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ASSET PURCHASE AGREEMENT
BETWEEN
FRESH FOODS OF NORTH CAROLINA, LLC
AND
XXXXXX FOODS, INC.
APRIL 10, 1998
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement"), dated as of April 10,
1998, is by and between FRESH FOODS OF NORTH CAROLINA, LLC, a North Carolina
limited liability company ("Fresh Foods") and wholly-owned subsidiary of WSMP,
Inc., a North Carolina corporation ("WSMP"), and XXXXXX FOODS, INC., a Delaware
corporation ("Xxxxxx") and wholly-owned subsidiary of Tyson Foods, Inc., a
Delaware corporation ("Tyson").
Xxxxxx desires to sell the Business (as herein defined) together with
all of the assets used in the operation thereof to Fresh Foods, and Fresh Foods
desires to buy the Business and such assets from Xxxxxx, all on the terms and
subject to the conditions contained herein.
Therefore, in consideration of the mutual representations, warranties,
covenants and other agreements, and upon and subject to the terms and the
conditions hereinafter set forth in this Agreement, the parties do hereby agree
as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
following meanings:
"Accounting Practices" means GAAP in all material respects and, where
inconsistent with GAAP, the prior accounting practices of Xxxxxx and the
Business.
"Acquisition Proposal" is defined in Section 6.15.
"Adjusted Closing Net Book Value" is defined in Section 2.5.
"Affiliate" of a Person means another Person controlled by or
controlling, or under common control with, such Person.
"Assumed Liabilities" means (i) the liabilities of the Business
identified on Schedule A hereto as Assumed Liabilities, (ii) all other
liabilities of the Business, known or unknown, contingent or otherwise, and
(iii) all liabilities incurred after the Closing in connection with the
operation of the Business by Fresh Foods; excluding however, any Excluded
Liabilities.
"Assumption Agreement" means the instrument in the form of Exhibit A
attached hereto, to be executed and delivered at the Closing, pursuant to which
Fresh Foods will assume the Assumed Liabilities.
"Balance Sheet" means the unaudited balance sheet of the Business dated
as of February 28, 1998 attached hereto as Schedule B.
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"Beef Recall" means the events associated with the August 1997 recall
of raw ground beef products processed at the Columbus, Nebraska facility then
owned by Xxxxxx, including but not limited to the possibility that such products
may have been subject to a form of E. coli bacterial contamination.
"Xxxx of Sale" means the instrument substantially in the form of
Exhibit B attached hereto, to be executed and delivered at the Closing, pursuant
to which certain Transferred Assets will be conveyed to Fresh Foods.
"Business" means the business currently conducted by the Pierre Foods
division of Xxxxxx in Cincinnati, Ohio and in Caryville, Tennessee excluding the
production and sale of chicken products to or in connection with Sam's Club,
Burger King Corporation (and Restaurant Services, Inc.), Subway (and Independent
Purchasing Cooperative, Inc.) and products marketed under the Classic Seasons
line, including those sold to Price/Costco.
"Charter Documents" means a Person's articles or certificate of
incorporation and bylaws (or similar organizational documents).
"Closing" means the consummation of the purchase and sale of the
Business and the assumption of the Assumed Liabilities under the terms and
subject to the conditions of this Agreement.
"Closing Date" means the date on which the Closing occurs.
"Closing Net Book Value" is defined in Section 2.5.
"COBRA" is defined in Section 6.28.
"Code" means the Internal Revenue Code of 1986, as amended.
"Compensation and Benefit Plans is defined in Section 3.17.
"Competitive Business" is defined in Section 6.12.
"Confidential Information" is defined in Section 6.11.
"Contracts" includes all contracts, agreements, Permits, distribution
agreements, sales and purchase agreements, arrangements, understandings, leases,
subleases, licenses, sublicenses, indentures, mortgages, instruments of
indebtedness and commitments, written or oral, with respect to the Business, to
which the Person to whom reference is made is a party or by which such Person is
bound or by which such Person or any of its properties may be bound or affected.
"Designated Official" means Xx. Xxxxx X. Xxxxxx or any other individual
so designated by Fresh Foods.
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"Disclosure Memorandum" means the memorandum, identified as such,
executed and delivered by Xxxxxx contemporaneously with the execution and
delivery of this Agreement.
"Employee Benefit" refers to employment-related obligations of Xxxxxx,
including all actual or contingent liabilities relating to unemployment, health,
injury, death and retirement, as well as any and all items of a similar nature.
"Employees" is defined in Section 3.17.
"Encumbrance" means any mortgage, charge (whether fixed or floating),
security interest, pledge, right of first refusal, lien (including, without
limitation, any unpaid vendor's lien), option, hypothecation, title retention or
conditional sale agreement, lease, option, restriction as to transfer or
possession, or subordination to any right of any other Person.
"ERISA" is defined in Section 3.17.
"ERISA Affiliate" is defined in Section 3.17.
"Excluded Assets" means (i) the assets of Xxxxxx identified as Excluded
Assets on Schedule A hereto, (ii) the Caryville, Tennessee and the Albert Lea,
Minnesota facilities (other than the items of personal property thereat
identified as "Transferred Assets" pursuant to clause (iv) of the definition
thereof included herein), (iii) any items of rolling stock not specifically
identified as Transferred Assets, (iv) all inventories and accounts receivable
used for or derived from, and all contract rights related to, the sale of
chicken products to or in connection with Sam's Club, Burger King Corporation
(and Restaurant Services, Inc.) and Subway (and Independent Purchasing
Cooperative, Inc.) or of products marketed under the Classic Seasons line,
including those sold to Price/Costco, (v) any assets (including, without
limitation, books, records and documents) relating to the Business formerly
operated by Xxxxxx as its Specialty Foods Division which are not a part of, or
directly related to, the Business and (vi) any other assets of Xxxxxx used in
the Business which are not located in the Business's facility in Cincinnati,
Ohio (unless such asset is specifically identified as a "Transferred Asset").
"Excluded Liabilities" means any liability of Xxxxxx to Tyson or to any
Affiliate of Tyson or with respect to, or arising from, (i) the Salary
Continuation Plan Agreements between Xxxxxx and each of Xxxxxxx Xxxxxxxx, Xxxxxx
Xxxxxx and Xxxxxxx Xxxxxxxxxxx, (ii) Xxxxxxx Xxxxxxxx' Loyalty Bonus Plan, (iii)
employment-related matters related to its Caryville, Tennessee facility, (iv)
any Excluded Asset and (v) the Beef Recall.
"February Net Book Value" means the book value of the Transferred
Assets less the book value of the Assumed Liabilities as of February 28, 1998,
determined with reference to the Balance Sheet.
"GAAP" means United States generally accepted accounting principles,
consistently applied.
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"Governmental Entity" means any court or any governmental or other
administrative or regulatory authority, department, ministry, agency or
commission, whether federal, state or local, domestic or foreign.
"Xxxxxx Transition Services" is defined in Section 6.23.
"Indemnified Party" is defined in Section 6.9.
"Indemnifying Party" is defined in Section 6.9.
"Intellectual Property" shall mean (i) the patents, trademarks, service
marks and trade names listed on Schedule 3.19 of the Disclosure Memorandum, the
other trade rights, copyrights and applications for issuance or registration of
any of the foregoing, and (ii) the trade secrets, software computer codes,
product codes, data bases and other confidential, nonpublic, or similar
information necessary to the conduct of the Business as the same is presently
conducted (including, without limitation, ideas, formulas, compositions,
inventions (whether patentable or unpatentable and whether or not reduced to
practice), know-how, manufacturing and production processes and techniques,
research and development information, drawings, specifications, designs, plans,
proposals, technical data, copyrightable works, financial and marketing plans
and customer and supplier lists and information). Notwithstanding the foregoing,
"Intellectual Property" shall not include any right, title or interest in the
names "Tyson", "Xxxxxx" and "Xxxxxxxxxx."
"Invention" is defined in Section 6.26.
"Knowledge of Xxxxxx" or "Xxxxxx'x Knowledge" (or words of similar
import) refers to all those things known by Xxxxxx Xxxxxxx, Xxxxx Xxxxx, Xxxxxx
Xxxxxxxxx, Xxx March, Xxxxx Xxxxxxxxxxx, Xxxx Xxxxx, Xxx Xxxxxx, Xxxxxxxx
Xxxxxxxx, Read Xxxxxx and Xxxxxxxx Xxxxx, or that would be known by any of them
after reasonable inquiry about the thing or things in question.
"Litigation" is defined in Section 3.11.
"Material Adverse Effect" means a material adverse effect on or change
in (i) the business, assets, financial condition or prospects of the Business,
(ii) the relationship of Xxxxxx with any material customer or supplier of the
Business, (iii) any Material Contract or (iv) the transactions contemplated by
this Agreement.
"Material Contract" is defined in Section 3.8.
"Neutral Auditors" is defined in Section 2.5.
"Patent Application" is defined in Section 6.26.
"Permit" includes any approval, authorization, certificate of
convenience and necessity, qualification, consent, franchise, license, security
clearance, easement, order or other permit issued or granted by any Governmental
Entity.
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"Permitted Encumbrances" is defined in Section 3.4.
"Person" means a corporation, partnership, trust, limited liability
company, other business entity or individual.
"Plans" is defined in Section 3.17.
"Real Property" is defined in Section 3.4.
"Resolution Period" is defined in Section 2.5.
"Restricted Territory" is defined in Section 6.12.
"Rule" means any law, statute, rule, regulation, order, court decision,
judgment or decree of any federal, state, territorial, provincial or municipal
authority.
"Tax" or "Taxes" means all forms of levies, taxes, customs and other
duties normally deemed to be of a fiscal or customs nature, including but not
limited to (a) all taxes levied, imposed or assessed under the Code or any Rule,
in the United States or elsewhere; (b) all taxes in the nature of an income tax,
use tax, sales tax, consumption tax, value added tax, payroll tax, group tax,
undistributed profits tax, fringe benefits tax, recoupment tax, withholding tax,
land tax, water rates, municipal rates, stamp duties, gift duties or other
state, territorial, provincial or municipal charges or impositions levied,
imposed or collected by any Governmental Entity; and (c) any additional tax,
interest, penalty, charge, fee or other amount of any kind assessed, charged or
imposed in relation to the non-, late, short or incorrect payment of the same or
the failure to file any return.
"Threshold" is defined in Section 6.9.
"Transferred Accounts" means those bank accounts listed on Schedule A.
"Transferred Assets" means all right, title and interest of Xxxxxx in,
to and under all of the properties, assets and rights of Xxxxxx referred to in
clauses (i) through (xii) below, but only to the extent that such properties,
assets and rights are primarily related to, primarily used in or dedicated to,
or otherwise necessary to, the Business and are not Excluded Assets:
(i) All interests (both freehold and leasehold) in the Real Property,
together with all related certificates of occupancy, Permits, plans,
specifications, surveys, inspection reports, site inspections and related books
and records, as set forth in Schedule A to this Agreement;
(ii) All bank balances in any Transferred Account, cash, and similar
cash items on hand;
(iii) All raw materials, work-in-process, finished goods, packaging and
other inventories and all tools, spare parts and supplies (together with the
right to sell, transfer or
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otherwise convey finished goods bearing the names and marks of Xxxxxx, Xxxxx and
Schwiegert; excluding, however, any and all unused packaging materials bearing
the names and marks of Xxxxxx, Xxxxx and Schwiegert);
(iv) All interests (whether leasehold or otherwise) in fixed
machinery and equipment, other fixtures and fittings, moveable plant, machinery
and equipment, furniture and fixtures and other items of personal property
located on the Real Property or identified on Schedule A;
(v) All interests (whether leasehold or otherwise) in automobiles,
trucks, tractors, trailers, rail cars and other vehicles identified on Schedule
A;
(vi) The Intellectual Property;
(vii) The Contracts;
(viii) All accounts receivable and cash proceeds therefrom related to
the Transferred Assets or otherwise part of the Business;
(ix) All prepaid items and deposits, rebates, refunds (other than
income Tax refunds), causes of action, choses in action, rights of recovery and
rights of set-off of any kind;
(x) Originals of all books and records relating to the Business;
(xi) All going concern value of the Business; and
(xii) All other assets, tangible and intangible, real, personal and
mixed, whether currently in use or idle, whether or not specifically referred to
herein or in any instrument of conveyance delivered pursuant hereto, that are
primarily related to, primarily used in or dedicated to the Business, or
otherwise necessary to the Business, and are not Excluded Assets.
"Warranty" means any representation or warranty of Xxxxxx made in this
Agreement or in any certificate or other document delivered by it or on its
behalf in connection with this Agreement.
ARTICLE 2
TERMS OF TRANSACTION
2.1 Purchase and Sale of the Business. Upon the terms and subject to
the conditions of this Agreement, Fresh Foods shall purchase the Business and
the Transferred Assets from Xxxxxx and Xxxxxx shall sell, transfer and assign
the Business and the Transferred Assets to Fresh Foods.
2.2 Consideration. Subject to the post-closing adjustment described in
Section 2.5 hereinbelow, in consideration of the sale, transfer and assignment
to Fresh Foods of the Business and the Transferred Assets, Fresh Foods shall pay
Xxxxxx the sum of One Hundred Twenty-Two Million Dollars ($122,000,000.00) (the
"Purchase Price") and shall assume the Assumed Liabilities.
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2.3 Payment. The Purchase Price (which is subject to a post-closing
adjustment pursuant to Section 2.5 below) shall be paid by wire transfer of
immediately available funds to an account to be designated by Xxxxxx at least 48
hours prior to the Closing.
2.4 The Closing.
(a) The Closing shall occur, subject to the satisfaction or waiver of
the conditions set forth herein, at such place and time, and on such date (not
to be later than June 19, 1998), as the parties shall agree upon in writing.
(b) At the Closing the following events shall occur, each event being
deemed to have occurred simultaneously with the other events:
(i) Xxxxxx shall deliver to Fresh Foods such deeds, Bills of Sale,
assignments, licenses, affidavits, instruments of conveyance and other
instruments and certificates, and all books and records to be transferred, as
are necessary or reasonably requested by Fresh Foods to consummate the transfer
of all of the Transferred Assets to Fresh Foods as contemplated by this
Agreement. All Transferred Assets shall be deemed delivered at the locations
where they are used in the Business immediately prior to the Closing;
(ii) Fresh Foods shall deliver to Xxxxxx the Purchase Price;
(iii) Fresh Foods shall execute and deliver to Xxxxxx one or more
Assumption Agreements, each substantially in the form attached hereto as Exhibit
A (with appropriate changes therein resulting from the nature of the liabilities
to be assumed and the particular jurisdictions involved), as necessary or
reasonably requested by Xxxxxx to effect the assumption by Fresh Foods of all of
the Assumed Liabilities; and
(iv) Xxxxxx shall execute and deliver to Fresh Foods one or more
assignments or licenses in a form or forms reasonably requested by Fresh Foods
to effect the sale, transfer, conveyance, assignment and/or license of the
Intellectual Property not otherwise transferred by the Xxxx of Sale.
2.5 Post-Closing Adjustment in Purchase Price. (a) Procedures for
Determination of the Closing Net Book Value. As soon as practicable, but in no
event later than 30 days following the Closing Date, Fresh Foods with the
cooperation of Xxxxxx (as provided below) shall prepare a statement indicating
the book value of the Transferred Assets less the book value of the Assumed
Liabilities as of the Closing Date (the "Closing Net Book Value"). The Closing
Net Book Value shall be calculated by Fresh Foods utilizing, to the extent
possible, such carrying values for Transferred Assets and Assumed Liabilities as
they appear on the Balance Sheet or can be derived therefrom and in all events
shall be calculated by implementing the Accounting Practices. In determining the
Closing Net Book Value, no reserve established for inventory, accounts
receivable or other assets, or for any liability, shall be reduced below the
Balance Sheet balance for any such item (computed independently of all other
items). During the preparation of the statement stating the Closing Net Book
Value and the period of any dispute within the contemplation of Section
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2.5(b), Xxxxxx shall cooperate fully with Fresh Foods and Fresh Foods'
authorized representatives, including providing on a timely basis all
information necessary or useful in preparing the Closing Net Book Value.
(b) Delivery of the Statement Containing Closing Net Book Value;
Dispute Resolution. Fresh Foods shall deliver a copy of the statement containing
the Closing Net Book Value to Xxxxxx promptly after it has been prepared. After
receipt of the Closing Net Book Value, Xxxxxx shall have 15 days to review the
Closing Net Book Value. In doing so, Xxxxxx and its authorized representatives
shall have reasonable access to all relevant books and records and employees of
the Business to the extent required to complete their review of the Closing Net
Book Value. Unless Xxxxxx delivers written notice to Fresh Foods on or prior to
the 15th day after Xxxxxx'x receipt of the statement indicating the Closing Net
Book Value, specifying in reasonable detail all disputed items and the basis
therefor, Xxxxxx shall be deemed to have accepted and agreed to the Closing Net
Book Value. If, however, Xxxxxx notifies Fresh Foods that it objects to the
Closing Net Book Value, then Xxxxxx and Fresh Foods shall, within 30 days
following such notice (the "Resolution Period"), attempt to resolve their
differences, and any resolution by them as to any disputed amounts shall be
final, binding and conclusive. If, at the conclusion of the Resolution Period,
there remain items in dispute, then all disputed items shall be submitted to a
firm of nationally recognized independent public accountants (the "Neutral
Auditors") selected by Fresh Foods and Xxxxxx within 10 days after the
expiration of the Resolution Period (which Neutral Auditors shall not have been
engaged directly by any party hereto within the preceding two years). If Fresh
Foods and Xxxxxx are unable to agree on the Neutral Auditors, then Fresh Foods
shall appoint an accounting firm and Xxxxxx shall appoint an accounting firm.
Such appointed accounting firms shall thereafter mutually appoint another
nationally recognized accounting firm to be the Neutral Auditors. All fees and
expenses relating to the work, if any, to be performed by the Neutral Auditors
shall be borne equally by Fresh Foods and Xxxxxx. The Neutral Auditors shall act
as an arbitrator to determine, based solely on presentations by Fresh Foods and
Xxxxxx, and not by independent review, only those issues still in dispute. The
Neutral Auditors' determination shall be made within 30 days of their selection,
shall be set forth in a written statement delivered to Xxxxxx and Fresh Foods
and shall be final, binding and conclusive. The term "Adjusted Closing Net Book
Value," as hereinafter used, shall mean the definitive Closing Net Book Value
agreed to by Xxxxxx and Fresh Foods in accordance with this Section 2.5(b) or
the definitive Closing Net Book Value resulting from the determinations made by
the Neutral Auditors in accordance with this Section 2.5(b) (in addition to
those items theretofore agreed upon by Fresh Foods and Xxxxxx).
(c) Adjustment to Purchase Price Based Upon Adjusted Closing Net Book
Value. Fresh Foods and Xxxxxx agree that, in the event that the Adjusted Closing
Net Book Value is more or less than the February Net Book Value, the Purchase
Price shall be adjusted dollar for dollar. If the Adjusted Closing Net Book
Value is more than the February Net Book Value, then Fresh Foods shall pay the
excess plus interest thereon at the Wall Street Journal "Prime Rate" as of the
Closing Date, from the Closing Date to the date of payment, to Xxxxxx, by
delivering such amount by wire transfer not later than seven days after the date
of determination of the Adjusted Closing Net Book Value. If the Adjusted Closing
Net Book Value is less than the February Net Book Value, then Xxxxxx shall pay
the deficit plus interest thereon at the Wall Street Journal "Prime Rate" as of
the Closing Date, from the Closing Date to the date of payment, to Fresh
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Foods, by delivering such amount by wire transfer not later than seven days
after the date of determination of the Adjusted Closing Net Book Value.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF XXXXXX
To induce Fresh Foods to execute, deliver and perform this Agreement,
and in acknowledgment of Fresh Foods's reliance on the following Warranties,
Xxxxxx hereby represents and warrants to Fresh Foods as follows as of the date
hereof and as of the Closing; provided, however, that the Warranties set forth
in Sections 3.5, 3.6, 3.8, 3.9, 3.10, 3.11, 3.15, 3.16, 3.19, 3.23 and 3.24
hereinbelow are made only to the Knowledge of Xxxxxx and, provided further, that
the Warranties set forth in Section 3.5 are made only as of the date hereof.
3.1 Organization and Qualification of Xxxxxx. Xxxxxx has been duly
organized and is validly existing and in good standing under the laws of the
jurisdiction of its organization and has full power and authority to conduct the
Business and to own or lease and operate the Transferred Assets it now owns or
leases and operates. Xxxxxx is duly qualified to do business as a foreign
corporation and is in good standing in all jurisdictions where the activities
conducted by it or the nature of the assets or properties owned or leased by it
make such qualification necessary, except where the failure to so qualify would
not have a Material Adverse Effect.
3.2 Authorization of Agreement. Xxxxxx has all requisite corporate
power and authority needed to execute, deliver and perform this Agreement and to
consummate the transactions contemplated on its part hereby. All of the issued
and outstanding capital stock of Xxxxxx is owned by Tyson. The execution,
delivery and performance by Xxxxxx of this Agreement and the consummation by
Xxxxxx of the transactions contemplated on its part hereby have been duly
authorized by all necessary corporate proceedings. This Agreement has been duly
and validly executed and delivered by Xxxxxx and, assuming the valid execution
by Fresh Foods of this Agreement, constitutes a valid and binding agreement of
Xxxxxx, enforceable against Xxxxxx in accordance with its terms, subject to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
3.3 Non-Contravention. Except as disclosed on Schedule 3.3 of the
Disclosure Memorandum, neither the execution, delivery and performance by Xxxxxx
of this Agreement nor the performance or consummation on the part of Xxxxxx
will, with or without the giving of notice or the lapse of time, or both, (i)
conflict with, result in a breach, violation or default under or the termination
of, or require the consent of any party to, or create in any party the right to
accelerate, terminate, modify or cancel, any Material Contract; (ii) result in
the creation or imposition of any material Encumbrance upon any of the
Transferred Assets pursuant to any provision of any indenture, mortgage, lease,
agreement, license or other instrument to which Xxxxxx is a party or by which
Xxxxxx may be bound; (iii) violate any provision of the Charter Documents of
Xxxxxx; (iv) violate any Law, order or Permit other than such violations that,
individually or in the aggregate, have not resulted in and could not be
considered reasonably likely to result in, individually or in the aggregate, a
Material Adverse Effect; or (v) violate or conflict with any other material
restriction to which Xxxxxx is subject, except for such violations or conflicts
which have
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not resulted in and would not be considered reasonably likely to result in,
individually or in the aggregate, a Material Adverse Effect.
3.4 Title to and Condition of Assets. Xxxxxx is the true and lawful
owner of, and holds good and marketable title to, all of the Transferred Assets
free and clear of any and all Encumbrances, except for Encumbrances that are not
and cannot reasonably be expected to be material ("Permitted Encumbrances"),
either individually or in the aggregate, and except for liens for Taxes not yet
due and payable. Upon the execution and delivery by Xxxxxx of the instruments of
conveyance referred to in Section 2.4(b), Fresh Foods will become the true and
lawful owner of, and will receive good and marketable title to, the Transferred
Assets free and clear of any Encumbrances other than Permitted Encumbrances. The
Transferred Assets constitute all of the tangible and intangible property
primarily related to, primarily used in, dedicated to or otherwise necessary to
the conduct of the Business as presently conducted. The sale and assignment of
the Transferred Assets will effectively convey to Fresh Foods all of the assets,
properties and rights that are primarily related to, primarily used in,
dedicated to or otherwise necessary to the conduct of the Business as presently
conducted. The tangible Transferred Assets, including, without limitation, the
physical plant and structures located upon the Real Property, have been
maintained in accordance with normal industry practice, are in good operating
condition and repair (subject to normal wear and tear) and are suitable for the
purposes for which they presently are used. Schedule 3.4 of the Disclosure
Memorandum includes a list of all fee and leasehold real property interests
constituting part of the Transferred Assets (the "Real Property").
Notwithstanding the foregoing, as for Transferred Assets other than the Real
Property, the Warranties made in this Section 3.4 are subject to the Knowledge
of Xxxxxx. Xxxxxx and Fresh Foods acknowledge a title exception regarding
utility easements which affects the Real Property. Xxxxxx shall be responsible
for the cost of clearing said exception prior to the issuance of a final title
policy in favor of Fresh Foods and/or its lender, whether such policy is issued
prior to or following the Closing Date.
3.5 Certain Financial Information. The Balance Sheet has been prepared
in accordance with the Accounting Practices, fully and accurately sets forth in
all material respects the financial condition of the Business as of the date
thereof and has been properly derived from the books and records of the
Business.
3.6 Absence of Certain Changes in Business. Except as disclosed on
Schedule 3.6 of the Disclosure Memorandum, since February 28, 1998 the
operations of the Business have been conducted in the ordinary course of
business consistent with past practice, and, with respect to the Business,
Xxxxxx has not:
(a) experienced or suffered any changes that have resulted in, or could
reasonably be expected to result in, individually or in the aggregate, a
Material Adverse Effect;
(b) created, incurred or assumed any liability or entered into any
transaction relating to the Business which is outside the ordinary course of
business and exceeds $5,000 individually or $50,000 for any series of similar
liabilities or transactions;
(c) made any loans or advances to any Person (other than Tyson) or any
investment in any Person;
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(d) waived or released, or experienced any lapse of, any material
rights of value relating to the Business, or canceled, compromised, released or
assigned any liability owed to it or any claim held by it that would be a
Transferred Asset, other than in the ordinary course of business consistent with
past practice;
(e) sold or otherwise transferred or conveyed any asset that would be a
Transferred Asset otherwise than in the ordinary course of business and on an
arm's length basis, consistent with past practice;
(f) mortgaged, pledged or subjected to any material Encumbrance any
Transferred Asset, or in any way created or consented to the creation of any
title condition affecting any such asset, other than in the ordinary course of
business consistent with past practice;
(g) (A) increased the rate or terms of compensation payable or to
become payable to its officers, consultants or employees who are expected to
continue to be engaged in the conduct of the Business after the Closing Date,
other than in the ordinary course of business consistent with past practice, (B)
except as required by applicable law or in the ordinary course of business
consistent with past practice, paid or agreed to pay any pension, retirement
allowance or other employee benefit not required or permitted by any existing
plan, agreement or arrangement as the same may be amended with respect to all
participants therein to any of such officers, consultants or employees, (C)
except as required by applicable law or in the ordinary course of business
consistent with past practice, committed itself to any new pension, profit
sharing, bonus, incentive, deferred compensation, stock purchase, stock option,
stock appreciation right, group insurance, severance pay, retirement or other
employee benefit plan, agreement or arrangement relating to the Business or
agreed to increase the rate or improve the terms of any such existing plan,
agreement or arrangement which commitment or increase could impose any
incremental cost on Fresh Foods or any of its Affiliates beyond the Closing Date
or (D) entered into any employment or consulting agreement with or for the
benefit of any person referred to in clause (A) above;
(h) purchased any real property relating to the Business or, other than
in the ordinary course of business on an arm's length basis consistent with past
practice, entered into any lease or terminated or made any change in any
existing lease relating to the Business;
(i) received any notice of or become aware of any loss of any customer,
or of several similar customers, representing $250,000 or more of the annual
sales of any material product segment as of February 28, 1998;
(j) made any material alteration in the manner of keeping the books,
accounts or records of the Business or in the Accounting Practices therein
reflected, except as required by law or generally accepted accounting
principles;
(k) entered into or engaged in any transaction in respect of the
Business other than on commercially reasonable terms determined on the basis of
the facts existing at the time such transaction was entered into or engaged in;
or
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(l) agreed to take or allow any of the foregoing actions described in
this Section 3.6.
3.7 Certain Tax Matters. (a) No tax is required to be withheld pursuant
to Section 1445 of the Code as a result of the consummation of the transactions
contemplated by this Agreement.
(b) (i) There are no liens for Taxes (other than the Taxes described in
subsection (ii) hereof) on any of the Transferred Assets, (ii) to the Knowledge
of Xxxxxx, there are no liens for property, sales, excise and fuel Taxes on any
of the Transferred Assets, and (iii) to the Knowledge of Xxxxxx, there is no
basis for the assertion of any such lien.
3.8 Contracts. Schedule 3.8 of the Disclosure Memorandum contains a
true and complete list as of the date hereof of each of the following Contracts
relating to the Business: (A) each Contract for the lease of Transferred Assets
from or to third parties providing for payments in excess of $5,000 per annum
and which cannot be terminated by Xxxxxx without material penalty, premium or
any further obligation within 30 days from the date of notice of intent to
cancel; (B) each Contract relating to the Business for the purchase, sale or
distribution of raw materials, commodities, supplies, products or other personal
property or for the furnishing or receipt of services that involves aggregate
payments by any party thereto of more than $50,000 and which cannot be
terminated by Xxxxxx without material penalty, premium or any further obligation
within 30 days from the date of notice of intent to cancel; (C) other than
distributorship and representative agreements of Xxxxxx, each Contract that
limits the freedom of Xxxxxx to engage in any line of business or compete in any
geographical area in respect of the Business; (D) each Contract concerning any
employee, officer or director of Xxxxxx relating to the Business that (x) is not
terminable without notice and without material penalty, premium or any further
obligation or (y) provides for any payments or vesting or acceleration of
benefits upon a change of control of the Business; (E) each Contract that
licenses or sublicenses, or otherwise provides access to, any of the
Intellectual Property; and (F) each other Contract relating to the Business that
involves aggregate payments by any party thereto of more than $100,000 and which
cannot be terminated by Xxxxxx without material penalty, premium or other
further obligation within 30 days from the date of notice of intent to cancel.
Each of the foregoing Contracts is hereinafter referred to as a "Material
Contract." Neither Xxxxxx nor any other party to any Material Contract is in
default under any of the Material Contracts and no condition exists with respect
to any Material Contract that, with the giving of notice or the lapse of time,
or both, would constitute a default thereunder and has resulted in, or could
reasonably be expected to result in, individually or in the aggregate, a
Material Adverse Effect. Except as specified on Schedule 3.8 of the Disclosure
Memorandum, Xxxxxx has the right to assign and transfer to Fresh Foods all of
its respective right, title and interest in and to all of the Material Contracts
without the consent of the other parties to such Material Contracts, and no
Material Contracts are or will be terminable, or will otherwise result in a
change of rights thereunder, by reason of the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
3.9 Compliance with Laws; Permits. Except as disclosed on Schedule 3.9
of the Disclosure Memorandum, Xxxxxx is in compliance with all Rules applicable
to the Business, except for incidents of noncompliance that have not resulted
in, and could not be considered reasonably likely to result in, individually or
in the aggregate, a Material Adverse Effect. Xxxxxx
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holds, maintains in valid condition and complies with all Permits that relate to
the Business and the Transferred Assets and that are required in connection with
the conduct, use, operation or ownership thereof, except for Permits the failure
of which to hold, maintain or comply with have not resulted in, and could not
reasonably be expected to result in, individually or in the aggregate, a
Material Adverse Effect on any material part of the Business. No governmental
proceeding is pending or threatened to cancel, amend, modify or fail to renew
any such Permit.
3.10 Regulatory Approvals. Except as disclosed on Schedule 3.10 of the
Disclosure Memorandum, no notices, reports or other filings are required to be
made by Xxxxxx with, nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by Xxxxxx from, any Governmental Entity
in connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, the failure of which to
make or obtain any or all of which (i) is reasonably likely to be material to
any part of the Business, (ii) would prevent, delay or burden the transactions
contemplated by this Agreement or (iii) could subject Xxxxxx, Fresh Foods or any
of their respective Affiliates to any material liability.
3.11 Litigation. Except as disclosed on Schedule 3.11 of the Disclosure
Memorandum, there is no legal, administrative or other action, claim, proceeding
or governmental investigation, domestic or foreign ("Litigation"), pending or
threatened (i) against Xxxxxx affecting the Business that, if adversely
determined, could reasonably be expected to result in, individually or in the
aggregate, a Material Adverse Effect or (ii) that challenges or reviews the
execution, delivery or performance of this Agreement by Xxxxxx or of the
consummation of the transactions contemplated hereby, or that seeks to enjoin or
obtain damages in respect of the consummation of any of the transactions
contemplated hereby. Xxxxxx is not a party to and is not bound by any order or
any ruling or award of any other Person that has resulted in or could reasonably
be expected to result in, individually or in the aggregate, a Material Adverse
Effect or which could reasonably be expected to materially adversely affect the
consummation of the transactions contemplated hereby.
3.12 Environmental Matters. Xxxxxx has delivered to Fresh Foods copies
of all environmental reports, studies, assessments, sampling data and other
environmental information in its custody or control relating to the Business.
3.13 Product Liability. There is no Litigation pending or, to the
Knowledge of Xxxxxx, threatened, relating to claims of product liability to
which Xxxxxx has been a party in connection with the Business which, if
determined adversely, could be considered reasonably likely to result in,
individually or in the aggregate, a Material Adverse Effect.
3.14 Insurance. All material policies of fire, casualty, liability,
burglary, fidelity, worker's compensation, life and other forms of insurance
owned or held by Xxxxxx related to the Business are disclosed on Schedule 3.14
of the Disclosure Memorandum, with an indication of the period during which each
such policy has been in full force and effect; and such policies or extensions,
renewals or replacements (on comparable terms to the extent available) thereof
in such amounts will be outstanding and in full force and effect without
interruption until the Closing Date. In respect of all insurance programs set
forth in such Schedule, (a) all premiums have been
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duly paid when due to date and (b) to the Knowledge of Xxxxxx none are voidable
on account of any act, omission or non-disclosure on the part of the insured
party.
3.15 Prepayments. There are no material contractual prepayments or
advance payments, made or received, relating to executory contracts of the
Business.
3.16 Suppliers. The conduct of the Business is not, and Xxxxxx does not
reasonably expect that it will during the next year be, dependent for raw
materials, components or services upon any suppliers that cannot be replaced by
Fresh Foods, upon consummation of the transactions contemplated hereby, without
materially affecting a material part of the Business. Xxxxxx has no Knowledge
regarding the loss or possible loss in the future of any such suppliers to the
Business.
3.17 Employee Matters. (a) Schedule 3.17 of the Disclosure Memorandum
sets forth (i) a list of all individuals employed in the Business by Xxxxxx and
all independent contractors, consultants and agents employed by or retained by
Xxxxxx in connection with the Business who receive annual compensation in excess
of $50,000 as of the date of this Agreement and their date of hire by Xxxxxx and
(ii) all contracts concerning any employee, officer, director or consultant of
Xxxxxx relating to the Business, whether or not Material Contracts.
(b) Schedule 3.17 of the Disclosure Memorandum accurately lists all
bonus, deferred compensation, pension, retirement, profit-sharing, deferred
profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock and stock option plans, all employment or severance
contracts, other material employee benefit plans and applicable "change of
control" or similar provisions in any plans, contracts and arrangements that
cover current employees of the Business (the "Compensation and Benefit Plans").
The Compensation and Benefit Plans and all other benefit plans, contracts and
arrangements (whether funded or unfunded, foreign or domestic, registered or
unregistered) covering current employees of the Business (collectively,
"Employees"), including but not limited to "employee benefit plans" within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1976
("ERISA"), are disclosed on Schedule 3.17 of the Disclosure Memorandum. True and
complete copies of all Compensation and Benefit Plans and such other benefit
plans, contracts and arrangements, including but not limited to any trust
instruments and insurance contracts, if any, forming a part of such plans
contracts and arrangements, and all amendments thereto, all funding or actuarial
reports or valuations and all summary plan descriptions required by ERISA
concerning the Compensation and Benefit Plans that affect the Employees or their
dependents, have been made available to Fresh Foods. Fresh Foods has been given
a statement of the employer and employee contribution rates to all of the
Compensation and Benefit Plans. The documents relating to the Compensation and
Benefit Plans that have been disclosed to Fresh Foods contain full particulars
of all of the benefits provided by, and the terms of, the Compensation and
Benefit Plans.
(c) All employee benefit plans, other than "multi-employer plans"
within the meaning of Section 3(37) or 4001(a)(3) of ERISA, covering Employees
(the "Plans"), to the extent subject to ERISA, are in substantial compliance
with ERISA. There is no material pending or, to the Knowledge of Xxxxxx,
threatened litigation relating to the Plans. Xxxxxx has not engaged in a
transaction with respect to any Plan that, assuming the taxable period of such
transaction expired as
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of the date hereof, could subject Xxxxxx to a tax or penalty imposed by either
Section 4975 of the Code or Section 502(i) or ERISA in an amount which would be
material.
(d) No liability under Subtitle C or D of Title IV of ERISA has been or
is expected to be incurred by Xxxxxx or any of its Affiliates with respect to
any ongoing, frozen or terminated "single-employer plan," within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained by any of them,
or the single-employer plan of any entity which is considered one employer with
Xxxxxx under Section 4001 of ERISA or Section 414 of the Code (an "ERISA
Affiliate"). Xxxxxx and its Affiliates have not incurred and do not expect to
incur any withdrawal liability with respect to a multi-employer plan under
Subtitle E of Title IV of ERISA (regardless of whether based on contributions of
an ERISA Affiliate).
(e) All contributions required to be made under the terms of any
Compensation and Benefit Plan have been timely made or have been reflected on
the Balance Sheet. Neither any Plan nor any single-employer plan of an ERISA
Affiliate has an "accumulated funding deficiency" (whether or not waived) within
the meaning of Section 412 of the Code or Section 302 of ERISA and no ERISA
Affiliate has an outstanding funding waiver. Xxxxxx has not provided, nor is it
required to provide, security to any Plan or to any single-employer plan of an
ERISA Affiliate pursuant to Section 401(a)(29) of the Code.
(f) No collective bargaining (or similar) agreement covers any Person
employed in the Business, and, except for the current and ongoing "card signing
campaign", no union organizing effort has been initiated or, to the Knowledge of
Xxxxxx, is in prospect relative to any part of the Business. Except as disclosed
on Schedule 3.17 of the Disclosure Memorandum, since January 1, 1996: (i) to the
Knowledge of Xxxxxx, no attempt to organize any group or all of the persons
employed in the Business has been made; (ii) there currently is not, and there
has not been, any labor strike, dispute, lockout, slowdown or stoppage against
the Business, and none of the foregoing in the past was or, to the Knowledge of
Xxxxxx, is threatened; (iii) Xxxxxx is in compliance in all material respects
with all laws respecting employment and employment practices, terms and
conditions of employment and wages and hours pertaining to persons employed in
the Business, including applicable requirements of the Immigration and
Nationality Act of 1952, as amended by the Immigration Reform and Control Act of
1986, and regulations promulgated thereunder; (iv) no unfair labor practice
charge or complaint involving the Business or persons employed in the Business
is pending or, to the Knowledge of Xxxxxx, threatened to be filed; (v) no charge
or grievance relating to persons employed in the Business is pending before the
U.S. Equal Employment Opportunity Commission; and (vi) no agreement would
restrict Fresh Foods from relocating, closing or terminating any operations or
facilities of the Business.
(g) All of Xxxxxx'x Compensation and Benefit Plans that are group
health plans (within the meaning of Section 5000(b)(1) of the Code) or group
dental plans covering Employees include provisions that will allow Fresh Foods
to elect, in its sole discretion, to extend coverage under such plans for a
period of up to six months after the Closing Date for those Employees (and their
dependents) who accept employment with Fresh Foods and who have coverage
immediately prior to the Closing under any one of Xxxxxx'x Compensation and
Benefit Plans that are group health plans (within the meaning of Section
5000(b)(1) of the Code) or group dental plans.
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3.18 OSHA and Similar Matters. Since January 1, 1996, there have been
no citations, or, to the Knowledge of Xxxxxx, complaints, received from any
Governmental Entity by Xxxxxx or Tyson relating to the Business, nor has any
Litigation been commenced or, to the Knowledge of Xxxxxx, threatened, against
Xxxxxx or Tyson relating to the Business, with respect to any material violation
or alleged material violation of any Laws governing occupational health and
safety matters.
3.19 Intellectual Property. (a) Xxxxxx owns or has the enforceable
right to use all Intellectual Property to be conveyed pursuant to this
Agreement. Upon execution and delivery of the instruments of conveyance referred
to in Section 2.4(b), each such item of Intellectual Property owned by Xxxxxx
will be owned by Fresh Foods immediately following the Closing, and each such
item of Intellectual Property available for use by Xxxxxx will be available for
use by Fresh Foods on substantially similar terms and conditions immediately
following the Closing. Xxxxxx has taken all reasonably necessary measures to
protect the proprietary and confidential nature of each item of Intellectual
Property. No other Person has any rights in or to any of the Intellectual
Property, and no other Person is infringing, violating or misappropriating any
of the Intellectual Property.
(b) Except as disclosed on Schedule 3.19 of the Disclosure Memorandum,
the business, operations and activities of the Business as presently conducted
or as conducted at any time within the two years prior to the date of this
Agreement have not infringed or violated, or constituted a misappropriation of,
and do not now infringe or violate, or constitute a misappropriation of, any
intellectual property rights of any other Person (including, without limitation,
any Affiliate of Xxxxxx). Except as disclosed on Schedule 3.19 of the Disclosure
Memorandum, Xxxxxx has not received, since January 1, 1996, any complaint, claim
or notice alleging any such infringement, violation or misappropriation.
(c) Schedule 3.19 of the Disclosure Memorandum identifies each
trademark registration and application therefor which has been issued to or is
owned by Xxxxxx with respect to any Intellectual Property and each pending
patent or trademark application or application for registration which Xxxxxx has
filed or which Xxxxxx owns with respect to any Intellectual Property and, with
respect to each such trademark, trademark registration and trademark or
registration application, and the jurisdiction or jurisdictions where such
filings have been made. With respect to each item of Intellectual Property that
Xxxxxx owns:
(i) Xxxxxx possesses all right, title and interest in and to such
items;
(ii) such item is not subject to any outstanding judgment, order,
decree, stipulation or injunction; and
(iii) except for indemnity provisions in Xxxxxx'x standard terms and
conditions or supply contracts, Xxxxxx has not agreed to indemnify any Person
for or against any infringement, violation or misappropriation with respect to
such item.
3.20 Insider Interests. No officer or director of Xxxxxx or of any
Affiliate of Xxxxxx, and no Affiliate or associate of any such officer, director
or Affiliate, has any material interest in
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any material property, whether real, personal or mixed, tangible or intangible,
used in or pertaining to the Business, except as an employee or director
thereof.
3.21 Administration. Schedule 3.21 of the Disclosure Memorandum sets
forth a detailed list of material administrative and central office services
that, as of the date hereof, Xxxxxx or its Affiliates perform for the Business
or that the Business performs for Xxxxxx or its Affiliates that are not included
within the Business.
3.22 Investment Bankers, Etc. Neither Xxxxxx nor any of its Affiliates
has retained or dealt with any investment bank, broker, dealer, finder,
consultant or other intermediary or incurred any liability for any investment
banking, brokerage, finder's, consultant's or other intermediary's fees or
expenses in connection with the transactions contemplated by this Agreement.
3.23 Inventory. All inventory of the Business, whether or not reflected
on the Balance Sheet (net of reserves reflected (i) on the Balance Sheet or (ii)
on the books and records relating to the Business and accrued in the ordinary
course of business consistent with past practice since February 28, 1998), is of
a quality and quantity usable and saleable in the ordinary course of business,
except for scrap, obsolete or excess items, all of which have been accounted for
in accordance with the Accounting Practices.
3.24 Accounts Receivable. Except as disclosed on Schedule 3.24 of the
Disclosure Memorandum, all accounts receivable reflected on the Balance Sheet
(net of reserves reflected (i) on the Balance Sheet or (ii) on the books and
records relating to the Business and accrued in the ordinary course of business
consistent with past practice since February 28, 1998) are valid receivables,
and Xxxxxx has not been notified that any Person intends to assert a set-off or
counterclaim with respect thereto. All such accounts receivable arose in the
ordinary course of business. All accounts receivable reflected in the financial
or accounting records of the Business that have arisen since February 28, 1998
are valid receivables, and Xxxxxx has not been notified that any Person intends
to assert a set-off or counterclaim with respect thereto. All such accounts
receivable arose in the ordinary course of business.
3.25 No Other Representations or Warranties. Except for the
representations and warranties contained in this Article 3, neither Xxxxxx nor
any other Person makes any other express or implied representation or warranty
on behalf of Xxxxxx or any of its Affiliates, and Xxxxxx hereby disclaims any
such representation or warranty whether by Xxxxxx or any of its or the Business'
respective officers, directors, employees, agents or representatives or any
other Person, with respect to the execution and delivery of any of this
Agreement or the transactions contemplated hereby, notwithstanding the delivery
or disclosure to Fresh Foods or any of its officers, directors, employees,
agents or representatives or any other Person of any documentation or other
information by Xxxxxx or any of its or the Business' respective officers,
directors, employees, agents or representatives or any other Person with respect
to any one or more of the foregoing.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF FRESH FOODS
To induce Xxxxxx to execute, deliver and perform this Agreement, and in
acknowledgment of its reliance on the following representations and warranties,
Fresh Foods hereby represents and warrants to Xxxxxx as follows as of the date
hereof and as of the Closing:
4.1 Organization of Fresh Foods. Fresh Foods is a limited liability
company duly organized and validly existing under the laws of North Carolina,
with all power and authority necessary to conduct its business as it is now
being conducted and to own or lease its properties and assets.
4.2 Consents; Compliance with Laws. Fresh Foods has obtained all
necessary consents, approvals, authorizations or estoppels of any other Person
or governmental or regulatory authority required to be obtained to execute and
perform under this Agreement and to authorize and permit Fresh Foods to purchase
the Business and the Transferred Assets. All of the equity interest in Fresh
Foods is owned by WSMP. The execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby, by
Fresh Foods, have been duly and validly authorized by all necessary action on
the part of Fresh Foods and upon the Closing will not, without the giving of
notice or the lapse of time, or both, (i) violate or conflict with any of the
provisions of the Charter Documents of Fresh Foods; (ii) violate, conflict with
or result in a breach or default under or cause termination of any term or
condition of any mortgage, indenture, contract, license, Permit, instrument,
trust document or other agreement, document or instrument to which Fresh Foods
is a party or by which it or any of its properties may be bound; or (iii)
violate any Rule.
4.3 Authorization of Agreement. This Agreement has been duly and
validly executed by Fresh Foods and, assuming the valid execution by Xxxxxx,
constitutes its legal, valid and binding obligation, enforceable in accordance
with its terms, except to the extent that its enforceability is limited by
bankruptcy, insolvency, reorganization or other laws relating to or affecting
the enforcement of creditors rights generally or by general principles of
equity.
4.4 Financial Letters. Attached hereto as Exhibit C is a commitment,
issued by First Union National Bank, to lend to Fresh Foods or WSMP, and a
letter, signed by First Union Capital Markets and BancAmerica Xxxxxxxxx
Xxxxxxxx, stating that they are "highly confident" of their ability to place
debt securities of WSMP, in each case subject to satisfaction of the conditions
stated therein, in an aggregate amount not less than the Purchase Price, to be
applied by Fresh Foods in payment thereof at the Closing.
4.5 Litigation. There are no actions, suits, proceedings, orders or
investigations pending or, to the knowledge of Fresh Foods, threatened, against
or affecting Fresh Foods or any of its Affiliates at law or in equity, or before
or by any Governmental Entity which is reasonably likely to materially and
adversely affect Fresh Foods' performance under this Agreement or the
consummation of the transactions contemplated hereby.
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4.6 Investment Bankers, Etc. Neither Fresh Foods nor any of its
Affiliates has retained or dealt with any investment bank, broker, dealer,
finder, consultant or other intermediary or incurred any liability for any
investment banking, brokerage, finder's, consultant's or other intermediary's
fees or expenses in connection with the transactions contemplated by this
Agreement.
ARTICLE 5
CONDUCT OF BUSINESS PRIOR TO CLOSING
Pending the Closing or earlier termination of this Agreement in
accordance with its terms, Xxxxxx will operate and conduct the Business
diligently and only in accordance with prior practices and will not make or
institute any material changes in its methods of purchase, sale, management,
distribution, marketing, accounting or operation. Pursuant thereto and not in
limitation of the foregoing:
5.1 Financial Statements; Financial Position. Xxxxxx shall maintain the
financial statements of the Business in accordance with the Accounting
Practices, shall use reasonable efforts to maintain the financial position of
the Business and shall use commercially reasonable efforts to maintain the
revenues of the Business in a profitable manner.
5.2 Working Capital. Xxxxxx shall, as it relates to the Business,
manage its working capital, including cash, receivables, other current assets,
trade payables and other current liabilities, in a profitable manner consistent
with past practices, including by maintaining adequate reserves of inventory to
fulfill customer orders and by paying outstanding obligations, trade accounts
and other indebtedness as they come due in accordance with past practices.
5.3 Maintenance of Assets, Permits, Business. Xxxxxx shall maintain the
assets of the Business in their present state of repair (ordinary wear and tear
excepted), and shall use its best efforts to remain in compliance with its
obligations under the Contracts and to preserve the goodwill, if any, of the
Business and its relationships with the customers, licensors, suppliers,
distributors and brokers with which the Business has relations. Xxxxxx shall use
its best efforts to (i) maintain all Permits and (ii) obtain any permit or
license required to conduct any of the Business prior to the Closing.
5.4 Notice of Disputes. Xxxxxx shall promptly advise the Designated
Official of the details of any material disputes, claims, actions, suits or
proceedings pertaining to or otherwise materially adversely affecting the
Business, or its operations, assets or Contracts.
5.5 No Action without Consent. Xxxxxx shall not take any of the
following actions related to the Business after the date of this Agreement and
prior to Closing or termination of this Agreement without the prior written
consent of the Designated Official:
(a) sell, assign, transfer or otherwise dispose of any material
Transferred Asset except in the ordinary course of business consistent with past
practice;
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(b) subject any material asset to a material Encumbrance, other than a
Permitted Encumbrance;
(c) materially affect the carrying value of any existing asset or
liability or enter into any arrangement to assume liabilities (except as
required in the ordinary course of business);
(d) purchase any capital asset for a price exceeding $1,000;
(e) enter into any leasing arrangement for any motor vehicle or for any
other item of personal or real property as to which the annual payments will
exceed $5,000;
(f) enter into or modify any contractual arrangement with directors or
officers or any contract with any manager, employee or consultant;
(g) increase or announce any increase of any salaries, wages or
benefits for officers, managers or employees, or hire, commit to hire or
terminate any employee (except in the ordinary course of business, including but
not limited to anniversary date salary or wage increases consistent with past
practice);
(h) incur, assume or guarantee any indebtedness for borrowed money or
exchange, refund or renew any such indebtedness in any manner, except in the
ordinary course of business consistent with past practice, or cancel or
compromise a lease obligation prior to the stated term thereof;
(i) cancel or compromise any indebtedness for borrowed money owed to
it;
(j) amend or terminate any Material Contract in effect on the date
hereof;
(k) make any material changes in the Accounting Practices;
(l) do any act, omit to do any act or permit any act within its control
which will cause a material breach of any Warranty or a material breach of any
obligation contained in this Agreement or contained in any of its Material
Contracts;
(m) enter into any Material Contract or other material commitment,
except in the ordinary course of business consistent with past practice;
(n) take any action that would have an adverse effect on any Permit;
(o) make any material expenditure except for expenditures consistent
with past practice; or
(p) agree to take any of the prohibited actions described in this
Section 5.5.
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5.6 Worker's Compensation Claims. Xxxxxx shall diligently process all
worker's compensation claims in the normal course of business and shall be
current with the payment of such claims as of the Closing Date.
ARTICLE 6
COVENANTS OF THE PARTIES
6.1 Cooperation. Xxxxxx and Fresh Foods shall cooperate fully with each
other and their respective employees, legal counsel, accountants and other
representatives and advisers in connection with the steps required to be taken
as part of their respective obligations under this Agreement; and each of them
shall, at any time and from time to time after the Closing, upon the request of
the other, do, execute, acknowledge and deliver, or cause to be done, executed,
acknowledged and delivered, all such further acts, deeds, assignments,
transfers, conveyances, receipts, acknowledgments, acceptances and assurances as
may be reasonably required (without incurring unreimbursed expense) to satisfy
and perform the obligations of such party hereunder, and to allow Fresh Foods to
operate the Business after the Closing in the manner in which it was operated
before the Closing. Further, after the Closing Fresh Foods shall make employees
of the Business available to Xxxxxx as is reasonably necessary in connection
with the Beef Recall.
6.2 Access. Prior to the Closing, Xxxxxx shall (i) provide Fresh Foods
and its designees (officers, counsel, accountants, actuaries and other
authorized representatives) with such information as Fresh Foods may from time
to time reasonably request with respect to the Business and the transactions
contemplated by this Agreement; (ii) provide Fresh Foods and its designees
complete access to the books, records, offices, personnel, counsel, accountants
and actuaries of Xxxxxx as Fresh Foods or its designees may from time to time
reasonably request; and (iii) permit Fresh Foods and its designees to make such
inspections of the Real Property as Fresh Foods may reasonably request.
6.3 Interim Financials. As promptly as practicable after each monthly
accounting period after February 28, 1998, and prior to the Closing Date, Xxxxxx
shall deliver to Fresh Foods periodic financial reports in the form which it
customarily prepares for its internal purposes, together with an unaudited pro
forma balance sheet of the Business as of the last day of each month and
unaudited pro forma statements of income of the Business for each such month.
6.4 Records. Xxxxxx shall provide to Fresh Foods, as soon as is
reasonably practicable after the Closing, any and all files, records or other
data in its possession or under its control in respect of or relating to the
operation of the Business.
6.5 Use of Name. From and after the Closing, Xxxxxx and its directors,
officers, employees, agents and representatives shall cease to use the
trademarks, service marks and trade names listed on Schedule 3.19 of the
Disclosure Memorandum (or any variation thereof) for any business purpose.
6.6 Expenses. Whether or not the expenses are incurred before or after
the Closing, each of the expenses incurred by Fresh Foods or Xxxxxx in
connection with the authorization, preparation, execution and performance of
this Agreement, including without limitation all fees,
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commissions and expenses of agents, representatives, counsel, accountants,
brokers and finders, shall be paid by the party that incurred such expenses.
6.7 Tax Matters.
(a) All state, county or local sales, use or other transfer Taxes
required to be paid on the transfer of any of the Transferred Assets shall be
paid by such party as is customary pursuant to state and local law, ordinance
and custom. All state, county, local or other ad valorem Taxes related to the
ownership of the Transferred Assets shall be prorated (with reference to the
applicable Tax year) through the Closing Date.
(b) Xxxxxx shall file and control any and all Tax returns relative to
the Business that are required to be filed by Xxxxxx after the Closing Date.
(c) Each of Xxxxxx and Fresh Foods agrees to give prompt notice to the
other of any proposed adjustment to Taxes involving the Business for periods
prior to the Closing. Xxxxxx and Fresh Foods shall cooperate with each other in
the conduct of any Tax audit or other proceedings involving the Business for
such periods.
(d) Xxxxxx and Fresh Foods agree to furnish or cause to be furnished to
each other, upon request, such information and assistance (including access to
books and records) relating to the Business as may be reasonably necessary for
the preparation of any return, claim for refund or audit and the prosecution or
defense of any claim, suit or proceeding relating to any proposed adjustment.
(e) The cash portion of the Purchase Price shall be allocated among
each item or class of the Purchased Assets as agreed by the parties hereto. No
less than ten days prior to the Closing Date, Fresh Foods shall deliver to
Xxxxxx a written proposal of the allocation prepared by Deloitte & Touche, LLP,
and such allocation shall be deemed accepted by Xxxxxx unless objected to in
writing within five days after its receipt by Xxxxxx. If the parties cannot
resolve any dispute as to the allocation, the matter will be submitted for
resolution by Neutral Auditors in accordance with Section 2.5 hereof. Fresh
Foods and Xxxxxx shall each pay one-half of the cost of the fees and expenses of
the Neutral Auditors in resolving any dispute with respect to such allocation.
With respect to the Purchase Price allocation finally determined or agreed upon
by the parties (or as resolved by the Neutral Auditors), Fresh Foods and Xxxxxx
shall prepare Form 8594 in a manner consistent with such allocation and shall
timely file such Form 8594 with the Internal Revenue Service.
(f) Xxxxxx shall pay or cause to be paid in timely fashion all Taxes of
Xxxxxx involving the Business and incurred prior to and through the Closing,
including without limitation all Taxes attributable to gain on the sale of the
Transferred Assets.
6.8 Survival of Representations and Warranties. Except as otherwise
provided in this Section, the representations and warranties made by the parties
to this Agreement or pursuant hereto shall survive for three years after the
Closing.
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(a) The representations and warranties made by Xxxxxx in Section 3.17
shall survive the Closing until 60 days following the expiration of all
applicable statutes of limitation and any extensions thereof.
(b) The representations and warranties made by Fresh Foods in Sections
4.1(a), (b) and (c) above shall survive the Closing indefinitely.
(c) The expiration of any representation or warranty shall not affect
any party's right to pursue any claim made in writing prior to such expiration.
(d) Notwithstanding the foregoing, any party may make a claim at any
time based on fraud in connection with any representation or warranty.
6.9 Indemnification.
(a) By Xxxxxx. From and after the Closing, Xxxxxx shall indemnify,
reimburse, defend and hold harmless Fresh Foods and any of its Affiliates,
successors or assigns for any and all direct or indirect claims, losses,
liabilities, damages (including special and consequential damages), costs
(including court costs) and expenses, including all reasonable attorneys' and
accountants' fees and expenses (hereinafter a "Loss" or "Losses"), as a result
of or in connection with (i) any breach or inaccuracy of any Warranty, whether
such breach or inaccuracy exists or is made on the date of this Agreement or as
of the Closing; or (ii) any breach of or noncompliance by Xxxxxx of or with any
covenant or agreement of Xxxxxx contained in this Agreement or in any other
agreement or instrument delivered in connection herewith; or (iii) any liability
of Xxxxxx other than Assumed Liabilities.
(b) By Fresh Foods. From and after the Closing, Fresh Foods shall
indemnify, reimburse, defend and hold harmless Xxxxxx and any of its Affiliates,
successors or assigns for any and all Losses as a result of or in connection
with (i) any breach or inaccuracy of any representation or warranty herein of
Fresh Foods, whether such breach or inaccuracy exists or is made on the date of
this Agreement or as of the Closing; or (ii) any breach of or noncompliance by
Fresh Foods of or with any covenant or agreement of Fresh Foods contained in
this Agreement or in any other agreement or instrument delivered in connection
herewith; or (iii) any of the Assumed Liabilities.
(c) Definitions. A person entitled to make a claim of indemnification
hereunder shall be referred to as an "Indemnified Party". A person obligated for
indemnification hereunder shall be referred to as an "Indemnifying Party".
(d) Claim Threshold. Notwithstanding the foregoing, no claim for
indemnification under Sections 6.9(a)(i) through (ii) may be made by Fresh Foods
against Xxxxxx unless and until the cumulative total of all Losses suffered by
Fresh Foods exceeds $125,000 (the "Threshold"). Once Losses exceed the
Threshold, Fresh Foods may recover all Losses. The foregoing limitation shall
not apply to any Loss either intentionally caused by Fresh Foods or of which
Fresh Foods had knowledge prior to the Closing. The Threshold does not apply to
any claim for indemnification under Sections 6.9(a)(iii) or 6.9(b) hereof.
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(e) Procedures.
(i) The Indemnifying Party shall be entitled to defend any
claim, action, suit or proceeding made by any third party against an Indemnified
Party; provided, however, that the Indemnified Party shall be entitled to
participate in such defense with counsel of its choice and at its own expense
and, if the Indemnifying Party does not provide a competent and vigorous
defense, then the Indemnified Party's participation shall be at the expense of
the Indemnifying Party. The Indemnified Party shall provide such cooperation and
access to its books, records and properties as the Indemnifying Party shall
reasonably request with respect to such matter; and the parties shall cooperate
with each other in order to ensure the proper and adequate defense thereof.
(ii) An Indemnified Party shall not settle any claim subject
to indemnification hereunder without the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld or delayed.
(iii) With regard to claims of third parties for which
indemnification is payable hereunder, such indemnification shall be paid by the
Indemnifying Party (or amounts may be set off by the Indemnified Party) upon the
earliest to occur of: (A) the entry of a judgment against the Indemnified Party
and the expiration of any applicable appeal period, (B) the entry of an
unappealable judgment or final appellate decision against the Indemnified Party,
(C) the settlement of the claim, (D) with respect to indemnities for Tax
liabilities, upon the issuance of any final resolution by a taxation authority,
or (E) with respect to claims before any administrative or regulatory authority,
when the Loss is finally determined and not subject to further review or appeal;
provided, however, that the Indemnifying Party shall pay on the Indemnified
Party's demand any cost or expense reasonably incurred by the Indemnified Party
in defending or otherwise dealing with such claim.
(f) Notice of Claim. To seek indemnification hereunder, an Indemnified
Party shall notify the Designated Official or Xxxxxx, as applicable, of any
claim for indemnification, specifying in reasonable detail the nature of the
Loss and the amount or an estimate of the amount thereof.
(g) Exclusive Remedy. Subject to Section 6.8(d), the indemnification
rights provided in this Section 6.9 shall be the sole and exclusive remedy
available to each of the parties to this Agreement as against the other party
for any breach of representation or warranty or failure to fulfill any covenant
or agreement contained herein; provided, however, that the remedies set forth in
Section 6.17 shall additionally be available to Xxxxxx.
6.10 Casualty. Xxxxxx shall bear the risk of any loss or damage or
destruction to any of the Transferred Assets from fire or other casualty or
cause at all times prior to the Closing. Upon the occurrence of any loss or
damage to any significant portion of the Transferred Assets as a result of fire
or other casualty or cause prior to the Closing, Xxxxxx shall immediately notify
Fresh Foods of the same in writing, stating with particularity the extent of
loss or damage incurred, the cause thereof, if known, and the extent to which
restoration, replacement and repair of such assets lost or destroyed will be
reimbursed under any insurance policy with respect thereto. Fresh Foods
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shall have the option, but not the obligation, exercisable within 15 business
days after receipt of such notice from Xxxxxx, to:
(a) Postpone the Closing until such time as such assets have been
completely repaired, replaced or restored;
(b) Elect to consummate the Closing and accept such assets in their
"then" condition, in which event Xxxxxx shall assign to Fresh Foods all rights
under any insurance claim covering the loss and pay over to Fresh Foods any
proceeds under any such insurance policy theretofore received by Xxxxxx with
respect thereto; or
(c) If, in the good faith opinion of Fresh Foods, the loss or damage
materially adversely affects the Business or the Transferred Assets taken as a
whole, terminate this Agreement, whereupon this Agreement shall be of no further
force or effect and no party shall have any further rights, duties or
obligations hereunder except under Section 6.11.
6.11 Confidentiality.
(a) Xxxxxx shall hold in trust and confidence all Confidential
Information, (as defined below) of Fresh Foods and shall not, for a period of
three years after the Closing or any termination of this Agreement, use, divulge
or communicate any such Confidential Information to any Person other than those
officers, employees, or professional advisors of Xxxxxx who have a need to know
such information for the purpose of the completion of the transactions
contemplated herein, or as specifically allowed by the Designated Official in
writing, or which Xxxxxx is required to disclose pursuant to any law,
regulation, or court or administrative order. Following the Closing, the
foregoing restrictions shall also apply to all Confidential Information relating
to the Business.
(b) Notwithstanding anything herein to the contrary, the
confidentiality provisions of the Letter of Intent dated as of March 9, 1998
from Fresh Foods to Xxxxxx shall continue in full force and effect through the
Closing, or for a period of three years from any termination of this Agreement
in accordance with its terms.
(c) "Confidential Information" means technical, business, financial and
other information relating to Fresh Foods and its Affiliates, Xxxxxx and its
Affiliates, or relating to the Business, regardless of the form or medium of
storage, and whether originated or obtained by, or coming into the possession,
custody, control or knowledge of, any party or any of its Affiliates, either
alone or jointly; excluding, however, any information that is in the public
domain at the time of disclosure or that enters the public domain through no
fault of any party.
6.12 Covenants Not to Compete. Xxxxxx acknowledges and recognizes the
highly competitive nature of the Business and accordingly agrees, to induce
Fresh Foods to consummate the transactions contemplated by this Agreement, that
Xxxxxx shall not, for a period of one year after the Closing Date: (i) engage
directly or indirectly in any Competitive Business (as defined below) anywhere
in the Restricted Territory (as defined below), whether such engagement be as an
employer, officer, director, owner, investor, employee, partner, consultant or
other participant
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of or in any Competitive Business; (ii) directly solicit for employment any
employee of the Business, Fresh Foods or its Affiliates; or (iii) attempt to do
any of the things or assist anyone else in doing any of the things specified in
clause (i) or (ii) above. Fresh Foods likewise acknowledges and recognizes the
highly competitive nature of the business conducted by Xxxxxx separate and apart
from the Business and accordingly agrees, to induce Xxxxxx to consummate the
transactions contemplated by this Agreement, that Fresh Foods shall not, for a
period of one year after the Closing Date, compete with Xxxxxx or its Affiliates
(i) in the sale of chicken-based products (other than sandwiches) to or in
connection with Sam's Clubs, Burger King Corporation (or Restaurant Services,
Inc.) or Subway (or Independent Purchasers Cooperative, Inc.), or (ii) in the
sale of products marketed under the Classic Seasons line, including those sold
to Price/Costco. Notwithstanding the foregoing, the ownership or control of up
to five percent of the outstanding equity securities of any company which has a
class of equity securities traded on any national or regional stock exchange or
on The NASDAQ Stock Market shall not be considered a violation of this Section
6.12. As used in this Section 6.12, the term "Competitive Business" means and
includes any Person engaged wholly or partly in the sale of sandwiches to or
through warehouse clubs, vending services, convenience stores or foodservice,
but excluding sales of sandwiches (including chicken sandwiches) to customers
not associated with the Business; and the term "Restricted Territory" means the
entirety of the United States and any other locale anywhere else in the world to
which the Business currently ships finished products.
6.13 Funds Received After Closing. Any and all funds received by Xxxxxx
after the Closing in respect of the Transferred Assets or otherwise to the
Business transferred to Fresh Foods shall be promptly remitted to Fresh Foods
upon receipt.
6.14 No Public Announcements. Prior to the Closing, without the prior
written consent of the other parties, neither Fresh Foods nor Xxxxxx shall make
any press release or other public disclosure, or make any statement to any
customer, supplier or other Person with regard to the transactions contemplated
by this Agreement, except as may required by applicable securities law or
regulations (in which case the disclosing party will consult with the other
party prior to making such disclosure).
6.15 Acquisition Proposals. Prior to the Closing or termination of this
Agreement, Xxxxxx shall not, and shall not permit any officer, director,
employee or agent of Xxxxxx or any Affiliate thereof to (a) solicit, initiate or
encourage submission of proposals or offers, or accept any offers, from any
Person relating to any acquisition or purchase of all or any material amount of
the assets of, the Business (an "Acquisition Proposal") or (b) participate in
any discussions or negotiations regarding, or furnish to any other Person any
information with respect to, or otherwise cooperate in any way with or assist,
facilitate or encourage, any Acquisition Proposal by any other Person.
6.16 Closing. Each of the parties shall use all reasonable efforts to
close the transactions contemplated by the Agreement on or before June 19, 1998.
6.17 Termination and Break-Up Fee. Either party may terminate this
Agreement upon (i) a material breach of the terms or conditions of this
Agreement by the other party which breach is not cured within 10 days following
written notice thereof to the breaching party or (ii) after June
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19, 1998, provided, however, that no party in material breach of this Agreement
may terminate this Agreement by reason of the other party's material breach. In
the event that all necessary Governmental Entity approvals have been obtained
and yet the Closing does not occur by the close of business on June 19, 1998 for
any reason not attributable to Xxxxxx or its Affiliates, Fresh Foods shall
immediately pay to Xxxxxx the sum of One Million Two Hundred Twenty Thousand
Dollars ($1,220,000). In addition to the foregoing, in the event that the
Closing does not occur by such time solely because Fresh Foods or WSMP has
failed to consummate the borrowing from First Union National Bank referred to in
Section 4.4, then Xxxxxx shall be entitled to seek all available legal and
equitable remedies, unless the sole reason for Fresh Foods' or WSMP's failure to
consummate such borrowing was a material adverse change in the financial,
banking or capital markets (without regard to the effect of any such change on
the ability of First Union National Bank to syndicate such borrowing).
6.18 Permits. Xxxxxx shall cooperate with and use its best efforts to
assist Fresh Foods, both in advance of the Closing and after the Closing, in
maintaining or reapplying for any Permits for Fresh Foods' use after the Closing
(without incurring any unreasonable expense). Xxxxxx consents to Fresh Foods
making any and all necessary application for new Permits, as may be required by
any Rule, and agrees to allow Fresh Foods to use and continue to use existing
Permits as may be allowed by any Rule. Upon Fresh Foods' request, Xxxxxx will
execute and deliver separate documents containing the consents and agreements
given in the preceding sentence.
6.19 Accounts Receivable. Notwithstanding anything herein to the
contrary, no third party payor accounts receivable of Xxxxxx shall be assigned
to Fresh Foods hereunder which may not be assigned under applicable regulations.
Fresh Foods shall collect all such accounts receivable of the Business on behalf
of Xxxxxx and shall keep such amounts as may be collected. Any accounts
receivable received by Xxxxxx after the Closing shall be promptly forwarded to
Fresh Foods. Xxxxxx agrees to execute and deliver to Fresh Foods such powers of
attorney and other documents as may be reasonably necessary to allow Fresh Foods
to collect and otherwise deal with such accounts receivable on Xxxxxx'x behalf.
6.20 Release of Encumbrances. At or before the Closing, Xxxxxx shall
obtain releases of all Encumbrances on the Transferred Assets (other than
Permitted Encumbrances), including UCC-3 termination statements, from every
Person in whose favor any such Encumbrance exists, each such release to be in
form and substance reasonably satisfactory to Fresh Foods.
6.21 WARN Agreements. Fresh Foods shall refrain from engaging in any
plant closing or mass layoff within the meaning of the Worker Adjustment
Retraining Notification Act, 29 U.S.C. ss.2101, et seq., for a period of at
least ninety days after the Closing; provided, however, that Fresh Foods shall
have no obligation to Xxxxxx for a breach of this Section 6.21 to the extent
that any such plant closing or mass layoff by Fresh Foods results from any
terminations or layoffs of employees by Xxxxxx within the ninety-day period
prior to the Closing Date.
6.22 Disclaimer Regarding Projections. In connection with Fresh Foods'
investigation of the Business, Fresh Foods has received from Xxxxxx certain
projections and certain business plan information. Fresh Foods acknowledges that
there are uncertainties inherent in attempting to make such projections and
other forecasts and plans, that Fresh Foods is taking full responsibility
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for making its own evaluation of the adequacy and accuracy of all projections
and other forecasts and plans so furnished to it, and that Fresh Foods shall
have no claim against Xxxxxx with respect thereto. Accordingly, Xxxxxx makes no
representation or warranty with respect to such projections and other forecasts
and plans except that Xxxxxx has no knowledge of any information that would
render the projections misleading.
6.23 Transition Services Provided by Xxxxxx.
(a) In consideration of the payment of the Purchase Price and
assumption of the Assumed Liabilities by Fresh Foods, Xxxxxx shall provide the
Xxxxxx Transition Services (as defined below) to the Business while the Business
is under the ownership of Fresh Foods to the extent such Xxxxxx Transition
Services may be requested by Fresh Foods, for up to six months following the
Closing Date. Notwithstanding Xxxxxx'x agreement to provide the Xxxxxx
Transition Services for up to six months following the Closing Date, Fresh Foods
shall use its best efforts to assume responsibility for all of the Xxxxxx
Transition Services as soon as reasonably practicable.
(b) For purposes of this Agreement, "Xxxxxx Transition Services" shall
mean administrative support services of a nature previously rendered by
headquarters employees of Xxxxxx to the Business in connection with the
information systems used by the Business, including general ledger, accounts
payable, payroll, fixed assets and leased assets systems.
(c) Xxxxxx shall perform the Xxxxxx Transition Services with the degree
of care, skill, diligence and responsiveness with which it previously performed,
or may continue to perform, similar services for itself or others. Xxxxxx will
make every reasonable effort to maintain sufficient resources such that it may
continue to be in a position to provide the Xxxxxx Transition Services for the
entire term of its obligation hereunder. Xxxxxx reserves the right to determine
staffing and scheduling of Xxxxxx Transition Services and to engage contractors
as needed.
6.24 Bulk Transfer Laws. Fresh Foods hereby waives compliance by Xxxxxx
with the provisions of any so-called bulk transfer laws of any jurisdiction in
connection with the sale of the Transferred Assets. Notwithstanding anything to
the contrary in Section 6.9 hereof, Xxxxxx agrees to indemnify Fresh Foods
against all liability, damage or expense which Fresh Foods suffers due to the
failure to so comply or to provide notice required by the bulk transfers laws
(excluding from such indemnity any Assumed Liabilities or a liability
indemnified by Fresh Foods pursuant to Section 6.9(b) hereof).
6.25 Arbitration. If a dispute, controversy or claim arises out of or
in connection with the terms and conditions of this Agreement, except as set
forth in Sections 2.5 or 6.7(e) hereof, it shall be submitted to binding
arbitration which shall be conducted as follows: (a) the arbitrator shall be an
independent third party, a member of the American Arbitration Association,
knowledgeable of the beef and chicken further processing and distribution
industries, mutually satisfactory to Fresh Foods and Xxxxxx, and selected under
the American Arbitration Association rules; (b) the arbitrator, in conducting
such arbitration, shall have access to all relevant documents and records of the
parties; (c) the arbitration shall be conducted in accordance with the
Commercial Arbitration Rules of the American Arbitration Association in effect
on the date such arbitration is commenced and shall be final and binding on the
parties hereto; and (d) all
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arbitration proceedings shall be conducted in English in a location mutually
agreed upon by the parties.
6.26 Patent License. Fresh Foods acknowledges that Xxxxxx or its
Affiliate is and, following the Closing, will continue to be the sole owner of
all right, title and interest in an invention entitled "Process for Preparing
Pureed Meat Products" (the "Invention") set forth in an application for United
States Letters Patent, Serial No. 08/959,485 (the "Patent Application") recorded
in the U. S. Patent and Trademark Office on October 10, 1997, the Patent
Application having been assigned to Xxxxxx by Assignment dated October 16, 1997
recorded in the U. S. Patent and Trademark Office on October 28, 1997 at
Reel/Frame: 8806/0691. In consideration of the payment of the Purchase Price and
assumption of the Assumed Liabilities by Fresh Foods, Xxxxxx shall xxxxx to
Fresh Foods at Closing a royalty-free license, to use the Invention in the
United States of America and its colonies, territories and dependencies and also
in all countries foreign to the United States of America, for the exclusive use
of Fresh Foods, its successors and assigns, in connection with the Business to
the end of the term or terms for which Letters Patent may be granted; provided,
however, that Fresh Foods shall not publicly disclose any information regarding
the Invention prior to Xxxxxx'x decision to file any foreign patent
applications. Xxxxxx shall not grant any other licenses for the use of the
Invention; provided, however, that Xxxxxx, its successors and assigns, may
otherwise utilize the Invention in any manner whatsoever in connection with its
business and operations.
6.27 Like Kind Exchange. Fresh Foods acknowledges that Xxxxxx may
desire to complete one or more like kind exchanges through the use of a
qualified intermediary (as defined in the Code Section 1031 regulations) or a
similar arrangement. If requested by Xxxxxx, Fresh Foods shall cooperate with
Xxxxxx to the extent reasonably necessary in order to accomplish such like kind
exchanges and shall execute all documents and provide all consents reasonably
necessary to complete such like kind exchange including, but not limited to, an
amendment to, or an assignment of, this Agreement; provided, however, that (i)
Fresh Foods's obligations hereunder shall not be increased, (ii) Xxxxxx'x
representations, warranties, covenants and obligations hereunder shall not be
reduced, relieved or modified, and (iii) the Purchase Price shall not be
different than that which Fresh Foods would have otherwise paid hereunder.
6.28 Employee Benefits Covenants.
(a) Xxxxxx shall use all reasonable efforts to assist Fresh Foods in
extending coverage under Xxxxxx'x Compensation and Benefit Plans that are group
health plans (within the meaning of Section 5000(b)(1) of the Code) or group
dental plans for a period of up to six months after the Closing Date for those
Employees (and their dependents) who accept employment with Fresh Foods and who
have coverage immediately prior to the Closing under any one of Xxxxxx'x
Compensation and Benefit Plans that are group health plans (within the meaning
of Section 5000(b)(1) of the Code) or group dental plans.
(b) If Xxxxxx satisfies its obligations under Section 6.28(a), Fresh
Foods will waive waiting periods and pre-existing condition limitations under
one or more group health and dental plans maintained by Fresh Foods for such
Employees and their dependents and, if the first plan year of participation is a
partial year, will give such employees and dependents credit toward
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deductible and out-of-pocket limitations for any expenses paid by such persons
under Xxxxxx'x group health and dental plans during the portion of that plan
year that precedes their entry into Fresh Foods' group health and dental plans.
(c) Xxxxxx shall retain liability for and shall pay when due all
benefits under its group health and dental plans that are attributable to claims
actually made (by delivery to the recordkeeper) on or before the Closing Date.
Fresh Foods shall reimburse Xxxxxx for benefits paid by Xxxxxx under its group
health and dental plans for claims by the Employees and their dependents that
are incurred on or prior to the Closing Date but are made in the normal course
(by delivery to the recordkeeper) after the Closing Date. Fresh Foods shall also
reimburse Xxxxxx for benefits paid by Xxxxxx under any group health and dental
plans for claims by the Employees and their dependents that are incurred after
the Closing Date, reduced by any premiums paid by Fresh Foods or the Employees
to Xxxxxx after the Closing.
(d) Xxxxxx shall provide health continuation coverage satisfying the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") for all
Employees (and their eligible dependents) who incur a "qualifying event," as
defined in COBRA, while employed by Xxxxxx on or before the Closing Date. Fresh
Foods shall provide health continuation coverage satisfying COBRA for all
Employees (and their eligible dependents) who incur a "qualifying event," as
defined in COBRA, while employed by Fresh Foods after the Closing Date.
(e) Xxxxxx shall be responsible for any and all severance benefits as
may arise with respect to the termination of employment of any Employee with
Xxxxxx occurring on or before the Closing Date. Fresh Foods shall be responsible
for any and all severance benefits as may arise with respect to the termination
of employment of any Employee with Fresh Foods occurring after the Closing Date.
ARTICLE 7
CONDITIONS TO OBLIGATIONS OF XXXXXX
The obligations of Xxxxxx to consummate the sale of the Transferred
Assets hereunder shall be subject to the satisfaction (or waiver by Xxxxxx) at
or before the Closing of each of the following conditions:
7.1 Representations, Warranties and Covenants. Each of the
representations and warranties of Fresh Foods contained in this Agreement shall
be true in all material respects as of the time of the Closing with the same
force and effect as though made at that time; Fresh Foods shall have performed
and complied in all material respects with the respective covenants and
agreements set forth herein to be performed or complied with by it at or before
the Closing; and Fresh Foods shall have delivered to Xxxxxx a certificate,
signed on behalf of Fresh Foods by its President, to all such effects.
7.2 Litigation. No suit, investigation, action or other proceeding
shall be pending or overtly threatened before any court or governmental agency,
which has resulted in the restraint or prohibition of Xxxxxx, or in the
reasonable opinion of counsel for Xxxxxx could result in the
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obtaining of material damages or other relief from Xxxxxx, in connection with
this Agreement or the consummation of the transactions contemplated hereby.
7.3 Opinion Letter of Counsel to Fresh Foods. Xxxxxx shall have
received from counsel to Fresh Foods an opinion letter dated the Closing Date in
form and substance reasonably satisfactory to Xxxxxx and its counsel.
7.4 Required Approvals. All governmental authorizations, consents and
approvals necessary for the valid consummation of the transactions contemplated
hereby shall have been obtained and shall be in full force and effect. All
applicable governmental pre-acquisition filing, information furnishing and
waiting period requirements shall have been met or such compliance shall have
been waived by the Governmental Entity having authority to grant such waivers.
7.5 Execution and Delivery of Documents. Fresh Foods shall have
executed and delivered all of the documents contemplated by this Agreement to be
executed and delivered by it at or prior to the Closing; and all other
agreements, certificates and other documents delivered by Fresh Foods to Xxxxxx
hereunder shall be in form and substance reasonably satisfactory to counsel for
Xxxxxx.
ARTICLE 8
CONDITIONS TO OBLIGATIONS OF FRESH FOODS
The obligations of Fresh Foods to be performed hereunder shall be
subject to the satisfaction (or waiver by Fresh Foods) at or before the Closing
of each of the following conditions:
8.1 Representations, Warranties and Covenants. Each of the Warranties
of Xxxxxx contained in this Agreement (other than those set forth in Section
3.5) shall be true in all material respects as of the time of the Closing with
the same force and effect as though made at that time; Xxxxxx shall have
performed and complied in all material respects with the respective covenants
and agreements set forth herein to be performed or complied with by it at or
before the Closing; and Xxxxxx shall have delivered to Fresh Foods a
certificate, signed on behalf of Xxxxxx by an authorized officer, to all such
effects.
8.2 Litigation. No suit, investigation, action or other proceeding
shall be pending or overtly threatened before any court or governmental agency,
which has resulted in the restraint or prohibition of Fresh Foods, or in the
reasonable opinion of counsel for Fresh Foods could result in the obtaining of
material damages or other relief from Fresh Foods, in connection with this
Agreement or the consummation of the transactions contemplated hereby.
8.3 Opinion Letter of Counsel to Xxxxxx. Fresh Foods shall have
received from counsel to Xxxxxx an opinion letter dated the Closing Date in form
and substance reasonably satisfactory to Fresh Foods and its counsel.
8.4 Execution and Delivery of Documents. Xxxxxx shall have executed and
delivered all of the documents contemplated by this Agreement to be executed and
delivered by it at or prior
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to the Closing, including, without limitation, the documents required in Section
2.4(b), and all other agreements, certificates and other documents delivered by
Xxxxxx to Fresh Foods hereunder shall be in form and substance reasonably
satisfactory to counsel for Fresh Foods.
8.5 No Material Adverse Change. The Business shall not have suffered
any material adverse change since February 28, 1998 in its business, prospects,
financial condition, working capital, assets, liabilities (absolute, accrued,
contingent or otherwise), reserves or results of operations.
8.6 Required Approvals. All governmental authorizations, consents and
approvals necessary for the valid consummation of the transactions contemplated
hereby shall have been obtained and shall be in full force and effect. All
applicable governmental pre-acquisition filing, information furnishing and
waiting period requirements shall have been met or such compliance shall have
been waived by the Governmental Entity having authority to grant such waivers.
8.7 Other Necessary Consents and Approvals. Xxxxxx shall have obtained
all consents, approvals and estoppels required under any Material Contract, all
consents and approvals listed in the Disclosure Memorandum and all other
consents and approvals the failure of which to obtain would have a Material
Adverse Effect.
8.8 Encumbrances. All of the Transferred Assets shall be free and
clear of all Encumbrances at the Closing other than Permitted Encumbrances, if
any.
8.9 Permits. Fresh Foods shall be satisfied that it can obtain or that
Xxxxxx can transfer all Permits necessary to the continued conduct of the
Business following the Closing.
8.10 Auditor's Assurances. Deloitte & Touche, LLP shall have issued an
unqualified audit report on the balance sheet, income statement and cash flow
statement of the Business as of September 27, 1997 and for the fiscal year then
ended.
ARTICLE 9
MISCELLANEOUS
9.1 Notices. All notices, requests, demands, consents and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered by overnight courier or express
mail service or by postage pre-paid certified or registered mail, return receipt
requested (the return receipt constituting prima facie evidence of the giving of
such notice, request, demand or other communication), by personal delivery, or
by fax with confirmation of receipt to the following address or such other
address of which a party subsequently may give notice to all the other parties:
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To Xxxxxx: Xxxxxx Foods, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xx. Xxxxx Xxxxx
Fax: (000) 000-0000
To Fresh Foods: Fresh Foods of North Carolina, LLC
0 XXXX Xxxxx
X.X. Xxx 000
Xxxxxxxxx, XX 00000
Attention: Xx. Xxxxx X. Xxxxxx
Fax: (000) 000-0000
9.2 Parties Bound by Agreement; Successors and Assigns. The terms,
conditions and obligations of this Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective successors and assigns.
Neither party may assign its rights, duties or obligations hereunder or any part
thereof to any other Person without the prior written consent of the other
party.
9.3 Entire Agreement. This Agreement, the Disclosure Memorandum, the
Schedules and Exhibits hereto and all other documents delivered pursuant hereto
or thereto constitute the entire agreement between the parties with respect to
the transactions contemplated hereby and thereby and supersede any and all prior
agreements and understandings, written or oral, between them and their
Affiliates relating to any and all such transactions.
9.4 Descriptive Headings. The descriptive headings of the Sections of
this Agreement are inserted for convenience only and shall not control or affect
the meaning or construction of any provision hereof.
9.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which, taken
together, shall constitute one and the same agreement.
9.6 Amendments and Waivers. No modification, termination, extension,
renewal or waiver of any provision of this Agreement shall be binding upon a
party unless made in writing and signed by such party. A waiver on one occasion
shall not be construed as a waiver of any right on any future occasion. No delay
or omission by a party in exercising any of its rights hereunder shall operate
as a waiver of such rights.
9.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of North Carolina.
9.8 Third-Party Beneficiaries. With the exception of the parties to
this Agreement and the Indemnified Parties, no Person shall have any right to
claim a beneficial interest in this Agreement or any right accruing by virtue of
this Agreement.
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9.9 Gender and Number. Where the context requires, the use of a
pronoun of one gender or the neuter is to be deemed to include a pronoun of the
appropriate gender. Singular words are to be deemed to include the plural, and
vice versa.
9.10 No Strict Construction. The language used in this Agreement will
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
person.
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Each party hereto has caused this Agreement to be duly executed on its
behalf as of the date first set forth above.
FRESH FOODS OF NORTH CAROLINA, LLC
By: /s/ Xxxxx X. Xxxxx
-------------------------------------------
Name: Xxxxx X. Xxxxx
Title: President
XXXXXX FOODS, INC.
By: /s/ Xxxxxx Xxxxxxx
-------------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Chairman and Chief Executive Officer
GUARANTEES
The undersigned hereby unconditionally guarantees to Xxxxxx Foods, Inc.
the due and punctual performance of each and every obligation of Fresh Foods of
North Carolina, LLC evidenced by the foregoing Asset Purchase Agreement and any
other document executed thereby pursuant thereto.
WSMP, INC.
By: /s/ Xxxxx X. Xxxxx
-------------------------------------------
Name: Xxxxx X. Xxxxx
Title: President
The undersigned hereby unconditionally guarantees to Fresh Foods of
North Carolina, LLC the due and punctual performance of each and every
obligation of Xxxxxx Foods, Inc. evidenced by the foregoing Asset Purchase
Agreement and any other document executed thereby pursuant thereto.
TYSON FOODS, INC.
By: /s/ Xxxxxx Xxxxxxx
-------------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Chairman and Chief Executive Officer
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ATTACHMENTS
List of Schedules
Schedule A Assumed Liabilities; Transferred Assets; Transferred Accounts
Schedule B February 28, 1998 Balance Sheet
List of Exhibits
Exhibit A Assumption Agreement
Exhibit B Xxxx of Sale
Exhibit C Commitment Letter and Highly Confident Letter
Disclosure Memorandum
Schedule 3.3 Non-Contravention
Schedule 3.4 Title to and Condition of Assets
Schedule 3.6 Changes in Business
Schedule 3.8 Contracts
Schedule 3.9 Compliance with Laws; Permits
Schedule 3.10 Regulatory Approvals
Schedule 3.11 Litigation
Schedule 3.14 Insurance
Schedule 3.17 Employee Matters
Schedule 3.19 Intellectual Property
Schedule 3.21 Administration
Schedule 3.24 Accounts Receivable
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