliance with the provisions thereof, and that a legend to such effect
shall be placed on all Shares issued to it pursuant to this Agreement.
EXCEPT AS EXPRESSLY SET FORTH IN SECTION 3 AND THIS SECTION 4, NEITHER
PARENT NOR THE SELLER MAKES ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
AT LAW OR IN EQUITY, IN RESPECT OF THE COMPANY OR ANY OF ITS ASSETS,
LIABILITIES, OR OPERATIONS, AND ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES ARE
HEREBY EXPRESSLY DISCLAIMED.
5. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents
and warrants to Parent and the Company that as of the date of this Agreement:
(a) ORGANIZATION OF THE BUYER. The Buyer is duly organized,
validly existing, and in good standing under the laws of the State of New York.
(b) AUTHORIZATION OF TRANSACTION. The Buyer has full corporate
power and authority to execute and deliver this Agreement and the Ancillary
Agreements to perform its obligations hereunder and to carry on its business as
it is now being conducted and is duly authorized to conduct business and is in
good standing under the laws of each state where such qualification is required,
except where the lack of such qualification would not have a material adverse
effect on the Buyer. The execution and delivery of this Agreement and the
Ancillary Agreements and the consummation of the transactions contemplated
thereby have been duly and validly authorized by the Buyer's Board of Directors
and no other corporate or stockholder proceedings on the part of the Buyer are
necessary to authorize this Agreement and the Ancillary Agreements, the issuance
of the Shares and the consummation of the other transactions contemplated
hereby. This Agreement constitutes, and the Ancillary Agreements when executed
will constitute, the valid and legally binding obligations of the Buyer,
enforceable in accordance with their respective terms and conditions, except as
the enforceability thereof may be limited by any applicable bankruptcy,
reorganization, insolvency, or other laws affecting creditors' rights generally
or by general principles of equity. The Buyer need not give any notice to, make
any filing with, or obtain any authorization, consent, or approval of any
government or governmental
21
agency in order to consummate the transactions contemplated by this Agreement
and the Ancillary Agreements other than the applicable filings under the
Xxxx-Xxxxx-Xxxxxx Act, any filings with the Securities and Exchange Commission
and state securities law agencies with respect to the issuance of the Shares,
the filing of a listing application with the NASDAQ Stock Market and the filing
of the Certificate of Amendment with the New York Secretary of State.
(c) NONCONTRAVENTION. Except to the extent set forth on SECTION
6(B)(II) of the Disclosure Schedule, neither the execution and the delivery of
this Agreement and the Ancillary Agreements, nor the consummation of the
transactions contemplated hereby and thereby, (i) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court to which
the Buyer is subject or any provision of its charter or bylaws or (ii) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which the Buyer is a party or by which it is
bound or to which any of its assets is subject.
(d) BROKERS' FEES. The Buyer has no liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(e) CAPITAL STOCK. The authorized capital stock of the Buyer
consists of 20,000,000 shares of Class A Common Stock, par value Twenty Five
Cents ($0.25) per share ("CLASS A COMMON STOCK"), 10,000,000 shares of Class B
common stock, par value Twenty Five Cents ($0.25) per share ("CLASS B COMMON
STOCK") and 8,430,000 shares of Preferred Stock, consisting of 200,000 shares of
6% Cumulative Preferred Stock with a par value of $.25 per share, 30,000 shares
of Preferred Stock without par value, and 8,200,000 shares of Preferred Stock
with a par value of $.025 per share, Class A. As of January 31, 2003, 3,827,468
shares of Class A Common Stock, 2,764,053 shares of Class B Common Stock and
200,000 shares of 6% Cumulative Preferred Stock, 807,240 shares of 10%
Cumulative Convertible Voting Preferred Stock and 3,566,556 shares of
Participating Convertible Preferred Stock were issued and outstanding. An
aggregate of 3,600,251 shares of Class A Common Stock and 33,695 shares of Class
B Common Stock are reserved for issuance upon conversion of the Buyer's
Preferred Stock. The Shares when issued will have the rights and privileges set
forth in the Certificate of Amendment. As of the date of this Agreement, there
are no outstanding subscriptions, options, warrants, rights or other
arrangements or commitments, rights of first refusal, preemptive rights, calls
or rights obligating the Buyer to issue any capital stock or other securities
of, or other ownership interests in, the Buyer, other than as set forth in the
Shareholders Agreement by and among Buyer and certain shareholders comprising
the Xxxxxxx and Xxxxxx families and the Xxxx Xxxxx Investor Group dated June 22,
1998 (the "SHAREHOLDERS AGREEMENT"). All outstanding shares of capital stock of
the Buyer are, and the Shares (and any shares of Class A Common Stock issued
upon conversion of the Shares) when issued will be, duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights. There
are no bonds, debentures, notes or other indebtedness of the Buyer having the
right to vote (or convertible into, or exchangeable for, securities having the
right to vote) on any matters on which shareholders of the Buyer may vote. There
are no outstanding obligations of the Buyer to repurchase, redeem or
22
otherwise acquire any of its securities. The Buyer is not a party to any voting
agreement with respect to its securities except the Shareholders Agreement.
(f) REPORTS AND FINANCIAL STATEMENTS. The Buyer has filed all
reports, schedules, forms, statement and other documents (including exhibits and
other information incorporated herein) with the SEC required to be filed by the
Buyer since January 1, 1999 (such documents together with any documents filed
during such period by the Buyer with the SEC on a voluntary basis on Current
Reports on Form 8-K, the "BUYER SEC REPORTS"). As of their respective dates, the
Buyer SEC Reports (i) complied as to form in all material respects with the
applicable requirements of the Securities Act and the Securities Exchange Act
and (ii) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, that the foregoing clause (ii) shall not apply to the
financial statements included in the Buyer SEC Reports (which are covered by the
following sentence). The audited consolidated financial statements and unaudited
consolidated interim financial statements included in the Buyer SEC Reports
(including any related notes and schedules) fairly present in all material
respects the financial position of the Buyer and its consolidated Subsidiaries
as of the dates thereof and the results of their operations and their cash flows
for the periods then ended (subject, where appropriate, to normal year-end
adjustments), in each case in accordance with GAAP consistently applied during
the periods involved (except as otherwise disclosed in the notes thereto and
except that the unaudited financial statements therein do not contain all of the
footnote disclosures required by GAAP). Since January 1, 1999, the Buyer has
timely filed all material reports, registration statements and other filings
required to be filed by it with the SEC under the rules and regulations of the
SEC.
(g) NO VIOLATION OF LAW. To Buyer's knowledge, the businesses of
the Buyer and its Subsidiaries are not being conducted in violation of any
provisions of law or regulation except (a) as described in any of Buyer SEC
Reports and (b) for violations or possible violations which would not have a
material adverse effect on the Buyer. To Buyer's knowledge, the Buyer has all
permits, licenses and governmental authorizations material to ownership or
occupancy of its properties and assets and the carrying on of its business,
except for such permits, licenses and governmental authorizations, the failure
of which to have would not have a material adverse effect on the Buyer.
(h) ABSENCE OF CERTAIN CHANGES OR EVENTS. Other than as disclosed
in the Buyer SEC Reports, since December 28, 2002 and to the date of this
Agreement, the businesses of the Buyer and its Subsidiaries have been conducted
in all material respects in the ordinary course and there has been no material
adverse change in the financial condition, results of operations, or business of
the Buyer, excluding any adverse change resulting from changes in general
economic or industry conditions or changes that are temporary in nature or
effect.
(i) INVESTIGATIONS; LITIGATION. Except as described in any of the
Buyer SEC Reports:
(i) no government entity has notified the Buyer in writing
of an intention to conduct an investigation or review of the Buyer by the
government entity, and to
23
Buyer's knowledge, no investigation or review by any government entity is
pending with respect to the Buyer which would have a material adverse effect on
the Buyer; and
(ii) to Buyer's knowledge, there are no actions, suits or
proceedings pending (or, to the Buyer's knowledge, threatened) against or
affecting the Buyer or any of its properties before any governmental entity,
which is reasonably likely to have a material adverse effect on the Buyer.
(j) NO REQUIRED VOTE OF SHAREHOLDERS. No vote of shareholders of
the Buyer is required by law, by the Certificate of Incorporation or by-laws of
the Buyer or by any agreement to which Buyer is a party in order for the Buyer
to consummate the transactions contemplated hereby.
(k) MATERIAL CONTRACTS.
(i) Except as set forth in the Buyer SEC Reports, to Buyer's
knowledge, the Buyer has not received written notice of any material violation
or material default under any material contract (as such term is defined in item
601(b)(10) of Regulation S-K of the SEC) to which the Buyer is a party.
(ii) Except as set forth in the Buyer SEC Reports, to
Buyer's knowledge, the Buyer is not (i) in violation or default under any
contract or agreement that restricts its ability to compete or otherwise conduct
its business as presently conducted, except for such violations or defaults as
would not have a material adverse effect on the Buyer or (ii) a party to, or
bound by, any contract or agreement that restricts or would restrict the ability
of the Buyer or any of its Subsidiaries from competing or otherwise conducting
its business as such business is conducted on the date of this Agreement, except
for such restrictions that would not have a material adverse effect on the
Buyer.
(l) TAKEOVER STATUTE. The Board of Directors of the Buyer has
approved this Agreement and the transactions contemplated hereby and such
approval constitutes approval of the transactions contemplated hereby by the
Board of Directors of the Buyer under the provisions of Section 912 of the
NYBCL, such that the restrictions of Section 912 of the NYBCL do not apply to
this Agreement or the transactions contemplated hereby. To Buyer's knowledge, no
other state takeover statute is applicable to the transactions contemplated by
this Agreement.
(m) TRANSACTIONS WITH AFFILIATES. Other than the transactions
contemplated by this Agreement or except to the extent disclosed in the Buyer
SEC Reports or otherwise disclosed to the Seller, there have been no
transactions, agreements, arrangements or understandings between the Buyer, on
the one hand, and the Buyer's Affiliates or any other Person, on the other hand,
that would be required to be disclosed under Item 404 of Regulation S-K under
the Securities Exchange Act.
(n) SECURITIES LAW MATTERS. The Buyer is a knowledgeable and
sophisticated investor capable of evaluating the merits and risks of its
investment in the Membership Interests and has the capacity to protect its own
interests. The Buyer acknowledges that investment in the Membership Interests
involves risks and represents that it is able to bear the risks of such
investment. The Buyer is acquiring the Membership Interests for its own account
and not with a
24
view to, or for resale in connection with, any distribution thereof. The Buyer
understands that the Membership Interests have not been registered under the
Securities Act and may be resold only in compliance with the provisions thereof.
6. PRE-CLOSING COVENANTS. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing:
(a) GENERAL. Each of the Parties will use its commercially
reasonable efforts to take all actions and to do all things necessary, proper,
or advisable in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not waiver, of the
closing conditions set forth in SECTION 8 below). In furtherance of the
foregoing: (i) the Buyer shall provide to Parent and the Seller, on or before
the date sixty (60) days after the date hereof commitment letters reasonably
satisfactory to Parent evidencing that the Buyer has available all financing
necessary for it to consummate the transactions contemplated by this Agreement;
(ii) the Buyer, at the Closing, shall pay off or guarantee the Credit Facility
and guarantee any Leases to which the Company is a party or provide other
reasonable financial accommodations if and as necessary to obtain lender or
lessor consents; and (iii) the Buyer shall take all actions necessary to cause
the Shares to be listed for trading on the NASDAQ National Market System.
(b) NOTICES AND CONSENTS. Parent and the Seller shall give, and
cause the Company to give, any notices to third parties, and will use, and cause
the Company to use, their and its commercially reasonable efforts to obtain any
third party consents, that may be necessary to permit Parent and the Seller to
effectuate the transactions contemplated by this Agreement. A listing of such
required notices and consents is set forth at SECTION 6(B)(I) of the Disclosure
Schedule. The Buyer shall give any notices to third parties, and will use its
commercially reasonable efforts to obtain any third party consents, that may be
necessary to permit the Buyer to effectuate the transactions contemplated by
this Agreement. A listing of such required notices and consents is set forth at
SECTION 6(B)(II) of the Disclosure Schedule. Each of the Parties shall (and
Parent will cause the Company to) give any notices to, make any filings with,
and use its commercially reasonable efforts to obtain any required
authorizations, consents, and approvals of governments and governmental agencies
in connection with the transactions contemplated by this Agreement. Without
limiting the generality of the foregoing, each of the Parties shall (i) take all
action necessary, as soon as reasonably practicable but not later than ten (10)
days after the date hereof, to make the filings required of the Buyer and the
Seller (or the "ultimate parent entity" of such party) under the
Xxxx-Xxxxx-Xxxxxx Act to consummate the transactions contemplated by this
Agreement, and (ii) use their commercially reasonable efforts to obtain early
termination of the waiting period thereunder. The Buyer shall pay all filing
fees payable in connection with its pre-merger notification filing under the
Xxxx-Xxxxx-Xxxxxx Act.
(c) OPERATION OF BUSINESS. Except as expressly contemplated by
this Agreement or otherwise consented to by the Buyer in writing (which consent
shall not be unreasonably withheld or delayed), the Company shall:
(i) conduct the Business in all material respects only in
the usual, regular, and ordinary course in substantially the same manner as
heretofore conducted (including, without limitation restoring operations at the
plants at Gillett, Wisconsin and
25
Xxxxxxx, Wisconsin and to relocate its corn operations from Salem, Oregon to
Walla Walla, Washington and its root vegetable operations from Salem, Oregon to
Ripon, Wisconsin (collectively, the "CONTEMPLATED ACTIONS"));
(ii) maintain in all material respects all of the Assets in
their present condition, except for ordinary wear and tear and damage by
unavoidable casualty;
(iii) keep in full force and effect insurance comparable in
amount and scope of coverage to that now carried with respect to the Business;
(iv) perform in all material respects its obligations under
the Contracts;
(v) maintain the books of account and records of the
Business in the usual, regular, and ordinary manner;
(vi) comply in all material respects with all Permits,
Environmental Laws, statutes, laws, ordinances, rules, and regulations
applicable to the conduct of the Business;
(vii) except as set forth in SECTION 6(C)(VII) of the
Disclosure Schedule or SCHEDULE III, and except as set forth in SECTION
6(C)(XIII) of this Agreement, not enter into any employment agreement or
commitment to employees of the Business or effect any increase in the
compensation or benefits payable, or to become payable, to any officers,
director, or employee of the Business other than increases in the ordinary
course of business;
(viii) not create or permit the creation of any Encumbrance
on the Assets, other than Permitted Encumbrances;
(ix) not enter into or modify any Contract obligating the
Company to purchase goods or services for a period of ninety (90) days or more,
or sell, lease, license, or otherwise dispose of any Asset (other than
dispositions of obsolete Assets and inventory in the ordinary course of
business) or acquire any substantial assets other than replacement assets,
machinery, equipment, vehicles, furniture, furnishings, inventory, and supplies
to be used in the Business or make any capital expenditures in excess of
$1,000,000 (provided that nothing herein shall prohibit the Company from taking
actions, consistent with its past practices, to prepare for the 2003 pack
(including entering into commitments to sell product or to acquire cans, raw
products, boxes, and other items for the 2003 pack), or from taking actions or
entering into commitments that do not materially affect the Company's business
or from incurring capital expenditures and/or costs and expenses in connection
with the Contemplated Actions which in all events shall not involve a
contractual commitment extending beyond 12 months);
(x) not take any action with respect to, or make any
material change in its accounting policies or procedures, except as may be
required by changes in GAAP upon the advice of its independent accountants;
(xi) not amend its Certificate of Formation or Operating
Agreement, issue any membership interest or other equity security or make any
distributions;
26
(xii) not engage in any material transaction with Parent or
any of its Subsidiaries or make any payments thereto other than payments of the
nature described in SECTION 4(H)(X) of the Disclosure Schedule made in the
ordinary course of business consistent with past practices or as specifically
required by this Agreement;
(xiii) not without the consent of the Buyer enter into any
agreement of any nature whatsoever that would impose on the Company and/or the
Buyer any liability or obligation or commitment of any nature whatsoever with
any certified bargaining representative of any of the employees who work for or
in connection with the business if such liability or obligation or commitment
would exist after the Closing, except the Company shall be free to fulfill any
legal obligation it has to negotiate with such certified bargaining
representative, provided it obtains the consent of the Buyer to any agreements
that are made before the Company makes any commitments that will be binding on
the Company and/or the Buyer after the Closing; or
(xiv) not authorize or enter into any commitment with
respect to any of the matters described in (VII)-(XIII) above.
(d) ACCESS.
(i) Subject to the last sentence of SECTION 6(D)(II), the
Seller will permit, and Parent and Seller will cause the Company to permit,
representatives of the Buyer, upon providing reasonable advance notice, to have
access at all reasonable times during normal business hours, and in a manner so
as not to interfere with the normal business operations of the Company, to all
premises, properties, personnel, books, records (including tax records,
financial records of the Company from the Company's accountants, and
environmental surveys, studies, and reports), contracts, and documents of or
pertaining to the Business; provided, however, that, to the extent that the
Buyer conducts any environmental review of the Owned Real Property or the Leased
Real Property, such review shall be conducted, at the Buyer's sole expense, in
accordance with a mutually acceptable site access and confidentiality agreement
among the Parties, and only after the prior approval of the Seller and Parent,
and shall not include, without the Seller's and Parent's prior approval, any
drilling or sampling (with all such prior approvals by Seller and Parent not to
be unreasonably withheld, conditioned or delayed). The Seller shall have the
option, but not the obligation, to receive copies of all non-privileged reports
generated or data collected by the Buyer or its representatives in conducting
any environmental review of the Owned Real Property or the Leased Real Property,
and upon the Seller's request, the Buyer shall have the obligation to provide
the Seller with copies of all non-privileged reports generated or data collected
by the Buyer or its representatives in conducting any environmental review of
the Owned Real Property or the Leased Real Property. The information to be
provided to the Buyer hereunder shall include (i) the Company's audited
financial statements for the calendar year period ended December 31, 2002 as
soon as such audited financial statements are available, and (ii) the Company's
unaudited monthly financial statements for each month of the current calendar
year as soon as reasonably practicable after such financial statements are
available.
(ii) Any and all information (which shall be deemed to
include, without limitation, all environmental surveys, studies, and reports)
that the Buyer receives from Parent or the Seller shall be subject in all
respects to strict compliance with the terms and
27
conditions of the Confidentiality Agreement dated as of October 22, 2002 by and
between Parent and the Buyer (the "CONFIDENTIALITY AGREEMENT"). In the course
of the reviews contemplated by this SECTION 6(D), the Buyer will not use any of
the information except as expressly permitted by the Confidentiality Agreement,
and, if this Agreement is terminated for any reason whatsoever, will return to
Parent or the Seller, as the case may be, all tangible embodiments (and all
copies) of such information which are in its possession. Parent and the Seller
shall be entitled to withhold Confidential Information or access from Buyer
upon written advice of counsel that the disclosure of such Confidential
Information to Buyer could result in the violation by Parent or the Seller of
state or federal law or an applicable confidentiality agreement with a third
party; and in such event, the Parties shall endeavor to agree upon such
arrangements as are reasonably acceptable to the Parties and their counsel
pursuant to which as much of such Confidential Information as can be lawfully
provided to Buyer is so provided (which shall, in any event, include all
information that is required to be disclosed under the provisions of SECTION
6(E) below).
(e) SUPPLEMENTS TO DISCLOSURE SCHEDULE. If the Seller or Parent
becomes aware of, or there occurs after the date of this Agreement, any fact or
condition that constitutes a breach of any representation or warranty made by
the Seller or Parent in SECTION 3 or SECTION 4 above that is qualified by
materiality or a material breach of any representation or warranty made by the
Seller or Parent in SECTION 3 or SECTION 4 above that is not so qualified, or if
any fact or condition, either currently existing or hereafter occurring,
requires any material change in the Disclosure Schedule delivered to the Buyer
at the time of execution of this Agreement, the Seller or Parent will deliver to
the Buyer at or before the Closing a supplement to the Disclosure Schedule
specifying any needed change. The Buyer may terminate this Agreement pursuant to
SECTION 11(A)(III) following its receipt of any such supplement describing a
fact or condition having a Material Adverse Effect but if the Buyer consummates
the transactions contemplated by this Agreement following its receipt of any
such supplement, the Buyer shall not be entitled to indemnification under
SECTION 9(B) for any matter described in any such supplement.
(f) NO SOLICITATION. Unless this Agreement shall have been
terminated pursuant to SECTION 11 below, neither Parent nor the Seller shall,
directly or indirectly through any officer, director, employee, agent,
affiliate, or otherwise, enter into any agreement, agreement in principle, or
other commitment (whether or not legally binding) relating to a Competing
Transaction or solicit, initiate, or encourage the submission of any proposal or
offer from any person or entity relating to any Competing Transaction, nor
participate in any discussions or negotiations regarding, or furnish to any
other person or entity any information with respect to, or otherwise cooperate
in any way with, or assist or participate in, facilitate, or encourage, any
effort or attempt by any other person or entity to effect a Competing
Transaction. Parent and the Seller shall immediately cease any and all contacts,
discussions, and negotiations with third parties regarding any Competing
Transaction.
(g) PRE-CLOSING TRANSACTIONS. Immediately prior to the Closing,
Seller will contribute to the capital of the Company all accounts payable by the
Company to Seller or any of its Affiliates, which shall be in an aggregate
amount of not less than $10,000,000.
(h) TAX MATTERS. The Seller shall cause any tax sharing agreement
or other similar arrangements with respect to or involving the Company to be
terminated as to the
28
Company on the Closing Date so that after the Closing Date, the Company
shall not be bound thereby or have any liability thereunder for amounts due in
respect to periods prior to or including the Closing Date.
(i) TAX TREATMENT OF TRANSACTION. The Parent, Seller and Buyer
agree that the transactions contemplated hereunder will be treated as an asset
sale for federal income tax purposes.
(j) DISTRIBUTION FROM MASTER PENSION BENEFIT TRUST. As promptly
as practicable after the date of this Agreement, Xxxxxxxx Brands, Inc., a
Subsidiary of Parent, will initiate an equitable separation of the assets of its
master pension benefit trust into two trusts--one for the assets attributable to
the Retirement Plan for Salaried Tropical Employees of Xxxxxxxx Brands, Inc. (a
subsidiary of Xxxxxxxx Brands International, Inc.) and one for the assets
attributable to the four Employee Pension Benefit Plans sponsored by the
Company. Such separation of assets will be completed effective upon the Closing.
In the division of the common investments of the master trust there shall be
allocated, between the two separate trusts, assets having a fair market value at
the time of separation equal to the value of the master trust assets identified
with the respective plans the assets of which are being transferred to the
separate trusts.
(k) PHYSICAL INVENTORY. The Seller shall cause the Company to
conduct a physical inventory count as of March 31, 2003 of inventory quantities
on hand at all physical locations where the Company's inventory is located in
accordance with the Company's past practices for physical inventory counts. The
Buyer and its representatives may observe this physical inventory count and, to
the extent that the Buyer reasonably deems necessary, make sample counts of
inventory on hand and conduct other procedures as necessary to verify that
inventory quantities are consistent with book inventory as of March 31, 2003.
The Seller shall cause the Company to compile a cost valuation of the physical
inventory count as of March 31, 2003 determined in accordance with the inventory
cost by SKU contained in the 50 page inventory cost document dated December 23,
2002 previously provided by the Seller to the Buyer, and the recorded inventory
balance in the Company's general ledger and inventory perpetual record systems
as of March 31, 2003 shall be adjusted to the such valuation of the physical
inventory count quantities as of March 31, 2003, after taking into consideration
all appropriate reserves for obsolescence, surplus and damage. The Buyer shall
reimburse the Seller for any incremental costs incurred by Parent, the Seller or
(if the Closing does not occur) the Company in connection with the actions
required by this SECTION 6(K).
(l) PACK AGREEMENT. The Buyer shall, and the Seller shall cause
the Company to negotiate in good faith and enter into the Pack Agreement on
terms reasonably acceptable to both parties as promptly as possible after the
execution hereof.
7. POST-CLOSING COVENANTS. The Parties agree as follows with respect to
the period following the Closing.
(a) GENERAL. In case at any time after the Closing any further
action is necessary to carry out or give effect to the purposes of this
Agreement each of the Parties will take such further action (including the
execution and delivery of such further instruments and documents)
29
as any other Party reasonably may request, all at the sole cost and expense of
the requesting Party (unless the requesting Party is entitled to indemnification
therefor under SECTION 9 below).
(b) LITIGATION SUPPORT; BUSINESS RECORDS.
(i) In the event and for so long as any Party actively is
contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with (A) any
transaction contemplated under this Agreement or (B) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing Date
involving the Company, each of the other Parties shall cooperate with such Party
and its counsel in the defense or contest, make available their personnel, and
provide such testimony and access to their books and records as shall be
reasonably necessary in connection with the defense or contest, all at the sole
cost and expense of the contesting or defending Party (unless the contesting or
defending Party is entitled to indemnification therefor under SECTION 9 below).
(ii) The Buyer acknowledges that business records of the
Company relating to the operations of the Business prior to the Closing will be
retained by the Company and that Parent and the Seller may from time to time
require access to or copies of such records in connection with tax matters,
litigation claims, and other matters arising with respect to the operations of
the Company prior to the Closing. The Buyer agrees that, upon reasonable prior
notice from Parent and/or the Seller, the Buyer will, during normal business
hours, provide, and cause the Company to provide, Parent and/or the Seller with
access to (including office space), and (at Parent's expense) copies of, such
records for such purposes. The Seller and Parent agree to hold any confidential
information so provided in confidence and to use such information only for the
purposes described above. In addition to the provisions of SECTION 10(G)(I)
below, the Buyer agrees that it will not, and will not permit the Company to,
within seven (7) years after the Closing, destroy any material records of the
Business prepared prior to the Closing without first notifying Parent and
affording it the opportunity to remove or copy them.
(c) INSURANCE. Effective as of the Closing, the Parties
acknowledge and agree that the Company's current insurance coverages (all of
which are provided under a comprehensive insurance program maintained by Parent
and its Affiliates) and self-insurance programs will terminate, and the Buyer
shall be required to obtain and maintain new insurance coverages for the Company
and the Company's assets and activities; provided, that nothing in this
Agreement shall preclude or limit the Buyer's or the Company's right to tender
to Parent's insurance carriers claims relating to events arising prior to the
Closing Date or to tender incurred but not yet reported claims as of the Closing
Date. Parent and the Seller agree to cooperate with the Buyer and the Company in
submitted any such claims relating to events arising prior to the Closing Date.
The Buyer will cause the Company from and after the Closing, to continue to
reimburse Parent and the Seller for claims payments made to GAB Robins, North
America, a third party claims administrator for the insurer, or otherwise for
amounts paid by it in respect of workers' compensation, employer's liability,
truck/automotive liability, general and product liability, employment practices
liability, fiduciary liability and other claims against the Company that are
within the deductible or self-insured amounts applicable to insurance programs
covering the Company with respect to pre-Closing occurrences. Payments must be
reimbursed to Parent or the Seller within thirty (30) days of any such payment
made by either of them to GAB Robins,
00
Xxxxx Xxxxxxx or other claims administrator. Monthly loss data will continue to
be provided by the Seller. The Company has a current listing of all reported
claims. The Buyer will cooperate, and cause the Company to cooperate, with the
Seller, its insurers and third party administrators with respect to claims
arising prior to the Closing.
(d) USE OF "XXXXXXXX" TRADEMARK. The Company shall be permitted
to use the "Xxxxxxxx" trademark only on canned goods existing in its inventory,
and with respect to any labels existing in its inventory, until such time as the
Company has disposed of such inventory, provided that the Buyer shall cause the
Company to discontinue use of such labels as promptly as commercially
practicable. The Company shall have three (3) months after the Closing Date to
remove and dispose of any "Xxxxxxxx" signage located at any of its facilities.
As promptly as practicable after the Closing, the Buyer shall change the name of
the Company to a name not including "Xxxxxxxx" or any derivation or variation
thereof.
8. CONDITIONS TO OBLIGATION TO CLOSE.
(a) CONDITIONS TO OBLIGATION OF THE BUYER. The obligation of the
Buyer to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in SECTIONS
3 and 4 that are qualified with reference to materiality shall be true and
correct (without giving effect to any supplement to the Disclosure Schedule as
provided under SECTION 6(E) above), and the representations and warranties that
are not so qualified shall be true and correct in all material respects (without
giving effect to any supplement to the Disclosure Schedule as provided under
SECTION 6(E) above), at and as of the Closing Date, provided that, for purposes
of this SECTION 8(A)(I), the amount specified in SECTION 4(H)(V) shall be
$1,000,000.
(ii) Parent and the Seller shall have performed and complied
with all of their respective covenants hereunder in all material respects
through the Closing;
(iii) there shall not be any injunction, judgment, order,
decree or ruling in effect preventing consummation of any of the transactions
contemplated by this Agreement, and there shall be no pending action or
proceeding brought by a governmental authority seeking to enjoin any of the
transactions contemplated by this Agreement;
(iv) Parent and the Seller shall have delivered to the Buyer
a certificate signed by officers of each to the effect that each of the
conditions specified above in SECTION 8(A)(I)-(III), as applies separately with
respect to each of Parent and the Company, to the knowledge of such officers, is
satisfied in all respects;
(v) all applicable waiting periods (and any extensions
thereof) under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or otherwise been
terminated;
(vi) the consents, releases and permits set forth on SECTION
8(A)(VI) of the Disclosure Schedule shall have been obtained;
31
(vii) the Buyer shall have received: (A) duly executed
originals of the Ancillary Agreements; and (B) current certificates of good
standing from Parent's and the Company's jurisdictions of organization,
resolutions of their respective Boards of Directors or Managers (certified by an
officer of Parent or the Seller, as applicable) authorizing the execution and
delivery of this Agreement and other documents and agreements contemplated
hereby and consummation of the transactions contemplated hereby and thereby, and
(C) an incumbency certificate of the officers of Parent and the Seller executing
any or all of this Agreement or any documents or agreements executed in
connection herewith or therewith; and
(viii) all actions to be taken by Parent and the Seller in
connection with consummation of the transactions contemplated hereby shall have
been completed to the reasonable satisfaction of the Buyer.
The Buyer may waive any condition specified in this SECTION 8(A) if it executes
a writing so stating at or prior to the Closing. The Parties specifically agree
that it shall not be a condition to the Buyer's obligations that the Buyer shall
have obtained any financing necessary for it to consummate the transactions
contemplated by this Agreement..
(b) CONDITIONS TO OBLIGATION OF THE PARENT AND SELLER. The
obligations of the Seller and Parent to consummate the transactions to be
performed by Parent and the Seller in connection with the Closing are subject to
satisfaction of the following conditions:
(i) the representations and warranties set forth in SECTION
5 that are qualified with reference to materiality shall be true and correct,
and the representations and warranties that are not so qualified shall be true
and correct in all material respects, at and as of the Closing Date;
(ii) the Buyer shall have performed and complied with all of
its covenants hereunder in all material respects through the Closing;
(iii) there shall not be any injunction, judgment, order,
decree or ruling in effect preventing consummation of any of the transactions
contemplated by this Agreement, and there shall be no pending action or
proceeding brought by a governmental authority seeking to enjoin any of the
transactions contemplated by this Agreement;
(iv) the Buyer shall have delivered to the Seller a
certificate signed by one of its officers to the effect that each of the
conditions specified above in SECTION 8(B)(I)-(III), to the knowledge of such
officer, is satisfied in all respects;
(v) all applicable waiting periods (and any extensions
thereof) under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or otherwise been
terminated;
(vi) the consents, releases and permits set forth on SECTION
8(A)(VI) of the Disclosure Schedule shall have been obtained;
(vii) Parent and the Seller shall have received: (A) a duly
executed original of the Ancillary Agreements; and (B) a current certificate of
good standing from the Buyer's jurisdiction of organization, resolutions of the
Buyer's Board of Directors (certified by
32
an officer of the Buyer) authorizing the execution and delivery of this
Agreement and other documents and agreements contemplated hereby and
consummation of the transactions contemplated hereby and thereby, and (C) an
incumbency certificate of the officers of the Buyer executing any or all of this
Agreement or any documents or agreements executed in connection herewith or
therewith;
(viii) the Seller shall have received (A) an agreement
substantially in the form of EXHIBIT C hereto executed by the Xxxx Xxxxx
shareholders and the Buyer amending their registration rights so as to avoid any
conflict with the rights of the Seller under the Registration Rights Agreement,
and (B) the Seller shall have received Subordination Agreements executed by the
shareholders of the Buyer named therein; and
(ix) all actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby shall have been completed
to the reasonable satisfaction of Parent and the Seller.
The Seller may waive any condition specified in this SECTION 8(B) if it executes
a writing so stating at or prior to the Closing.
9. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS;
INDEMNIFICATION.
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. The covenants
contained in this Agreement shall survive the Closing Date without limitation.
The representations and warranties contained herein shall survive the Closing
Date for a period of two (2) years; PROVIDED that the representations and
warranties contained in SECTION 4(J) shall survive until the expiration of all
applicable statutes of limitations, and the representations and warranties
contained in SECTION 4(P) shall survive for a period of seven (7) years and six
(6) months. Any matter as to which a claim has been asserted by notice to the
other party received before such date that is pending or unresolved at the end
of any applicable limitation period shall continue to be covered by SECTION 9
notwithstanding any applicable statute of limitations (which the parties hereby
waive) until such matter is finally terminated or otherwise resolved by the
parties or by a court of competent jurisdiction and any amounts payable
hereunder are finally determined and paid.
(b) INDEMNIFICATION BY THE SELLER AND PARENT. Parent and the
Seller, jointly and severally, shall defend, indemnify, and hold harmless the
Buyer and the Company, each of their successors and assigns and each of their
officers, directors, shareholders, affiliates, employees, and agents
(collectively, the "BUYER INDEMNITEES") from and against any and all Losses
(including those incurred in connection with the defense or prosecution of an
indemnifiable claim and those incurred in connection with the enforcement of
this provision) (collectively, "BUYER LOSSES") caused by, based upon, resulting
from, or arising out of:
(i) any breach of a representation or warranty hereunder (as
supplemented as permitted by SECTION 6(E)) on the part of Parent or the Seller;
(ii) any failure by Parent or the Seller to perform or
otherwise fulfill any covenant, provision, undertaking, or other agreement or
obligation of it hereunder;
33
(iv) any liability of the Company or the Buyer arising under
or with respect to (A) any ERISA Affiliate Pension Plan, (B) any ERISA Affiliate
Health Plan, (C) Parent's Capital Accumulation Plan or (D) Parent's Deferred
Compensation Plan; and
(v) any and all actions, suits, proceedings, claims, and
demands incident to any of the foregoing or such indemnification.
(c) INDEMNIFICATION BY THE BUYER. The Buyer shall defend,
indemnify, and hold harmless Parent and the Seller, each of their successors and
assigns and each of their officers, directors, shareholders, affiliates,
employees, and agents (collectively, the "PARENT INDEMNITEES") from and against
any and all Losses (including those incurred in connection with the defense or
prosecution of the indemnifiable claim and those incurred in connection with the
enforcement of this provision) (collectively, "PARENT LOSSES"), caused by, based
upon, resulting from, or arising out of:
(i) any breach of a representation or warranty hereunder on
the part of the Buyer;
(ii) any failure by the Buyer to perform or otherwise
fulfill any covenant, provision, undertaking, or other agreement or obligation
of it hereunder;
(iii) any inspections or test of, or the entry onto, any
Owned Real Property or Leased Real Property by the Buyer or its representatives
and agents prior to Closing;
(iv) any use by the Company after the Closing of the name
"Xxxxxxxx" in any form or any "Xxxxxxxx" trademark, including without limitation
any such use permitted by SECTION 7(D); and
(v) any and all actions, suits, proceedings, claims, and
demands incident to any of the foregoing or such indemnification.
(d) PROCEDURE FOR CLAIMS BY THIRD PARTIES.
(i) The rights and obligations of a party claiming a right
to indemnification hereunder (each, an "INDEMNITEE") from a party to this
Agreement (each, an "INDEMNITOR") in any way relating to a third party claim
shall be governed by the following provisions of this SECTION 9(D):
(A) The Indemnitee shall give prompt written notice to
the Indemnitor of the commencement of any claim, action, suit, or proceeding, or
any threat thereof, or any state of facts which Indemnitee determines will give
rise to a claim by the Indemnitee against the Indemnitor based on the indemnity
agreements contained in this Agreement setting forth, in reasonable detail, the
nature and basis of the claim and the amount thereof, to the extent known, and
any other relevant information in the possession of the Indemnitee (a "NOTICE OF
CLAIM"). The Notice of Claim shall be accompanied by any relevant documents in
the possession of the Indemnitee relating to the claim (such as copies of any
summons, complaint, or pleading which may have been served or any written demand
or document evidencing the same). No failure to give a Notice of Claim shall
affect, limit, or reduce the indemnification obligations
34
of an Indemnitor hereunder, except to the extent such failure actually
prejudices such Indemnitor's ability successfully to defend the claim, action,
suit, or proceeding giving rise to the indemnification claim.
(B) In the event that an Indemnitee furnishes an
Indemnitor with a Notice of Claim, then upon the written acknowledgment by the
Indemnitor given to the Indemnitee within 30 days of receipt of the Notice of
Claim, stating that the Indemnitor is undertaking and will prosecute the defense
of the claim under such indemnity agreements and confirming that as between the
Indemnitor and the Indemnitee, the claim covered by the Notice of Claim is
subject to this SECTION 9 (without admitting responsibility to indemnify
therefor) (an "INDEMNIFICATION ACKNOWLEDGMENT"), then the claim covered by the
Notice of Claim may be defended by the Indemnitor, at the sole cost and expense
of the Indemnitor; PROVIDED that the Indemnitee is authorized to file any
motion, answer, or other pleading that may be reasonably necessary or
appropriate to protect its interests during such 30 day period. However, in the
event the Indemnitor does not furnish an Indemnification Acknowledgment to the
Indemnitee, the Indemnitee may, upon written notice to the Indemnitor, assume
the defense (with legal counsel chosen by the Indemnitee) and dispose of the
claim, at the sole cost and expense of the Indemnitor. Notwithstanding receipt
of an Indemnification Acknowledgment, the Indemnitee shall have the right to
employ its own counsel in respect of any such claim, action, suit, or
proceeding, but the fees and expenses of such counsel shall be at the
Indemnitee's own cost and expense.
(C) The Parties agree to render to each other such
assistance as they may reasonably require of each other in order to ensure the
proper and adequate defense of any such claim, action, suit, or proceeding.
Subject to the Indemnitor furnishing the Indemnitee with an Indemnification
Acknowledgment in accordance with SECTION 9(D)(I)(B), the Indemnitee shall
cooperate with the Indemnitor and provide such assistance, at the sole cost and
expense of the Indemnitor, as the Indemnitor may reasonably request in
connection with the defense of any such claim, action, suit, or proceeding,
including, but not limited to, providing the Indemnitor with access to and use
of all relevant corporate records and making available its officers and
employees for depositions, pre-trial discovery, and as witnesses at trial if
required. In requesting any such cooperation, the Indemnitor shall have due
regard for, and attempt not to be disruptive of, the business and day-to-day
operations of the Indemnitee and shall follow the requests of the Indemnitee
regarding any documents or instruments which the Indemnitee believes should be
given confidential treatment.
(ii) The Indemnitor shall not make or enter into any
settlement of any claim, action, suit, or proceeding which Indemnitor has
undertaken to defend, without the Indemnitee's prior written consent (which
consent shall not be unreasonably withheld or delayed), unless there is no
obligation, directly or indirectly, on the part of the Indemnitee to contribute
to any portion of the payment for any of the Losses, the Indemnitee receives a
general and unconditional release with respect to the claim (in form, substance
and scope reasonably acceptable to the Indemnitee), there is no finding or
admission of any violation of law by, or material adverse effect on, any other
material claim that may be made against, the Indemnitee.
(e) PROCEDURE FOR CLAIMS BETWEEN THE PARTIES. Upon obtaining
knowledge of a Loss that shall entitle an injured party to indemnification
hereunder which does not arise from a
35
third party claim, the injured party shall deliver a Notice of Claim to the
indemnifying party. The Notice of Claim shall state in reasonable detail the
nature and estimated amount of any such Loss giving rise to the right of
indemnification hereunder. The Indemnitor shall have 30 days after receipt of a
Notice of Claim to respond to such Notice of Claim stating whether or not it
disputes its liability or the amount thereof, and the basis for any objection.
If the indemnifying party fails to respond to such Notice of Claim within such
30 day period, the indemnifying party shall be deemed to have acknowledged its
responsibility for such Loss, and in such event, or if the indemnifying party
does not dispute its liability, then the indemnifying party shall pay and
discharge any such Loss which is not contested within 45 days after receipt of
such Notice of Claim. If the Indemnitor disputes its liability, then the
Indemnitee reserves all its right to seek recovery from the Indemnitor pursuant
to this Agreement, and Indemnitee reserves all of its defenses.
(f) EXCLUSIVE REMEDY. The Buyer, Parent, and the Seller
acknowledge and agree that the foregoing indemnification provisions in this
SECTION 9 shall be the exclusive remedy of the Buyer, Parent, and the Seller
with respect to the transactions contemplated by this Agreement, other than for
fraud.
(g) LIMITS ON INDEMNIFICATION.
(i) Parent's and the Seller's obligation to indemnify for
Buyer Losses under SECTION 9(B)(I) of this Agreement (A) shall accrue only if
the aggregate of all such Buyer Losses exceeds One Million Dollars ($1,000,000)
(the "SELLER BASKET") and then Parent shall be liable for all such Buyer Losses
only to the extent that such Buyer Losses exceed such amount and (B) shall be
limited in the aggregate to Forty Million Dollars ($40,000,000) (the "Cap").
(ii) The Buyer's obligation to indemnify for Parent Losses
under SECTION 9(C)(I) above shall accrue only if the aggregate of all such
Parent Losses exceeds One Million Dollars ($1,000,000) (the "BUYER BASKET") and
then the Buyer shall be liable for all such Parent Losses only to the extent
that such Parent Losses exceed such amount.
(iii) To the extent that any indemnified claim is covered by
insurance held by an Indemnitee, then without limiting the other limitations set
forth in this SECTION 9, such Indemnitee shall be entitled to indemnification
hereunder only with respect to the amount of Losses that are in excess of the
cash proceeds actually received by the Indemnitee pursuant to such insurance. If
the Indemnitee receives such cash insurance proceeds, then the amount payable by
the Indemnitor pursuant to such claim shall be reduced by the amount of such
proceeds, whether such proceeds were received prior to or after the time such
claim is paid. Each Party hereby agrees to file claims under any of its
insurance policies covering claims to the same extent that such Party would
normally file claims under its insurance policies in the ordinary course of
business.
36
(iv) In no event shall Parent Losses or Buyer Losses include
punitive, indirect or consequential damages (unless actually payable to a third
party).
10. TAX INDEMNIFICATION AND ALLOCATION.
(a) THE SELLER'S TAX INDEMNITY; INDEMNIFICATION FOR TAX
OBLIGATIONS. To the extent not reserved against in the Company's books and
records at the Closing Date, Parent and the Seller jointly and severally, shall
indemnify and hold harmless the Company and each of its respective officers,
directors, employees, agents and successors and assigns, from and against all
Taxes related to the Business or the Company including, without limitation, all
assessments and adjustments from audits by Tax authorities (i) with respect to
all periods ending on or prior to the Closing Date, (ii) with respect to any
period beginning before the Closing Date and ending after the Closing Date, but
only with respect to the portion of such period up to and including the Closing
Date (such portion, as defined below, a "PRE-CLOSING PARTIAL PERIOD"), and (iii)
of Parent, the Seller and any other entity which is or has been affiliated with
Parent or the Seller or any of their Subsidiaries, as a result of Regulation
section 1.1502-6(a) or otherwise due to the affiliated relationship. Parent and
the Seller shall be entitled to any net refunds of Taxes (including interest
thereon less any Taxes payable by the Company or any Subsidiary thereof and
less the costs of collection) with respect to the periods described in clauses
(i) and (ii) above, as limited below.
Parent and the Seller's indemnity obligations to pay Taxes under
this Section 10(a) (whether arising before, on or after the Closing and whether
paid with Tax Returns when due or as the result of audits or assessments) shall
be after the application (only if required to be applied to the Tax being
indemnified) of all applicable credits, loss deductions, allowances or
exemptions related to the Company which credits, loss deductions, allowances or
exemptions arose in the period ending on or prior to the Closing Date or in the
Pre-Closing Partial Period and are available to reduce the Tax deficiency for
which Parent or the Seller have an indemnification obligation(s). In addition to
the foregoing, Parent and the Seller shall, jointly and severally, indemnify and
hold harmless the Company from and against any and all attorneys' fees and
expenses incurred by any of them with respect to the matters, as incurred,
covered by such indemnity and/or the enforcement thereof.
(b) BUYER'S INDEMNITY. The Buyer shall, and shall cause the
Company to, jointly and severally, indemnify and hold harmless Parent and the
Seller and each of its officers, directors, employees and agents and successors
and assigns, from and against all (i) Taxes of the Company or related to the
Business with respect to periods beginning after the Closing Date; and (ii)
Taxes that are related to the operations of the Company with respect to any
period beginning before the Closing Date and ending after the Closing Date but
only with respect to Tax Liability accrued after the Pre-Closing Partial Period.
(c) TRANSFER TAX LIABILITY. All sales, use or transfer taxes
(excluding any income, capital gains or similar tax) arising as a result of the
transactions described herein shall be paid by the Buyer or the Company.
(d) TAX ALLOCATION BETWEEN PARTIAL PERIODS. For purposes of this
Agreement, any Tax attributable to a period beginning before the Closing Date
and ending after the Closing Date,
37
shall be apportioned between the Pre-Closing Partial Period and the period
following the Closing Date (a "POST-CLOSING PARTIAL PERIOD"), based on the
actual activities, property owned, taxable income or taxable loss of the Company
during such Pre-Closing Partial Period and such Post-Closing Partial Period.
(e) FILING OF TAX RETURNS. To the extent permitted by law, Parent
and the Seller shall include the Company, reflecting its activities up to and
including the Closing Date, in the consolidated federal and consolidated,
combined or unitary state income Tax Returns required to be filed by Parent, the
Seller and their Affiliates for periods prior to and including the Closing Date
(the "FINAL PRE-CLOSING INCOME TAX RETURNS"). The Buyer shall, and shall cause
the Company to, prepare all Tax Returns, other than with respect to income
Taxes, required to be filed by the Company after the Closing Date, provided that
the Buyer and Company shall not incur liability to the Seller or Parent for any
inadvertent failure to prepare any state and local Tax Returns which, in the
aggregate, are immaterial.
The Buyer and the Company shall prepare and file such Tax Returns
(other than those with respect to income Taxes) on a basis consistent with past
practices and shall not make or change any election applicable to the Company
without Parent's written consent.
(f) POST-CLOSING AUDITS AND OTHER PROCEDURES.
(i) Parent and the Seller, on the one hand, and the Buyer
and the Company, on the other hand, agree to give prompt notice to each other of
any proposed adjustment to Taxes for periods ending on or prior to the Closing
Date or any Pre-Closing Partial Period.
(ii) Parent and the Seller shall have the right to (i)
control the conduct of any audit, proceeding or controversy that involves Tax
liability for which Parent or the Seller must indemnify the Company under
SECTION 10(A) reported on a Tax Return prepared by Parent, the Seller or the
Company and (ii) Parent or the Seller may settle any such audit, proceedings or
controversy described in clause (i).
(iii) The Buyer and the Company shall have the right to
control, negotiate, settle and/or dispute any audits, proceedings or controversy
not described in SECTION 10(F)(II).
38
(g) COOPERATION.
(i) Parent and the Seller, on the one hand, and the Buyer
and the Company, on the other hand, hereby agree to make available to the other
party for inspection and copying all books of accounts, records, and supporting
records and data as may be necessary for the other to file or lodge any Tax
Return or other reports required by any government body or to support any Tax
Return or report or audit related to the operations of the Company before, or
arising out of, the Closing and the transactions occurring pursuant to the
Agreement. The obligation to retain records and make them available shall
continue until the expiration of the statutory period of limitation for the
assessment of Taxes shall have closed in respect of periods for which the
records shall have been retained but in no event sooner than seven (7) years
from the Closing Date.
(ii) Buyer and the Company hereby acknowledge that Parent
and the Seller will be required to file certain Tax Returns and reports
concerning the Company with the United States Internal Revenue Service and with
the various states. Such Tax Returns and reports may include full year
information for any partial year that the Seller owned issued membership
interests or stock of the Company. Such information shall include, but is not
limited to, Closing Date financial statements and the so-called "T" schedules
customarily required by Parent's Tax Department for the year of the Closing both
as of the Closing Date and, if requested by Parent's Tax Department in writing,
full year "T" schedules.
(iii) Parent and the Seller, on the one hand, and Buyer and
the Company (as the case may be), except as expressly provided otherwise herein,
on the other hand, shall each be responsible for their own costs and expenses
incurred or arising as a result of the performance of their respective
obligations under this SECTION 10.
(iv) Notwithstanding anything to the contrary herein, in
accordance with the "Alternative Procedure" set forth in Section 5 of the
Internal Revenue Procedure 96-60, 1996-2 CB 399, the Buyer and the Company agree
that Parent and the Seller shall be relieved of their duty to furnish Internal
Revenue Service Forms W-2 to those employees of the Company, who become or
remain employees of the Company after the Closing Date, and that the Company or
its successors shall complete such Forms W-2 for the entire calendar year of
2002. All salaries, wages or other sums paid to such employees by the Seller, or
its successors and all relating withholdings of taxes and other items reported
on the Forms W-2 shall, for purposes of reporting on the Forms W-2, be deemed to
have been paid by the Company or its successors.
(h) NO DUPLICATIVE RECOVERY. To the extent that Parent and the
Seller have an obligation to indemnify the Buyer under this SECTION 10, the
amount paid related to Taxes as required by the indemnification obligations set
forth in this Section shall not be treated as Buyer Losses for which Parent and
the Seller have an indemnification obligation under SECTION 9(B) hereof.
39
11. TERMINATION.
(a) TERMINATION OF AGREEMENT. The Parties may terminate this
Agreement as provided below:
(i) the Buyer, Parent, and the Seller may terminate this
Agreement by mutual written consent at any time prior to the Closing;
(ii) the Buyer may terminate this Agreement by giving
written notice to Parent and the Seller at any time prior to the Closing (A) in
the event Parent or the Seller has breached any representation, warranty, or
covenant contained in this Agreement that is qualified by materiality or any
other representation, warranty, or covenant contained in this Agreement in any
material respect, the Buyer has notified Parent and the Seller of the breach,
and the breach has continued without cure for a period of 30 days after the
notice of breach, (B) in the event the Buyer exercises its rights under the
provisions of Section 6 (e) above, (C) if the Closing shall not have occurred on
or before July 31, 2003, by reason of the failure of any condition precedent
under SECTION 8(A) above (unless the failure results from the Buyer's breaching
any representation, warranty, or covenant contained in this Agreement) or (D) if
the Indebtedness under the Credit Facility is accelerated prior to the Closing
and such acceleration is not rescinded prior to the later of the Closing and
July 31, 2003; or
(iii) Parent or the Seller may terminate this Agreement by
giving written notice to the Buyer at any time prior to the Closing (A) in the
event the Buyer has breached any representation, warranty, or covenant contained
in this Agreement that is qualified by materiality or any other representation,
warranty, or covenant contained in this Agreement in any material respect,
Parent or the Seller has notified the Buyer of the breach, and the breach has
continued without cure for a period of 30 days after the notice of breach or (B)
if the Closing shall not have occurred on or before July 31, 2003, by reason of
the failure of any condition precedent under SECTION 8(B) above (unless the
failure results from Parent's or the Seller's breaching any representation,
warranty, or covenant contained in this Agreement) or by reason of the failure
of the Buyer to obtain all financing necessary for it to consummate the
transactions contemplated by this Agreement.
(b) EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to SECTION 11(A) above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to any other Party
(except for any liability of any Party then in breach, including a breach caused
by the failure of the Buyer to obtain all financing necessary for it to
consummate the transactions contemplated by this Agreement); provided that the
confidentiality provisions contained in SECTION 6(D) above shall survive
termination.
12. MISCELLANEOUS.
(a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue
any press release or make any public announcement relating to the subject matter
of this Agreement prior to the Closing without the prior written approval of
each of the other Parties; PROVIDED that any Party may make any public
disclosure it believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded securities (in which
case the
40
disclosing Party will use reasonable efforts to advise the other Parties prior
to making the disclosure, but such other Parties' written approval will not be
necessary).
(b) NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
(c) ENTIRE AGREEMENT. This Agreement (including the Exhibits,
Schedules, and Annexes referred to herein and the Ancillary Agreements)
constitutes the entire agreement among the Parties with respect to the subject
matter hereof and supersedes any prior understandings, agreements, or
representations by or among the Parties, written or oral, to the extent they
have related in any way to the subject matter hereof.
(d) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the Buyer and the Seller; PROVIDED that the Buyer may (i) assign any
or all of its rights and interests hereunder to one or more of its Affiliates or
to any lender providing financing for the transactions contemplated hereby as
security (including any refinancings thereof), and (ii) designate one or more of
its Affiliates to perform its obligations hereunder (in any or all of which
cases the Buyer nonetheless shall remain responsible for the performance of all
of its obligations hereunder.
(e) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) HEADINGS. The Section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (i) hand
delivered, (ii) sent by a nationally recognized overnight courier for next
business day deliver, or (iii) sent by confirmed facsimile transmission as
follows:
If to Parent or the Seller:
Xxxxxxxx Brands, Inc.
000 Xxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq., Senior Vice President & General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
41
Xxxx, Xxxxxxxxxx & Xxxxxxxxx LLP
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Buyer:
Seneca Foods Corporation
0000 Xxxxx Xxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxxxxxxxx & Mugel, LLP
000 Xxxxx Xxxx Xxxxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
The date of giving of any such notice shall be as follows: if by hand delivery,
on the date of delivery; if by courier service, on the next business day after
delivery to the overnight courier service; or if by facsimile, on the date of
confirmed facsimile transmission or, if such day is not a business day, on the
next business day thereafter. Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Parties notice in the manner herein set forth.
(h) GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL.
(i) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT
TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW
YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF
ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK. EACH PARTY HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE FEDERAL COURTS OF THE UNITED STATES OF
AMERICA LOCATED IN THE SOUTHERN DISTRICT OF NEW YORK SOLELY IN RESPECT OF THE
INTERPRETATION AND ENFORCEMENT OF THE PROVISIONS OF THIS AGREEMENT AND OF THE
DOCUMENTS REFERRED TO IN THIS AGREEMENT, AND IN RESPECT OF THE TRANSACTIONS
CONTEMPLATED HEREBY AND THEREBY. EACH PARTY HEREBY WAIVES AND AGREES NOT TO
ASSERT, AS A DEFENSE IN ANY ACTION, SUIT, OR PROCEEDING FOR THE
42
INTERPRETATION AND ENFORCEMENT HEREOF, OR ANY SUCH DOCUMENT OR IN RESPECT OF ANY
SUCH TRANSACTION, THAT SUCH ACTION, SUIT, OR PROCEEDING MAY NOT BE BROUGHT OR IS
NOT MAINTAINABLE IN SUCH COURTS OR THAT THE VENUE THEREOF MAY NOT BE APPROPRIATE
OR THAT THIS AGREEMENT OR ANY SUCH DOCUMENT MAY NOT BE ENFORCED IN OR BY SUCH
COURTS. EACH PARTY HEREBY CONSENTS TO AND GRANTS ANY SUCH COURT JURISDICTION
OVER THE PERSON OF SUCH PARTY AND OVER THE SUBJECT MATTER OF ANY SUCH DISPUTE
AND AGREES THAT PROVIDING PROCESS OR OTHER PAPERS IN CONNECTION WITH ANY SUCH
ACTION OR PROCEEDING IN THE MANNER PROVIDED IN SECTION 12(G) OR IN SUCH OTHER
MANNER AS MAY BE PERMITTED BY LAW, SHALL BE VALID AND SUFFICIENT SERVICE
THEREOF.
(ii) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES AND, THEREFORE, EACH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT, OR THE BREACH, TERMINATION, OR VALIDITY OF THIS AGREEMENT, OR
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT, OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH SUCH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) EACH SUCH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 12(H).
(i) AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer, Parent, and the Seller. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(j) SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(k) EXPENSES. Each of the Buyer, Parent, and the Seller will bear
its own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby. In
addition, any professional costs or expenses incurred by the Company (including
legal fees and expenses but excluding costs relating to the
43
employment of regular employees of the Company) in connection with this
Agreement and the transactions contemplated hereby shall be paid by the Parent
or Seller.
(l) CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder unless the context requires otherwise. The
word "including" shall mean including without limitation.
(m) INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits,
Schedules, and Annexes identified in this Agreement are incorporated herein by
reference and made a part hereof.
[SIGNATURE PAGE FOLLOWS]
44
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first written above.
SENECA FOODS CORPORATION
By: /S/XXXXX X. XXXXXX
---------------------------
Name: XXXXX X. XXXXXX
---------------------------
Title: CEO AND PRESIDENT
---------------------------
XXXXXXXX BRANDS INTERNATIONAL, INC.
By: /S/ CYRUS X. XXXXXXXXX, XX.
---------------------------
Name: CYRUS X. XXXXXXXXX, XX.
---------------------------
Title: CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
---------------------------
FRIDAY HOLDINGS, L.L.C.
By: /S/ XXXXXX X. XXXXX
---------------------------
Name: XXXXXX X. XXXXX
---------------------------
Title: VICE PRESIDENT
---------------------------
45
