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ASSET TRANSFER AGREEMENT
BY AND BETWEEN
XXXX FOODS COMPANY
AND
AGRILINK FOODS, INC.
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JULY 24, 1998
TABLE OF CONTENTS
Page
1. Definitions.................................................................................1
2. Transfer of Aseptic Business................................................................9
(a) Basic Transaction.........................................................9
(b) Assumption of Certain Liabilities.........................................9
(c) The Closing...............................................................9
(d) Deliveries at the Closing.................................................9
(e) Closing Date Inventory Adjustment.........................................9
(i) Estimated Closing Date Inventory.........................9
(ii) Closing Date Inventory..................................10
(f) Aseptic Business Employees...............................................11
3. Representations and Warranties of the Transferor...........................................14
(a) Organization, Qualification and Power....................................14
(b) Authorization of Transaction.............................................14
(c) Noncontravention.........................................................14
(d) Financial Statements.....................................................15
(e) Events Subsequent to Most Recent Fiscal Year End.........................15
(f) Legal Compliance.........................................................16
(g) Regulatory Matters.......................................................17
(h) Tax Matters..............................................................17
(i) Real Property............................................................18
(j) Personal Property........................................................19
(k) Intellectual Property....................................................19
(l) Sufficiency of Assets....................................................20
(m) Inventory................................................................20
(n) Contracts................................................................21
(o) Powers of Attorney.......................................................22
(p) Insurance................................................................22
(q) Litigation...............................................................22
(r) Arbitration..............................................................23
(s) Product Warranty.........................................................23
(t) Employees................................................................23
(u) Top Customers............................................................23
(v) Employee Benefits........................................................23
(w) Guaranties...............................................................24
(x) Environmental and Public Safety Matters..................................24
(y) Certain Business Relationships With Affiliates of the Transferor.........25
(z) Undisclosed Liabilities..................................................25
(aa) Brokers' Fees............................................................25
(bb) Year 2000 Compliance.....................................................25
(cc) Disclosure...............................................................26
4. Representations and Warranties of the Transferee...........................................26
(a) Organization of the Transferee...........................................26
(b) Authorization of Transaction.............................................26
(c) Noncontravention.........................................................26
(d) Brokers' Fees............................................................27
5. Pre-Closing Covenants......................................................................27
(a) General..................................................................27
(b) Regulatory Matters and Approvals.........................................27
(c) Operation of Business....................................................27
(d) Full Access..............................................................27
(e) Notice of Developments...................................................28
(f) Exclusivity..............................................................28
(h) Release of Liens on Acquired Assets......................................28
6. Post-Closing Covenants.....................................................................28
(a) General..................................................................28
(b) Allocation of Purchase Price.............................................28
(c) Retention of and Access to Records.......................................29
(d) Non-Compete..............................................................29
(e) Post-Closing License of Transferor's Names...............................30
7. Closing....................................................................................30
8. Indemnification............................................................................31
(a) General..................................................................31
(b) Indemnification of Transferee Indemnitees................................31
(c) Indemnification of Transferor Indemnitees................................31
(d) Limitation on Indemnification Obligations................................32
(e) Cooperation..............................................................33
(f) Third Party Claims Subject to Indemnification............................33
(g) Exclusivity..............................................................34
9. Termination................................................................................35
10. Miscellaneous..............................................................................35
(a) Press Releases and Public Announcements..................................35
(b) No Third-Party Beneficiaries.............................................35
(c) Expenses.................................................................35
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(d) Entire Agreement...............................................................35
(e) Succession and Assignment......................................................36
(f) Counterparts...................................................................36
(g) Headings.......................................................................36
(h) Notices........................................................................36
(i) Governing Law..................................................................37
(j) Amendments and Waivers.........................................................37
(k) Severability...................................................................37
(l) Construction...................................................................37
(m) Incorporation of Exhibits and Disclosure Schedules.............................38
Exhibit A - Closing Date Globe/Thank You License Agreement
Exhibit B - Transition Services Agreement
Exhibit C - Transferred Employee Severance Pay and Benefits
Transferor Disclosure Schedule - Exceptions to Representations and Warranties
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ASSET TRANSFER AGREEMENT
THIS ASSET TRANSFER AGREEMENT (this "Agreement") is entered into on
July 24, 1998, by and between Agrilink Foods, Inc., a New York corporation (the
"Transferor"), and Xxxx Foods Company, a Delaware corporation (the
"Transferee"). The Transferee and the Transferor are sometimes referred to
herein as a "Party" and collectively as the "Parties."
The Transferor and the Transferee are parties to that certain Stock
Purchase Agreement of even date herewith (the "Stock Purchase Agreement"). The
Stock Purchase Agreement contemplates a transaction in which the Transferee will
sell or cause to be sold to the Transferor and/or one or more subsidiaries of
the Transferor the frozen and canned vegetable products business of the
Transferee for consideration comprised of cash and the Aseptic Business (as
hereinafter defined) of the Transferor. The transfer of the Aseptic Business to
the Transferee upon the closing under the Stock Purchase Agreement will be
effected pursuant to and in accordance with the terms of this Agreement. Under
certain circumstances, however, the Transferee will receive solely cash at the
closing (the "SPA Closing") of the transactions contemplated by the Stock
Purchase Agreement (the "All Cash Alternative"). If the All Cash Alternative
becomes applicable, this Agreement shall terminate as provided in Section 9. In
connection with the transfer of the Aseptic Business to the Transferee, the
Transferor will grant to the Transferee a royalty-free perpetual license of
certain of the trademarks used in the Aseptic Business for certain uses and the
Transferor will enter into a transition services agreement for the benefit of
the Transferee.
Now, therefore, in consideration of the premises and the mutual
promises made in this Agreement and in the Stock Purchase Agreement, and in
consideration of the representations, warranties and covenants contained in this
Agreement and in the Stock Purchase Agreement, the Parties agree as follows.
1. Definitions.
"Acquired Assets" means all right, title and interest in and to all of
the assets used in or constituting the Aseptic Business, including all of its
(a) real property, leaseholds and subleaseholds therein, improvements, fixtures
and fittings thereon, and easements, rights-of-way and other appurtenants
thereto (such as appurtenant rights in and to public streets), (b) tangible
personal property (such as machinery, equipment, Inventory, manufactured and
purchased parts, goods in process and finished goods, furniture, automobiles,
trucks, tractors, trailers and tools), (c) Intellectual Property, goodwill
associated therewith, licenses and sublicenses granted and obtained with respect
thereto, and rights thereunder, remedies against infringements thereof, and
rights to protection of interests therein under the laws of all jurisdictions,
(d) leases, subleases and rights thereunder, (e) agreements, contracts,
indentures, mortgages, instruments, Security Interests, guaranties, other
similar arrangements and rights thereunder, (f) claims, deposits, prepayments,
refunds, causes of action, choses in action, rights of recovery, rights of set
off and rights of recoupment, (g) franchises, approvals, permits, licenses,
orders, registrations, certificates, variances and similar rights obtained from
Governmental Entities and (h) books, records, ledgers, files,
documents, correspondence, lists, plats, architectural plans, drawings and
specifications, creative materials, advertising and promotional materials,
studies, reports and other printed or written materials; provided, however, that
the Acquired Assets shall not include (i) the corporate charter, qualifications
to conduct business as a foreign corporation, arrangements with registered
agents relating to foreign qualifications, taxpayer and other identification
numbers, seals, minutes books, stock transfer books, blank stock certificates
and other documents relating to the organization, maintenance and existence of
the Transferor as a corporation, (ii) any of the rights of the Transferor under
this Agreement, (iii) any cash and cash equivalents of the Aseptic Business,
(iv) any accounts, notes and other receivables of the Aseptic Business, (v) the
Globe/Thank You Trademarks and (vi) the Logistics Services Agreement dated as of
April 1, 1998 by and between GATX Logistics, Inc. and the Transferor.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of
Code Section 1504(a) or any similar group defined under a similar provision of
state, local or foreign law.
"All Cash Alternative" has the meaning set forth in the preface.
"Aseptic Business" means the aseptic business of the Transferor,
including without limitation all operations of the Transferor conducted out of
its Benton Harbor, Michigan facility and all operations of the Transferor
related to or supporting the sales shown in the Financial Statements.
"Aseptic Business Packaging/Labels" means all of the packaging and
label inventory (including label inventory affixed to finished goods) of the
Aseptic Business that exists (or which has been ordered by the Aseptic Business
but not yet delivered) at the Closing Date which bears the name of Transferor or
of any division thereof.
"Aseptic Business-Related Intellectual Property" has the meaning set
forth in Section 3(k)(iii).
"Assumed Liabilities" means all obligations of the Aseptic Business
under the agreements, contracts, leases, licenses and other arrangements
included in the definition of Acquired Assets either (i) to furnish goods,
services and other non-cash benefits to another party after the Closing or (ii)
to pay for goods, services and other non-cash benefits that another party will
furnish to the Aseptic Business after the Closing, and the liability of the
Aseptic Business with respect to the litigation described in the section of the
Transferor Disclosure Schedule corresponding to Section 3(q); provided, however,
that the Assumed Liabilities shall not include (i) any liability of the
Transferor for unpaid Taxes (with respect to the Aseptic Business or otherwise)
for periods prior to the Closing, (ii) any liability of the Transferor for
income, transfer, sales, use and other taxes arising in connection with the
consummation of the transactions contemplated hereby (including any Income Taxes
arising because the Transferor is transferring the Acquired Assets), (iii) any
liability
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of the Transferor for the unpaid Taxes of any Person other than the Transferor,
as a transferee or successor, by contract or otherwise, (iv) any obligation of
the Transferor to indemnify any Person by reason of the fact that such Person
was a director, officer, employee or agent of the Transferor or was serving at
the request of the Transferor as a partner, trustee, director, officer, employee
or agent of another entity (whether such indemnification is for judgments,
damages, penalties, fines, costs, amounts paid in settlement, losses, expenses
or otherwise and whether such indemnification is pursuant to any statute,
charter, bylaw, agreement or otherwise), (v) any liability of the Transferor for
costs and expenses incurred in connection with this Agreement and the Stock
Purchase Agreement and the transactions contemplated hereby and thereby, (vi)
any accounts payable or accrued expenses of the Transferor, (vii) any liability
or obligation of the Transferor under this Agreement and (viii) any liability or
obligation with respect to any indebtedness other than indebtedness under any
capital lease identified in the section of the Transferor Disclosure Schedule
corresponding to Section 3(n)(xiv).
"CERCLA" has the meaning set forth in Section 3(x)(v).
"Closing" has the meaning set forth in Section 2(c).
"Closing Date" has the meaning set forth in Section 2(c).
"Closing Date Globe/Thank You License Agreement" means a license
agreement in form and substance as set forth in Exhibit A attached hereto
between the Transferor as licensor and the Transferee or a designee of the
Transferee as licensee.
"Closing Date Inventory" means all Inventory relating to the Aseptic
Business as of the close of business on the day immediately preceding the
Closing Date, as finally determined in accordance with Section 2(e)(ii)(A).
Items included in Closing Date Inventory shall be valued on the basis for their
valuation set forth in the notes to the Most Recent Balance Sheet. The
quantities and types of inventory included in Closing Date Inventory shall be
the book inventory of the Transferor with respect to the Aseptic Business as of
the close of business on the day immediately preceding the Closing Date
(reflecting any subsequent postings as of the close of business on the day
immediately preceding the Closing Date made in accordance with the past custom
and practices of the Transferor), and no physical inventory shall be conducted.
"Closing Date Inventory Statement" has the meaning set forth in
Section 2(e)(ii)(A).
"Closing Date Inventory Target" means $9,600,000.
"COBRA" means the requirement of Part 6 of Subtitle B of Title I of
ERISA and Code Section 4980B.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
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"Controlled Group" has the meaning set forth in Section 3(v).
"Damages" means all liabilities, demands, claims, actions or causes of
action, regulatory, legislative or judicial proceedings or investigations,
assessments, levies, losses, fines, penalties, damages, costs and expenses,
including, without limitation, reasonable fees and expenses of attorneys,
accountants and other professionals sustained or incurred in connection with the
defense or investigation of any claim.
"Delaware General Corporation Law" means the General Corporation Law of
the State of Delaware.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement, (b) qualified defined
contribution retirement plan or arrangement which is an Employee Pension Benefit
Plan, (c) qualified defined benefit retirement plan or arrangement which is an
Employee Pension Benefit Plan (including any Multiemployer Plan) or (d) Employee
Welfare Benefit Plan or fringe benefit or other retirement, bonus or incentive
plan or program, including without limitation any stock option or other
equity-based plan or severance plan or arrangement.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).
"Environmental Requirements" means all federal, state, local and
foreign statutes, regulations, ordinances and similar provisions having the
force or effect of law, all judicial and administrative orders and
determinations, and all common law, concerning pollution or protection of the
environment and public health and safety, including without limitation all those
relating to the presence, use, production, generation, handling, transportation,
treatment, storage, disposal, distribution, labeling, testing, processing,
discharge, release, threatened release, control or cleanup of any hazardous
materials, substances or wastes, chemical substances or mixtures, pesticides,
pollutants, contaminants, toxic chemicals, petroleum products or byproducts,
asbestos, polychlorinated biphenyls, noise or radiation.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Estimated Closing Date Inventory" has the meaning set forth in Section
2(e)(i).
"Excluded Liabilities" means all liabilities and obligations of the
Transferor (including without limitation all liabilities relating to the Aseptic
Business if and to the extent such liabilities arise from or relate to any fact,
circumstances or condition existing on or prior to the Closing Date) other than
the Assumed Liabilities.
"FDC Act" means the Federal Food, Drug and Cosmetic Act, as amended
from time to time.
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"Fiduciary" has the meaning set forth in ERISA Section 3(21).
"Financial Statements" has the meaning set forth in Section 3(d).
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Globe/Thank You Trademarks" means the trademarks set forth on Schedule
A to Exhibit A attached hereto.
"Governmental Entities" has the meaning set forth in Section 3(f).
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended from time to time.
"Income Tax" means any federal, state, local or foreign income tax,
including tax in lieu thereof (such as a tax on capital), and inducting any
interest, penalty, or addition thereto, whether disputed or not.
"Income Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Income Taxes, including
any schedule or attachment thereto, and including any amendment thereof.
"Indemnified Party" means a party that is entitled to indemnification
from another party pursuant to Section 8.
"Indemnifying Party" means a party that is required to provide
indemnification to another party pursuant to Section 8.
"Independent Firm" has the meaning set forth in Section 2(e)(ii)(A).
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all applications,
registrations, and renewals in connection therewith, (e) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing
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plans and proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
"Inventory" means raw materials, packaging supplies, work in process,
finished goods and spare parts.
"Knowledge of the Transferor" means (i) the actual knowledge, without
special investigation, of Xxxxxx Xxxxxx, Xxxx Xxxxxx or Xxxxxxx Xxxx, the Chief
Executive Officer, the Vice President and Chief Financial Officer and the Senior
Vice President, Strategic Development, respectively, of the Transferor, and (ii)
the actual knowledge, without special investigation, of Xxxxxxxx Xxxxx, Xxxxx
Xxxx, Xxxxxx Xxxxxx or Xxxxxxx Xxxxxxxx, the President, the Vice President,
Finance, the Vice President, Manufacturing, and the Vice President, Research,
respectively, of the Transferor's Xxxxxxx Xxxxx Foods division.
"Leased Premises" has the meaning set forth in Section 3(i)(ii).
"Most Recent Balance Sheet" means the statement of inventory and
property, plant and equipment with respect to the fiscal year ended June 27,
1998 contained in the Financial Statements.
"Most Recent Fiscal Year End" has the meaning set forth in
Section 3(d).
"Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
"Non-Compete Businesses" has the meaning set forth in Section 6(d).
"Non-Compete Period" has the meaning set forth in Section 6(d).
"Objection Notice" has the meaning set forth in Section 2(e)(ii)(A).
"Owned Premises" has the meaning set forth in Section 3(i)(i).
"Parties" has the meaning set forth in the preface.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization or a Governmental Entity.
"Records Retention Date" has the meaning set forth in Section 6(c).
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"Research and Development Facility" means the building known as "Xxxxxx
Harbor South" used in part by the Aseptic Business for research and development,
which is part of the Owned Premises.
"Securities Act" means the Securities Act of 1933, as amended from time
to time.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge or other security interest, other than (a) mechanic's, materialmen's and
similar liens being contested in good faith if the related payment obligation is
then due and payable, (b) liens for taxes not yet due and payable or for taxes
that the taxpayer is contesting in good faith, (c) purchase money liens and
liens securing rental payments under capital lease arrangements, (d) other liens
arising in the ordinary course of business and not incurred in connection with
the borrowing of money and (e) solely with respect to owned real property, other
encumbrances which, in the aggregate, do not materially adversely affect the
value of such real property or the owner's ability to use such real property for
its intended purpose.
"SPA Closing" has the meaning set forth in the preface.
"Subsidiary" means, with respect to any Person, any corporation,
limited liability company, partnership, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by that Person or one or more
Subsidiaries of that Person or a combination thereof. For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association or other business entity if
such Person or Persons shall be allocated a majority of limited liability
company, partnership, association or other business entity gains or losses or
shall be or control any managing director or general partner of such limited
liability company, partnership, association or other business entity.
"SWDA" has the meaning set forth in Section 3(x)(v).
"Taxes" means all taxes, charges, fees, premiums, levies, penalties or
other assessments imposed by any United States federal, state or local or
foreign taxing authority, including, but not limited to, Income Taxes, franchise
or capital stock taxes, sales taxes, use taxes, gross receipts taxes, real or
personal property taxes, excise taxes, transfer taxes, payroll, withholding,
social security or other taxes (including taxes or premiums for unemployment
insurance or similar governmental impositions), including any interest,
penalties or additions attributable thereto.
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"Third Party Claims" shall mean any claims for Damages which are
asserted or threatened by a Person, other than a Party or a successor or assign
of a Party, against any Indemnified Party or to which an Indemnified Party is
subject from such a Person.
"Threshold Amount" has the meaning set forth in Section 8(d)(ii).
"Transition Services Agreement" means the transition services agreement
in the form attached hereto as Exhibit B.
"Transferee" has the meaning set forth in the preface.
"Transferee Indemnitee" has the meaning set forth in Section 8(b).
"Transferee Savings Plan" has the meaning set forth in
Section 2(f)(iii).
"Transferred Employees" has the meaning set forth in Section 2(f).
"Transferor" has the meaning set forth in the preface.
"Transferor Disclosure Schedule" means the schedule entitled
"Transferor Disclosure Schedule" heretofore delivered by the Transferor, which
schedule is arranged in sections corresponding to the lettered and numbered
subsections contained in Section 3.
"Transferor Indemnitee" has the meaning set forth in Section 8(c).
"Transferor's Retirement Plans" has the meaning set forth in Section
2(f)(iv).
"Transferor's Savings Plans" has the meaning set forth in Section
2(f)(iv).
2. Transfer of Aseptic Business.
(a) Basic Transaction. On and subject to the terms and
conditions of this Agreement, the Transferor shall transfer, convey and deliver
to the Transferee all of the Acquired Assets at the Closing. In connection with
such transaction, the Transferor will grant to the Transferee a royalty-free
perpetual license of certain of the trademarks used in the Aseptic Business for
certain uses and enter into a transition services agreement for the benefit of
the Transferee. It is expressly agreed by the Parties that the Transferee may
choose to have the Aseptic Business conveyed to one or more Subsidiaries of the
Transferee rather than to the Transferee, provided that each such Subsidiary and
the particular assets to which it is to take title are identified to the
Transferor at least 15 days prior to the Closing Date. In such event, except to
the extent the context otherwise requires, each of the references to the
Transferee herein (including without limitation in the representations and
warranties of the Transferee in Section 4) shall be a reference not only to the
Transferee but also to each such Subsidiary.
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(b) Assumption of Certain Liabilities. On and subject to the
terms and conditions of this Agreement, the Transferee agrees to assume and
become responsible for all of the Assumed Liabilities at the Closing. The
Transferee will not assume or have any responsibility with respect to any
Excluded Liabilities.
(c) The Closing. Subject to the terms and conditions of this
Agreement, the closing of the transactions contemplated by this Agreement (the
"Closing") shall take place simultaneously with the SPA Closing (the date and
time of the Closing, the "Closing Date").
(d) Deliveries at the Closing. At the Closing, (i) the
Transferor will execute, acknowledge (if appropriate) and deliver to the
Transferee such instruments of transfer, conveyance and assignment (including
real property and Intellectual Property transfer documents) as the Transferee
may reasonably request, which instruments shall be in a form reasonably
satisfactory to the Transferee, (ii) the Transferor and the Transferee will
enter into the Closing Date Globe/Thank You License Agreement, (iii) the
Transferee and the Transferor will enter into the Transition Services Agreement
and (iv) the Transferee will execute, acknowledge (if appropriate) and deliver
to the Transferor an instrument of assumption in a form reasonably satisfactory
to the Transferor.
(e) Closing Date Inventory Adjustment.
(i) Estimated Closing Date Inventory. At least 3
business days in advance of the Closing, the Transferor shall
prepare in good faith and deliver to the Transferee an
estimate of Closing Date Inventory ("Estimated Closing Date
Inventory"). If Estimated Closing Date Inventory exceeds
Closing Date Inventory Target, the Transferee shall pay to the
Transferor at the Closing the amount of such excess, which
shall be payable in cash by wire transfer or delivery of other
immediately available funds (or at the election of the
Transferee by an offset on a dollar for dollar basis against
the cash consideration payable by the Transferor at the
closing under the Stock Purchase Agreement). If Estimated
Closing Date Inventory is less than Closing Date Inventory
Target, the Transferor shall pay to the Transferee at the
Closing the amount of such deficit, which shall be payable in
cash by wire transfer or delivery of other immediately
available funds.
(ii) Closing Date Inventory.
(A) Determination of Closing Date Inventory.
Within 45 days of the Closing Date, the Transferee
and its independent auditors shall deliver to the
Transferor a statement of Closing Date Inventory (the
"Closing Date Inventory Statement"). The Transferee
and its auditors will (i) make available to the
Transferor and its agents, attorneys and accountants
upon reasonable advance notice all records and work
papers necessary to understand the Closing Date
Inventory Statement and to calculate Closing
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Date Inventory and (ii) allow the Transferor and its
agents, attorneys and accountants upon reasonable
advance notice to interview any Transferee personnel
or independent auditor personnel significantly
involved in the preparation of the Closing Date
Inventory Statement. If the Transferor disagrees with
the computation of Closing Date Inventory contained
in the Closing Date Inventory Statement, the
Transferor may, within 30 days after receipt of the
Closing Date Inventory Statement, deliver a notice
(the "Objection Notice") to the Transferee setting
forth the objections of the Transferor and, to the
extent reasonably possible, Closing Date Inventory as
determined by the Transferor. The Transferee and the
Transferor will use reasonable efforts to resolve any
disagreements as to the computation of Closing Date
Inventory, but if they do not obtain a final
resolution within 15 days after the Transferee has
received the Objection Notice, the Transferee and the
Transferor will jointly retain Xxxxxx Xxxxxxxx LLP,
or if such firm is unwilling to serve, another
independent accounting firm of recognized national
standing that is not a public accountant of the
Transferee, the Transferor or any of their respective
Affiliates (an "Independent Firm") to resolve any
remaining disagreements. If the Transferee and the
Transferor are unable to agree on the choice of an
Independent Firm, the choice will be selected by lot
from those top five accounting firms that are
Independent Firms or, if no top five accounting firm
is an Independent Firm or is willing to serve,
selected by lot from those Independent Firms that are
willing to serve. The Transferee and the Transferor
will direct the chosen Independent Firm to render a
determination within 30 days of its retention and the
Transferee and the Transferor and their respective
agents will cooperate with the chosen Independent
Firm during its engagement. The chosen Independent
Firm will consider only those issues related to the
determination of Closing Date Inventory set forth in
the Objection Notice which the Transferee and the
Transferor have been unable to resolve. The
determination of the chosen Independent Firm will be
based on and consistent with the definition of
Closing Date Inventory included herein. The
determination of the chosen Independent Firm will be
conclusive and binding upon the Transferee and the
Transferor. In any proceeding described above in this
paragraph, all of the costs and expenses of the
Transferee (including reasonable attorneys' fees and
expenses) shall be borne by the Transferee, all of
the costs and expenses of the Transferor (including
reasonable attorneys' fees and expenses) shall be
borne by the Transferor and all costs and expenses of
the chosen Independent Firm shall be borne by the
Transferee in the event that the Closing Date
Inventory reflected in the Closing Date Inventory
Statement, as adjusted to reflect any resolution
between the Parties of any objections of the
Transferor to the Closing Date Inventory Statement,
is lower than Closing Date Inventory; otherwise the
Transferor shall bear all costs and expenses of the
chosen Independent Firm.
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(B) Payment. If Closing Date Inventory
exceeds Estimated Closing Date Inventory, the
Transferee shall pay to the Transferor within 5
business days of the final determination of Closing
Date Inventory the amount of such excess, which shall
be payable in cash by wire transfer or delivery of
other immediately available funds. If Closing Date
Inventory is less than Estimated Closing Date
Inventory, the Transferor shall pay to the Transferee
within 5 business days of the final determination of
Closing Date Inventory the amount of such deficit,
which shall be payable in cash by wire transfer or
delivery of other immediately available funds. No
interest shall be paid with respect to any adjustment
amount due and timely paid pursuant to this
subsection.
(f) Aseptic Business Employees.
(i) Subject to the succeeding provisions of this
Section 2(f), the Transferee will immediately following the
Closing Date (or, in the case of an employee within clause
(ii) of this sentence, immediately following the date of his
or her commencement of or return to active employment) offer
employment to (i) each employee with respect to the Aseptic
Business on the active payroll of the Transferor on the
Closing Date and (ii) each employee of the Transferor with
respect to the Aseptic Business not on its active payroll on
the Closing Date on account of an approved leave of absence,
disability leave or layoff if such employee returns to active
employment immediately upon the conclusion of any such leave
or layoff, or within the period required by law or any
applicable collective bargaining agreement (all such employees
being referred to herein as "Transferred Employees"). Each
such offer of employment shall be at the same initial salary
or wage level and bonus compensation applicable to such
Transferred Employee immediately prior to the Closing Date,
and with employee benefits and fringe benefits not materially
less than such benefits provided by the Transferor immediately
prior to the Closing Date. Such employment and the benefits to
be provided to the Transferred Employees shall recognize the
date of hire and time of service with the Transferor and its
Affiliates (and their respective predecessors) for all
purposes except as otherwise expressly provided in this
Section 2(f). The Transferor shall use reasonable best efforts
to cause the Transferred Employees to enter into employment
with the Transferee immediately after the Closing, and the
Transferee hereby authorizes the Transferor to communicate the
offer of employment and the terms thereof described in this
Section 2(f) on behalf of the Transferee to the Transferred
Employees. Nothing contained in this Section 2(f) shall confer
upon any Transferred Employee the right to continued
employment by the Transferee for any period of time after
immediately after the Closing Date which is not otherwise
required by law or the terms of any applicable collective
bargaining agreement.
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(ii) Effective as of the Closing Date, the
Transferred Employees shall cease to be covered under the
employee benefit plans of the Transferor, if any, and shall
participate under the employee benefit plans, programs and
policies maintained or established by the Transferee. Each
employee benefit plan, program or policy maintained or
established by the Transferee with respect to any Transferred
Employees shall credit the Transferred Employees covered
thereby for all purposes (other than benefit levels, and
unless such crediting would result in a duplication of
benefits) with the service that was recognized immediately
prior to the Closing Date under the comparable plan of the
Transferor maintained immediately prior to the Closing and,
with respect to each plan that is an Employee Welfare Benefit
Plan, the Transferred Employees shall be covered without
regard to any waiting period or pre-existing condition
restriction and shall receive credit for all deductibles,
co-payments and other out-of-pocket expenses incurred under
the Transferor's plans during the portion of the applicable
plan year that precedes the Closing Date. The Transferee shall
be bound by and shall honor the terms of each collective
bargaining agreement which applies to the Transferred
Employees. The Transferee shall, at its sole expense, provide
each Transferred Employee with any severance pay and benefits
applicable to such Transferred Employee pursuant to Exhibit C.
(iii) The section of the Transferor Disclosure
Schedule corresponding to this Section 2(f)(iii) lists each
Employee Benefit Plan that the Transferor maintains under
which any employee of the Transferor with respect to the
Aseptic Business is provided coverage (the "Transferor
Plans"). Transferor has made available to Transferee true and
correct copies of all such Employee Benefit Plans. Each of the
Transferor's Hourly Employees 401(K) Plan and Retirement
Savings and Incentive Plan (collectively, the "Transferor's
Savings Plans") has previously received a determination letter
from the Internal Revenue Service that the plan is qualified
under Section 401(a) of the Code and nothing has occurred
since the date of such determination that would materially and
adversely affect the qualification of such plan. The
Transferor's Savings Plans have been maintained and
administered in compliance in all material respects with ERISA
and the Code.
(iv) Effective as of the Closing Date, the Transferee
shall establish for the Transferred Employees a defined
contribution plan, or make the Transferred Employees eligible
for an existing defined contribution plan of the Transferee
that is qualified under Section 401(a) of the Code (the
"Transferee Savings Plan"). Upon the Transferor's receipt of
evidence satisfactory to it relative to the establishment or
the availability of the Transferee Savings Plan and that such
Plan is qualified under Section 401(a) of the Code, the
Transferor shall cause the trustee of the Transferor's Savings
Plans to transfer the account balances of the Transferred
Employees in the Transferor's Savings Plans to the
Transferee's Savings Plan, including without limitation, any
outstanding participant loans.
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(v) Effective as of the Closing Date, the Transferred
Employees shall cease active participation in the Transferor's
Master Salaried Retirement Plan and Master Hourly Pension Plan
(the "Transferor's Retirement Plans"). The Transferor shall
retain all assets of the Transferor's Retirement Plans and the
liabilities for benefits of the Transferred Employees accrued
through the Closing Date under the Transferor's Retirement
Plans. Each Transferred Employee shall be fully vested as of
the Closing Date and will be entitled to a distribution of his
or her benefits accrued as of the Closing Date under the
Transferor's Retirement Plans in accordance with the terms
thereof.
(vi) The Transferor agrees that it shall be solely
responsible for the provision of health care continuation
coverage required pursuant to the terms of COBRA for those
former employees of the Aseptic Business whose entitlement to
such continuation coverage occurred before the Closing Date.
The Transferee shall, to the extent required, offer
"continuation coverage" under its group health plans to all
Transferred Employees and comply with all notice and other
requirements under COBRA or similar state statue so that the
Transferor shall have no liability or obligation under COBRA
or a similar state statue to the Transferred Employees as a
result of the transactions contemplated by this Agreement.
(vii) The Transferee shall, for a period of 90 days
after the Closing Date, not cause any of the Transferred
Employees to suffer "employment loss" for purposes of the
Worker Adjustment and Retraining Notification Act and related
regulations, if such employment loss could create any
liability for the Transferor.
3. Representations and Warranties of the Transferor. The Transferor
represents and warrants to the Transferee that, subject in the case of the
representations and warranties in each particular section below to the
exceptions set forth in the corresponding section of the Transferor Disclosure
Schedule:
(a) Organization, Qualification and Power. The Transferor is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization.
(b) Authorization of Transaction. The Transferor has full
corporate power and corporate authority to execute and deliver this Agreement
and all other agreements contemplated hereby to which the Transferor is or is to
be a party and to perform its obligations hereunder and thereunder. The board of
directors of the Transferor has duly approved this Agreement and all other
agreements contemplated hereby to which the Transferor is or is to be a party
and has duly authorized the Transferor's execution and delivery of this
Agreement and all such other agreements and the consummation of the transactions
on the part of the Transferor contemplated hereby and thereby. No approval of
this Agreement or any such other agreement by the stockholders of the Transferor
is required. This Agreement and all such other agreements constitute the valid
and legally binding obligations of the Transferor, enforceable in accordance
with their respective terms,
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except as enforceability may be limited by bankruptcy or other laws affecting
creditor's rights generally and limitations on the availability of equitable
remedies.
(c) Noncontravention. The consummation of the transactions
contemplated by this Agreement does not (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge or other
restriction of any government, governmental agency or court to which the
Transferor is subject (except that no representation or warranty is made with
respect to any antitrust statute, regulation, rule or other restriction) or any
provision of the charter or bylaws (or similar governing documents) of the
Transferor or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require any notice under, any
material agreement, contract, lease, license, instrument or other arrangement to
which the Transferor is a party or by which it is bound or to which any of its
assets is subject (or result in the imposition of any Security Interest upon any
of its assets). The Transferor does not need to give any notice to, make any
filing with or obtain any authorization, consent or approval of, any government
or governmental agency in order for the Parties to consummate the transactions
or perform the obligations contemplated by this Agreement, other than in
connection with the provisions of the Xxxx-Xxxxx-Xxxxxx Act, and other than any
notice, filing, authorization, consent or approval that has been given, made or
obtained.
(d) Financial Statements. The Transferor has previously
delivered the following financial information for the Aseptic Business to the
Transferee: an unaudited statement of inventory and property, plant and
equipment as of June 27, 1998 (the "Most Recent Fiscal Year End") and unaudited
income statements for the fiscal years ended June 27, 1998 and June 28, 1997
(collectively, the "Financial Statements"). The Financial Statements have been
derived from the internal books and records of the Transferor, which have been
maintained in a manner consistent with the accounting practices of the
Transferor, and the financial information reflected in the Financial Statements
is included in the Transferor's consolidated financial statements which are
prepared in accordance with GAAP consistently applied. The Transferor makes no
other representation or warranty with respect to the Financial Statements.
(e) Events Subsequent to Most Recent Fiscal Year End. Since
the Most Recent Fiscal Year End, there has not been any material adverse change
in the business, operations or financial condition of the Aseptic Business.
Without limiting the generality of the foregoing, since that date:
(i) the Transferor has not sold, leased, transferred
or assigned any material assets, tangible or intangible, of
the Aseptic Business, except for sales of inventory in the
ordinary course of its business;
(ii) no party (including the Transferor) has
accelerated, terminated, made material modifications to or
canceled any material agreement, contract, lease or license to
which the Transferor is a party or by which it is bound with
respect to the Aseptic Business;
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(iii) the Transferor has not made any capital
expenditures materially in excess of the budgeted amount for
capital expenditures previously provided to the Transferee by
the Transferor with respect to the Aseptic Business;
(iv) the Transferor has not mortgaged, pledged or
subjected to any Security Interest any of the assets or
properties relating to the Aseptic Business;
(v) the Transferor has not waived or released any of
its material rights with respect to the Aseptic Business;
(vi) the Transferor has not granted any license or
sublicense of any material rights under or with respect to any
Intellectual Property related to the Aseptic Business;
(vii) the Transferor has not experienced any material
damage, destruction or loss (whether or not covered by
insurance) to property of the Aseptic Business;
(viii) the Transferor has not made any loan to, or
entered into any other transaction with, any of its officers
with respect to the Aseptic Business other than the advance or
reimbursement of reasonable business expenses incurred or to
be incurred in the ordinary course of business;
(ix) the Transferor has not entered into any
employment contract with any of its officers or any collective
bargaining agreement with respect to the Aseptic Business,
written or oral, or modified the terms of any existing such
contract or agreement;
(x) the Transferor has not granted any increase in
the compensation payable or to become payable to any of its
officers with respect to the Aseptic Business, except for
annual increases in the ordinary course of business consistent
with past practice;
(xi) the Transferor has not adopted, amended,
modified or terminated any bonus, profit-sharing, incentive,
severance or other plan, contract or commitment for the
benefit of any of its officers with respect to the Aseptic
Business (or taken any such action with respect to any other
Employee Benefit Plan);
(xii) the Transferor has not made any other material
change in employment terms for any of its officers with
respect to the Aseptic Business outside the ordinary course of
its business;
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(xiii) the Transferor has not experienced any
material adverse change in the business, operations or
financial condition of the Aseptic Business; and
(xiv) the Transferor has not committed to any of the
foregoing.
(f) Legal Compliance. The Aseptic Business has complied in all
material respects with all applicable laws (including rules, regulations, codes,
plans, injunctions, judgments, orders, decrees, rulings and charges thereunder)
of federal, state, local and foreign governments (and all departments, agencies
and political subdivisions thereof) (collectively, "Governmental Entities"). No
material investigation, review, inquiry or proceeding by any Governmental Entity
with respect to the Aseptic Business is pending or, to the Knowledge of the
Transferor, threatened. The Transferor currently is not subject to any
agreement, contract or decree with any Governmental Entity with respect to the
Aseptic Business arising out of any current or previously existing violations or
alleged violations.
(g) Regulatory Matters. The Aseptic Business possesses all
regulatory permits, licenses and other governmental authorizations and approvals
which it is required by applicable law to obtain, all of which have been duly
obtained and are in full force and effect; the Aseptic Business is in compliance
in all material respects with the respective terms and conditions thereof, and
there are no material proceedings pending or, to the Knowledge of the
Transferor, threatened seeking to revoke, cancel or suspend, or to adversely
modify, any thereof. The consummation of the transactions contemplated hereby
will not result in the revocation, cancellation, suspension or adverse
modification of any thereof.
(h) Tax Matters.
(i) The section of the Transferor Disclosure Schedule
corresponding to this Section 3(h) indicates the most recent
periods for which audits of the Transferor's Income Tax
Returns have closed.
(ii) Transferor with respect to the Aseptic Business
is not a party to any tax allocation or sharing agreement
which allocates tax liability to the Aseptic Business
independently of the allocation elected under Treasury
Regulation Section 1.1552-1. With respect to taxable periods
beginning on or after January 1, 1995, the Transferor (A) has
not been a member of an Affiliated Group filing a consolidated
U.S. federal Income Tax Return (other than a group the common
parent of which was Pro-Fac Cooperative, Inc.) and (B) has no
liability for the taxes of any Person (other than any of the
Transferor and its Subsidiaries) under Reg. Section 1.1502-6
(or any similar provision of state, local or foreign law), as
a transferee or successor, by contract, or otherwise.
(iii) The Transferor with respect to the Aseptic
Business has timely filed all tax and information returns
required to be filed and paid (or the Transferor has paid
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on behalf of the Aseptic Business), or has accrued on its
books and set up an adequate reserve for the payment of, all
Taxes reflected on such returns or required to be paid in
respect of the periods covered by such returns and has accrued
on its books and set up an adequate reserve for the payment of
all Taxes anticipated to be payable in respect of periods
through the end of the calendar month preceding the date
hereof. The Transferor with respect to the Aseptic Business is
not delinquent in the payment of any Taxes, assessment or
governmental charge. No deficiencies for any Taxes have been
proposed, asserted or assessed against the Transferor with
respect to the Aseptic Business have been proposed, asserted
or assessed that have not been resolved or settled, and no
requests for waivers of the time to assess any Taxes are
pending or have been agreed to. The Transferor with respect to
the Aseptic Business is not currently subject to audit or
examination of any of its tax returns by the Internal Revenue
Service or any state, municipal or other taxing authority. The
Transferor with respect to the Aseptic Business is not a party
to any action or proceeding by any Governmental Entity for the
assessment or the collection of Taxes. There are no Security
Interests on any of the assets of the Aseptic Business that
arose in connection with any failure (or alleged failure) to
pay any Tax.
(iv) The Transferor with respect to the Aseptic
Business has withheld amounts from its employees, independent
contractors, creditors, stockholders or other third parties in
compliance with the tax withholding provisions of applicable
federal, state and local laws, has filed all federal, state
and local returns and reports for all periods for which such
returns or reports would be due with respect to income
tax withholding, social security, unemployment taxes, income
and other Taxes and all payments or deposits with respect to
such taxes have been timely made and has notified all
employees and stockholders of their obligations to file all
forms, statements and reports with it in accordance with
applicable federal, state and local tax laws and has taken
reasonable steps to insure that such employees and
stockholders have filed all such forms, statements and reports
with it.
(i) Real Property.
(i) The section of the Transferor Disclosure Schedule
corresponding to this Section 3(i)(i) lists all real property
owned by the Transferor and used in the operation of the
Aseptic Business (the "Owned Premises"). With respect to each
such parcel of owned real property:
(A) the Transferor has good and marketable
title to the parcel of real property, free and clear
of any Security Interest, easement, covenant or other
restriction, except for easements and restrictions
existing generally with respect to properties of a
similar character which do not affect materially and
adversely the current use, occupancy or value, or the
marketability of title, of the property subject
thereto;
-17-
(B) there are no pending or, to the
Knowledge of the Transferor, threatened condemnation
proceedings, lawsuits or administrative actions
relating to the property or other matters affecting
materially and adversely the current use, occupancy
or value thereof;
(C) there are no outstanding options or
rights of first refusal to purchase the parcel of
real property, or any portion thereof or interest
therein; and
(D) there are no parties in possession of
the parcel of real property, other than tenants under
any leases disclosed in the section of the Transferor
Disclosure Schedule corresponding to Section 3(i)(ii)
who are in possession of space to which they are
entitled.
(ii) The section of the Transferor Disclosure
Schedule corresponding to this Section 3(i)(ii) lists all real
property leased or subleased to or by the Transferor in the
operation of the Aseptic Business (the "Leased Premises").
(iii) None of the businesses conducted by the
Transferor on any of the Owned Premises or Leased Premises,
and, to the Knowledge of the Transferor, none of the
improvements included in the Owned Premises or the Leased
Premises, is in material violation of any building line or use
or occupancy restriction, limitation, condition or covenant of
record, any zoning or building law, code or ordinance, or any
public utility or other easement.
(j) Personal Property. The Transferor has good title to, or a
valid leasehold in, or a contractual or common law right to use, all of the
personal property it uses in the conduct of the Aseptic Business, free and clear
of all Security Interests.
(k) Intellectual Property.
(i) the Aseptic Business has not infringed upon,
misappropriated or violated any Intellectual Property rights
of third parties, nor has the Transferor received any
complaint, claim, demand or notice alleging any such
infringement, misappropriation or violation (including any
claim that the Transferor must license or refrain from using
any Intellectual Property rights of any third party). To the
Knowledge of the Transferor, no third party has infringed
upon, misappropriated or violated any Intellectual Property
rights related to the Aseptic Business in any respect.
(ii) The section of the Transferor Disclosure
Schedule corresponding to this Section 3(k)(ii) identifies
each item of Intellectual Property that any third party (other
than Transferor) owns or licenses as licensee and that the
Aseptic Business
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uses pursuant to license, sublicense, agreement or
permission, other than any trade names or trademarks of
third parties used by the Aseptic Business under private
label arrangements for such third parties. With respect to
each item of Intellectual Property required to be so
identified in the Transferor Disclosure Schedule, the
Transferor has not granted any sublicense or similar right
with respect to the license, sublicense, agreement or
permission.
(iii) The section of the Transferor Disclosure
Schedule corresponding to this Section 3(k)(iii) identifies
each patent or trademark registration or pending application
which has been issued to or is filed by the Transferor with
respect to any of its Intellectual Property and identifies
each pending patent application or application for
registration which the Transferor has made with respect to any
of its Intellectual Property, in each case that is used by the
Aseptic Business in the conduct of its business ("Aseptic
Business-Related Intellectual Property"). The section of the
Transferor Disclosure Schedule corresponding to this Section
3(k)(iii) also identifies each license, agreement or other
permission which the Transferor has granted to any third party
with respect to any of the Aseptic Business-Related
Intellectual Property (together with any exceptions). The
Transferor has made available to the Transferee correct and
complete copies of all such patents, registrations,
applications, licenses, agreements and permissions (as amended
to date). With respect to each item of Aseptic
Business-Related Intellectual Property (in the case of each
such item other than a United States item, to the Knowledge of
the Transferor): (i) Transferor possesses all right, title and
interest in and to the item, free and clear of any Security
Interest, license, agreement, consent, license or other
restriction which adversely affects the use or ownership of
such item; (ii) the item is not subject to any outstanding
injunction, judgment, order, decree, ruling or charge; (iii)
no action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand is pending or, to the Knowledge of
the Transferor, threatened against the Transferor or any of
its Subsidiaries which challenges the legality, validity,
enforceability, use or ownership of the item; and (iv) the
Transferor has never agreed to indemnify any Person for or
against any infringement, misappropriation or other conflict
with respect to the item.
(l) Sufficiency of Assets. The Acquired Assets include all of
the assets necessary for the conduct of the businesses of the Aseptic Business
as conducted on the date of this Agreement.
(m) Inventory. The Inventory of the Aseptic Business is of a
quality and quantity which is usable or saleable in the ordinary course of its
business, except to the extent of the reserve for inventory writedown reflected
in the Most Recent Balance Sheet as adjusted in accordance with past custom and
practice for operations and transactions through the Closing Date. Each
ingredient and finished product included in the Inventory of the Aseptic
Business: (i) complies in all material respects with (x) the FDC Act and all
acts amending or supplementing the FDC Act (including,
-19-
without limitation, the Food Additive Amendment of 1958), and (y) the pure food
and drug laws of each and all states of the United States into which any such
product would normally be shipped by the respective Target, (ii) is not
adulterated or misbranded within the meaning of the FDC Act or such state laws,
(iii) is not prohibited from being introduced into interstate commerce under the
provisions of Sections 404 or 505 of the FDC Act, and does not contain a
hazardous substance or a banned substance.
(n) Contracts. The section of the Transferor Disclosure
Schedule corresponding to this Section 3(n) lists the following contracts and
other agreements of the Transferor with respect to the Aseptic Business:
(i) any partnership, joint venture or other similar
agreement or arrangement;
(ii) any agreement concerning confidentiality or
noncompetition;
(iii) any agreement with an Affiliate of the
Transferor;
(iv) any employment agreement or change in control
agreement with any of its officers or employees;
(v) any collective bargaining agreement;
(vi) any indenture, mortgage, promissory note, loan
agreement, guaranty or other agreement or commitment for the
borrowing of money or any related security agreement;
(vii) any agreement under which it has advanced or
loaned any amount to any of its officers and employees other
than the advance or reimbursement of reasonable business
expenses incurred or to be incurred in the ordinary course of
business;
(viii) any agreement under which the Transferor is
lessee or lessor of or holds or operates any real property;
(ix) any agreement under which the Transferor is
lessee or lessor of or holds or operates any material personal
property;
(x) any warehouse agreement;
(xi) any agreement for the sale or purchase of
products or services other than purchase or sale orders
entered into in the ordinary course of business;
-20-
(xii) any environmental indemnity agreement for the
benefit of a party other than the Transferor;
(xiii) any license, sublicense, agreement or
permission (as licensee or licensor) with respect to any of
the Aseptic Business-Related Intellectual Property;
(xiv) any capital lease;
(xv) any supply agreement; or
(xvi) any other agreement or group of related
agreements with the same party involving more than $65,000 per
year and not terminable by the Transferor on 6 months' or less
notice without penalty.
The Transferor has made available to the Transferee a correct and complete copy
of each such contract or agreement (as amended to date), except that the
Transferor has made available to the Transferee a written summary of the
significant terms (other than with respect to pricing and specifications) of the
Supply Agreement, dated as of October 9, 1996, by and between the Transferor and
Silgan Containers Corporation. With respect to each such contract or agreement
(insofar as the following relates to any party thereto other than the
Transferor, to the Knowledge of the Transferor): (i) the contract or agreement
is in full force and binding upon the parties thereto; (ii) no party is in
breach or default, and no event has occurred which with notice or lapse of time
would constitute a breach or default, or permit termination, modification or
acceleration, under the contract or agreement; and (iii) no party has repudiated
any provision of the contract or agreement.
(o) Powers of Attorney. There are no outstanding powers of
attorney executed on behalf of the Transferor with respect to the Aseptic
Business.
(p) Insurance. The section of the Transferor Disclosure
Schedule corresponding to this Section 3(p) contains a description of all
policies of fire, liability, workers' compensation and other forms of insurance
providing insurance coverage to or for the Aseptic Business, and the name of the
owner of each such policy. All premiums with respect thereto have been paid when
due and no notice of cancellation or termination has been received with respect
to any such policy. All such policies and the coverage provided thereunder will
continue to be in full force and effect through the Closing Date (but, except in
the case of coverage under those policies owned solely by the Aseptic Business,
if any, the coverage provided to or for the Aseptic Business thereunder may be
canceled as of the Closing Date). No such insurer has any right of payment,
whether by way of set-off, indemnity or otherwise, of any nature whatsoever,
against the Transferor or the Aseptic Business, as the case may be, in respect
of any recovery under any such policy.
(q) Litigation. The section of the Transferor Disclosure
Schedule corresponding to this Section 3(q) sets forth each instance in which
the Transferor with respect to Aseptic Business: (i) is subject to any
outstanding injunction, judgment, order, decree, ruling or charge or (ii) is a
party
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to any action, suit, proceeding, hearing or investigation of, in or before any
court or quasi-judicial or administrative agency of any federal, state, local or
foreign jurisdiction. The section of the Transferor Disclosure Schedule
corresponding to this Section 3(q) also sets forth all actions, suits,
proceedings, hearings or investigations of, in or before any court or
quasi-judicial or administrative agency of any federal, state, local or foreign
jurisdiction with which, to the Knowledge of the Transferor, the Transferor with
respect to Aseptic Business has been threatened.
(r) Arbitration. The Transferor is not a party to, or bound
by, any decree, order or arbitration award (or agreement entered into in any
administrative, judicial or arbitration proceeding) with respect to or affecting
the properties, assets, personnel or business activities of the Aseptic
Business.
(s) Product Warranty. The Transferor has not made any oral or
written warranties with respect to the quality or absence of defects of its
products with respect to the Aseptic Business which it has sold and which are in
force as of the date hereof. There are no claims pending or, to the Knowledge of
the Transferor, anticipated or threatened against the Transferor with respect to
the quality of or absence of defects in such products. The Transferor has not
paid or been required to pay direct, incidental or consequential damages to any
person in connection with any of such products.
(t) Employees. To the Knowledge of the Transferor, no
executive, key employee or significant group of employees plans to terminate
employment with the Aseptic Business during the next 12 months. The Aseptic
Business has not experienced any strike or material grievance, claim of unfair
labor practice or other collective bargaining dispute within the past two years.
To the Knowledge of the Transferor, there is no organizational effort presently
being made or threatened by or on behalf of any labor union with respect to
employees of the Aseptic Business.
(u) Top Customers. The section of the Transferor Disclosure
Schedule corresponding to this Section 3(u) sets forth a complete and correct
list of the top 10 customers by dollar volume of the Aseptic Business during the
fiscal year ended June 27, 1998. Except in the ordinary course, to the Knowledge
of the Transferor none of such customers intends to cease doing business with
the Aseptic Business or to significantly reduce the general level of business it
is currently doing with the Aseptic Business.
(v) Employee Benefits. The section of the Transferor
Disclosure Schedule corresponding to this Section 3(v) lists each Employee
Benefit Plan of the Transferor in which the employees of the Aseptic Business
participate on the date hereof. The Transferor has made available to the
Transferee true and correct copies (or summaries) of all such Employee Benefit
Plans. The Transferor does not participate in or contribute to any Multiemployer
Plan with respect to any employee or former employee of the Aseptic Business.
The Transferor has not incurred any liability to the PBGC, the Internal Revenue
Service, any Multiemployer Plan or otherwise with respect to any Employee
Pension Benefit Plan currently or previously maintained by members of the
controlled group of companies (as defined in Sections 414(b) and (c) of the
Code) that includes
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the Transferor (the "Controlled Group") that has not been satisfied in full, and
no condition exists that presents a material risk to any member of the
Controlled Group of incurring such a liability, other than any liability for
premiums due to the PBGC. The Transferor's Savings Plan has received a
determination letter from the Internal Revenue Service that the plan is
qualified under Section 401(a) of the Code and nothing has occurred since the
date of such determination that could adversely effect the qualified status of
such Plan. No payment (excluding any payment the right to which was created
subsequent to the Closing Date) that will be made by the Transferor to any
Transferred Employee after the Closing Date on account of the transactions
contemplated by this Agreement will be non-deductible to the Transferee or
subject to excise tax, under Code Section 280G or Code Section 4999, nor will
the Transferee be required to "gross up" any Transferred Employee because of the
imposition of such excise tax. The Transferor will make available to the
Transferee within 30 days of the date of this Agreement information regarding
the post-retirement medical benefits currently provided to employees of the
Aseptic Business and the obligations existing under FAS 106 with respect to such
employees.
(w) Guaranties. The Aseptic Business is not a guarantor or
otherwise is responsible for any liability or obligation (including
indebtedness) of any other Person.
(x) Environmental and Public Safety Matters.
(i) The Transferor and, to the Knowledge of the
Transferor, its predecessors has complied in all material
respects and is in compliance in all material respects with
all Environmental Requirements with respect to the Aseptic
Business.
(ii) Without limiting the generality of the
foregoing, the Transferor has obtained, has complied in all
material respects with and is in compliance in all material
respects with all material permits, licenses and other
authorizations required to be obtained by it pursuant to
Environmental Requirements applicable to the Owned Premises
and Leased Premises.
(iii) The Transferor has not received any written or
oral notice, report or other information regarding any actual
or alleged violation of Environmental Requirements, or any
actual or alleged liabilities or potential liabilities
(whether accrued, absolute, contingent, unliquidated or
otherwise), including any investigatory, remedial or
corrective obligations, under any Environmental Requirements,
relating to any of the Owned Premises or Leased Premises.
(iv) None of the following exists at any of the Owned
Premises or Leased Premises: (1) underground storage tanks,
(2) asbestos-containing material in any friable and damaged
form or condition, (3) materials or equipment containing
polychlorinated biphenyls or other hazardous substances or (4)
landfills, surface impoundments or disposal areas.
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(v) The Aseptic Business has not treated, stored,
disposed of, arranged for or permitted the disposal of,
transported, handled or released any substance, including
without limitation any hazardous substance, or owned or
operated any property or facility, in a manner that has given
or would give rise to any liability, including any liability
for response costs, corrective action costs, personal injury,
property damage, natural resources damages or attorney fees,
pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"),
or the Solid Waste Disposal Act, as amended ("SWDA"), or any
other Environmental Requirements; nor, to the Knowledge of the
Transferor, has any predecessor of the Transferor with respect
to the Aseptic Business done so.
(vi) This Section 3(x) contains the sole and
exclusive representations and warranties of the Transferor
with respect to environmental and public safety matters,
including without limitation any arising under any
Environmental Requirements, to the exclusion among others of
the Transferor's representations and warranties in Section
3(f).
(y) Certain Business Relationships With Affiliates of the
Transferor. The Aseptic Business has not been involved in any business
arrangement or relationship (including without limitation any support service
arrangement) with any other division or Affiliate of the Transferor and such
divisions or Affiliates do not own any material asset, tangible or intangible,
which is used in the Aseptic Business.
(z) Undisclosed Liabilities. [Intentionally left blank]
(aa) Brokers' Fees. Neither the Transferor nor any of its
Subsidiaries has any liability or obligation to pay any fees or commissions to
any broker, finder or agent with respect to the transactions contemplated by
this Agreement for which the Transferee or any of its Subsidiaries could become
liable or obligated.
(bb) Year 2000 Compliance. To the Knowledge of the Transferor,
a total expenditure not in excess of $75,000 with respect to ensuring the
computer systems (including all hardware, software, firmware, operating systems
and application systems) included in the Acquired Assets are year 2000 compliant
will be sufficient to bring such computer systems as of the date of this
Agreement into year 2000 compliance.
(cc) Disclosure. No representation or warranty by the
Transferor in this Agreement or in any document, written statement, certificate
or schedule required to be furnished to the Transferee pursuant hereto or in
connection with the transactions contemplated hereby, contains any untrue
statement of a material fact.
4. Representations and Warranties of the Transferee. The Transferee
represents and warrants to the Transferor that:
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(a) Organization of the Transferee. The Transferee is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation.
(b) Authorization of Transaction. The Transferee has full
corporate power and corporate authority to execute and deliver this Agreement
and all other agreements contemplated hereby to which the Transferee is or is to
be a party and to perform its obligations hereunder and thereunder. The board of
directors of the Transferee has duly approved this Agreement and all other
agreements contemplated hereby to which the Transferee is or is to be a party
and has duly authorized the Transferee's execution and delivery of this
Agreement and all such other agreements and the consummation of the transactions
on the part of the Transferee contemplated hereby and thereby. This Agreement
and all such other agreements constitute the valid and legally binding
obligations of the Transferee, enforceable in accordance with their respective
terms, except as enforceability may be limited by bankruptcy or other laws
affecting creditor's rights generally and limitations on the availability of
equitable remedies.
(c) Noncontravention. Neither the execution and delivery of
this Agreement and the other agreements contemplated hereby to which the
Transferee is or is to be a party, nor the consummation of the transactions on
the part of the Transferee contemplated hereby and thereby, (i) violates any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge or other restriction of any government, governmental agency or
court to which the Transferee is subject (except that no representation or
warranty is made with respect to any antitrust statute, regulation, rule or
other restriction) or any provision of the charter or bylaws (or similar
governing documents) of the Transferee or (ii) conflicts with, results in a
breach of, constitutes a default under, results in the acceleration of, creates
in any party the right to accelerate, terminate, modify or cancel, or requires
any notice under, any agreement, contract, lease, license, instrument or other
arrangement to which the Transferee is a party or by which it is bound or to
which any of its assets is subject (or results in the imposition of any Security
Interest upon any of its assets). The Transferee does not need to give any
notice to, make any filing with or obtain any authorization, consent or approval
of, any government or governmental agency in order for the Parties to consummate
the transactions contemplated by this Agreement, other than in connection with
the provisions of the Xxxx-Xxxxx-Xxxxxx Act.
(d) Brokers' Fees. Neither the Transferee nor any of its
Subsidiaries has any liability or obligation to pay any fees or commissions to
any broker, finder or agent with respect to the transactions contemplated by
this Agreement for which the Transferor or any of its Subsidiaries could become
liable or obligated.
5. Pre-Closing Covenants. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.
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(a) General. Each of the Parties shall use its reasonable best
efforts to take all action and to do all things necessary, proper or advisable
in order to consummate and make effective, as soon as reasonably practicable,
the transactions contemplated by this Agreement.
(b) Regulatory Matters and Approvals. Each of the Parties
shall give any notices to, make any filings with, and use its reasonable best
efforts to obtain any authorizations, consents and approvals of, governments and
governmental agencies in connection with the matters referred to in Sections
3(c) and 4(c). Without limiting the generality of the foregoing, the Transferee
and the Transferor shall each file any Notification and Report Forms and related
material that it may be required to file in connection with the transactions
contemplated by this Agreement with the Federal Trade Commission and the
Antitrust Division of the United States Department of Justice under the
Xxxx-Xxxxx-Xxxxxx Act, shall each use its reasonable best efforts to obtain an
early termination of the applicable waiting period, and shall each make any
further filings pursuant thereto that may be necessary, proper or advisable.
(c) Operation of Business. The Transferor shall cause the
Aseptic Business to conduct its business only in the ordinary course and
consistent with past practice, including causing the Aseptic Business to use all
commercially reasonable efforts to preserve intact its present business and
organization, to keep available the services of its current officers and
employees, to preserve its relationships with customers, suppliers and others
having business dealings with it and to maintain in full force and effect all
material contracts, documents and arrangements. The Transferor shall also cause
the Aseptic Business to not make any material change to its inventory management
practices and to manage its inventories in accordance with past custom and
practice.
(d) Full Access. The Transferor shall permit representatives
of the Transferee to have full access at all reasonable times, and in a manner
so as not to interfere unreasonably with the normal business operations of the
Aseptic Business, to all premises, properties, personnel, books, records
(including tax records and accounting work papers), contracts and documents of
or pertaining to the Aseptic Business. The Transferee shall treat and hold as
such any Confidential Information it receives from the Transferor in the course
of the access contemplated by this Section 5(d).
(e) Notice of Developments. Each Party shall give prompt
written notice to the other in the event its own representations and warranties
are discovered to be untrue as of the time made or in the event such Party
determines that such representations and warranties shall be untrue as if made
at and as of the Closing Date. No disclosure by any Party pursuant to this
Section 5(e), however, shall be deemed to amend or supplement the Transferor
Disclosure Schedule or to cure any misrepresentation or breach of warranty.
(f) Exclusivity. After the execution and delivery of this
Agreement, the Transferor shall not solicit, initiate, participate in
discussions of or encourage the submission of any proposal or offer from any
Person relating to the acquisition of all or substantially all of the assets of
the Aseptic Business.
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(g) Title Insurance Commitments. The Transferor will use its
commercially reasonable efforts to obtain and deliver or cause to be delivered
to the Transferee prior to the Closing ALTA (or equivalent) title insurance
commitments with respect to each of the Owned Premises and will deliver to the
Transferee all existing title insurance policies and surveys in the possession
or control of the Transferor with respect to the Owned Premises.
(h) Release of Liens on Acquired Assets. Prior to the Closing,
the Transferor (at its sole cost and expense) shall cause all Security Interests
to be removed and extinguished from each and every Acquired Asset.
6. Post-Closing Covenants. The Parties agree as follows with respect to
the period following the Closing.
(a) General. In case at any time after the Closing any further
action is necessary to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery of
such further instruments and documents) as the other Party reasonably may
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under Section 8). Each
of the Parties shall, and shall cause its officers, directors, employees and
accountants, and each of its Subsidiaries, to assist and cooperate fully with
the other Party and its officers, employees, accountants, counsel, financial
advisors and other representatives (as reasonably requested), in connection with
the preparation of any reports, schedules and other documents required to be
filed as a result of the transactions contemplated hereunder pursuant to the
requirements of federal and state securities laws, including for illustrative
purposes only, the preparation of audited financial statements and pro forma
financial information in connection with any reporting obligation under Section
13 or 15(d) of the Securities Exchange Act and Form 8-K.
(b) Allocation of Purchase Price. The Transferor and the
Transferee agree to allocate the value of the Aseptic Business, together with
the Assumed Liabilities and certain other relevant items, among the Acquired
Assets for tax purposes in accordance with the Code and applicable rules and
regulations thereunder as mutually agreed by the Transferor and the Transferee.
For purposes of the foregoing, the Aseptic Business shall be valued at the
amount determined by an appraiser selected by the Transferor subsequent to the
Closing and reasonably acceptable to the Transferee, the cost of which appraisal
shall be shared equally by the parties. Such appraisal shall include both an
overall valuation of the Aseptic Business and a valuation of the real property
and tangible personal property of the Aseptic Business. The Transferor and the
Transferee agree to report the allocation of such amounts in a manner entirely
consistent with such valuation and allocations and agree to act in accordance
with such valuation and allocations in the preparation of financial statements
and filing of all tax returns (including, without limitation, filing Form 8594
with its Federal income tax return for the taxable year that includes the date
of the Closing) and in the course of any tax audit, tax review or tax litigation
relating thereto.
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(c) Retention of and Access to Records. Until the seventh
anniversary of the Closing Date (the "Records Retention Date"), the Transferee
shall (and shall cause each of its Subsidiaries to) permit the Transferor and
its attorneys, accountants, agents and designees such access to, and right to
copy, the records and documents of the Aseptic Business which exist at the
Closing (regardless of whether such documents or records are in the possession
of the Aseptic Business, the Transferee or an Affiliate of the Transferee) as
the Transferor may deem reasonably necessary or reasonably desirable. Any such
examination and copying shall be at the expense of the Transferor, shall be
performed at the place where such records and documents are regularly maintained
and shall not unreasonably interfere with the normal business activities of the
furnishing party. In the event that the Transferee (or any of its Affiliates)
intends to destroy any of such records or documents prior to the Records
Retention Date, it shall so notify the Transferor in writing at least 90 days
before taking such action (and the Transferor shall have the right to review and
remove at its expense any of such records or documents to be destroyed).
(d) Non-Compete. The Transferor agrees not to (and to cause
its Subsidiaries not to), during the period of 5 years following the Closing
(the "Non-Compete Period"), directly or indirectly own any interest in, manage,
control, participate in, consult with, render services for or in any manner
engage in, any business (other than the manufacture, distribution and sale of
vegetable dips, snack dips and guacamole dips) that the Aseptic Business
conducts or engages in, within the United States or any other geographical area
in which, at the Closing Date, the Aseptic Business conducts or engages in such
business (the "Non-Compete Businesses"); provided that nothing herein shall
prohibit the Transferor and its Subsidiaries from: (i) acquiring any interest in
any Person which, directly or indirectly, engages in any of the Non-Compete
Businesses and subsequently managing, controlling, participating in, consulting
with or rendering services for such Person or engaging through such Person in
any of the Non-Compete Businesses, so long as (x) the sale of the products which
relate to the Non-Compete Businesses on a worldwide basis does not account for
more than the lesser of (1) $12,500,000 in sales on an annual basis and (2) 5%
of the sales of such Person either immediately before or after such acquisition
or (y) if within 270 days of such acquisition the Transferor disposes of to a
Person which is not an Affiliate of the Transferor, or enters into a definitive
agreement with a Person which is not an Affiliate of the Transferor to dispose
of, that portion of the acquired business that engages in the Non-Compete
Businesses; or (ii) owning less than 20% of the equity securities or other
interest in any Person, provided such ownership is passive other than the
exercise of shareholder rights. If, at the time of enforcement of this Section,
a court holds that the restrictions stated herein are unreasonable under
circumstances then existing, the Transferee and the Transferor agree that the
maximum period, scope or geographical area reasonable under such circumstances
shall be substituted for the stated period, scope or area. The Parties agree
that money damages would not be an adequate remedy for any breach of this
Section. Therefore, in the event of a breach or threatened breach of this
Section, the Transferee or its successors or assigns may, in addition to other
rights and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in order
to enforce, or prevent any violation of, the provisions hereof (without posting
a bond or other security). Transferor agrees that the restrictions contained in
this Section are reasonable.
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(e) Post-Closing License of Transferor's Names. Subject to the
terms and conditions of this Section, the Transferor grants to the Transferee
for a period of up to 2 years from the Closing Date, the right to use the
Aseptic Business Packaging/Labels on pudding and cheese sauce products sold by
the Aseptic Business subsequent to the Closing in accordance with the past
custom and practice of the Aseptic Business. The Transferee shall cause any such
product on which any of the Aseptic Business Packaging/Labels is used to be of a
character and quality substantially equivalent to the character and quality of
such product manufactured and sold, or caused to be manufactured and sold, by
the Aseptic Business before the Closing Date. The Transferee shall destroy and
not use any damaged or imperfect Aseptic Business Packaging/Labels. From time to
time upon reasonable notice, the Transferor shall have the right, at its
expense, to conduct inspections during normal business hours of the
manufacturing operations of the Aseptic Business to ensure that the Transferee
is complying with the foregoing obligations.
(f) Research and Development Facility. The Transferee grants
to the Transferor, for the 90 day period immediately subsequent to the Closing,
the right to occupy, rent free, the Research and Development Facility and use
the related office equipment and supplies in accordance with the past custom and
practice of the employees of the Transferor which occupied the Research and
Development Facility prior to the date of this Agreement and which are employed
by the Transferor subsequent to the Closing.
7. Closing. The Closing shall take place simultaneously with the SPA
Closing. The obligations of the Transferor and the Transferee to consummate the
Closing are subject to the conditions to closing set forth in the Stock Purchase
Agreement.
8. Indemnification.
(a) General. From and after the Closing, the Parties shall be
indemnified as provided in this Section 8. For the purposes of this Section 8,
each Party shall be deemed to have remade all of its representations and
warranties contained in this Agreement at the Closing with the same effect as if
originally made at the Closing; provided that for purposes thereof the
Transferor Disclosure Schedule shall be deemed amended to reflect any changes
therein furnished to the Transferee by the Transferor in writing in connection
with the Closing that are contemplated herein or permitted herein.
(b) Indemnification of Transferee Indemnitees. The Transferor
shall indemnify, save and keep the Transferee and its successors and permitted
assigns, and their respective directors, officers, employees and agents, and the
heirs, executors and personal representatives of each of the foregoing (each a
"Transferee Indemnitee" and collectively the "Transferee Indemnitees"), harmless
against and from all Damages sustained or incurred by any Transferee Indemnitee
as a result of or arising out of:
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(i) any inaccuracy in or breach of any representation
and warranty made by the Transferor to the Transferee herein
or in any other document executed in connection with the
Closing under this Agreement;
(ii) any breach by the Transferor of, or failure of
the Transferor to comply with, any of the covenants or
obligations under this Agreement to be performed by the
Transferor (including, without limitation, the obligations of
the Transferor under this Section 8);
(iii) any liability or obligation which is an
Excluded Liability (including any liability or obligation that
becomes a liability or obligation of the Transferee by
operation of law, bulk sale statute or otherwise);
(iv) any Taxes of the Transferor; or
(v) the Transferor's failure to satisfy its
obligations under any of its Employee Benefit Plans.
(c) Indemnification of Transferor Indemnitees. The Transferee
shall indemnify, save and keep the Transferor and its successors and permitted
assigns, and its directors, officers, employees and agents, and the heirs,
executors and personal representatives of each of the foregoing (each a
"Transferor Indemnitee" and collectively the "Transferor Indemnitees"), harmless
against and from all Damages sustained or incurred by any Transferor Indemnitee
as a result of or arising out of:
(i) any inaccuracy in or breach of any representation
and warranty made by the Transferee to the Transferor herein
or in any other document executed in connection with the
Closing under this Agreement;
(ii) any breach by the Transferee, or failure of the
Transferee to comply with, any of the covenants or obligations
under this Agreement to be performed by the Transferee
(including, without limitation, the obligations of the
Transferee under this Section 8); or
(iii) any liability or obligation which is an Assumed
Liability.
(d) Limitation on Indemnification Obligations.
(i) All representations and warranties of the
Transferor and the Transferee contained in this Agreement,
other than any intentional misrepresentation (which shall not
be subject to any survival period) and the representations and
warranties of the Transferor in Sections 3(h) and 3(v), shall
survive the Closing and continue in full force and effect for
a period of 18 months thereafter. Each of the
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representations and warranties of the Transferor contained in
Section 3(h) shall survive the Closing and continue in full
force and effect until thirty days after the expiration of the
statute of limitations applicable to the subject thereof. Each
of the representations and warranties of the Transferor
contained in Section 3(v) shall survive the Closing and
continue in full force and effect thereafter. A claim by a
Transferee Indemnitee or a Transferor Indemnitee for
indemnification under Section 8(b)(i) or 8(c)(i),
respectively, shall be ineffective unless such Person delivers
a written claim for indemnification within the survival period
specified in this Section 8(d)(i) as applicable to the
representation or warranty that is the subject of such claim.
(ii) Notwithstanding anything to the contrary
contained herein, (A) the Transferee Indemnitees shall only be
entitled to indemnification pursuant to Section 8(b)(i) once
the aggregate amount otherwise payable to the Transferee
Indemnitees pursuant to such Section exceeds an amount equal
to $1,330,000 (the "Threshold Amount"), and after such
aggregate amount exceeds such dollar amount the Transferee
Indemnitees shall be entitled to seek indemnification only for
indemnification claims above the Threshold Amount, and (B) the
indemnification to which the Transferee Indemnitees are
entitled pursuant to Section 8(b)(i) shall be subject to an
aggregate ceiling equal to $33,250,000; provided that such
Threshold Amount and such ceiling shall not apply to any
breaches of representation and warranties contained in
Sections 3(h) and 3(v) or to any intentional
misrepresentation.
(e) Cooperation. Subject to the provisions of Section 8(f),
the Indemnifying Party shall have the right, at the Indemnifying Party's own
expense, to participate in the defense of any Third Party Claim, and if said
right is exercised, the Indemnifying Party and the Indemnified Party shall
cooperate in the investigation and defense of said Third Party Claim.
(f) Third Party Claims Subject to Indemnification.
(i) Promptly following the receipt of notice of a
Third Party Claim for which it may seek indemnification
hereunder, the party receiving the notice of the Third Party
Claim shall notify the Indemnifying Party of such Third Party
Claim. The failure to give such notice shall not relieve the
Indemnifying Party of its obligations under this Agreement
except to the extent that the Indemnifying Party is prejudiced
as a result of the failure to give such notice. Within 15
business days after receipt of the notice by the Indemnifying
Party pursuant to the preceding sentence, the Indemnifying
Party shall notify the Indemnified Party whether it elects to
undertake the defense of the Third Party Claim. If the
Indemnifying Party elects to undertake the defense of such
Third Party Claim, it shall do so at its own expense with
counsel of its own choosing and it shall acknowledge in
writing its indemnification obligations as provided in this
Agreement to the Indemnified Party
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as to such Third Party Claim. If the Indemnifying Party elects
not to defend such Third Party Claim or fails to pursue the
defense of such Third Party Claim diligently, the Indemnified
Party shall have the right to undertake the defense of such
Third Party Claim through counsel of its own choosing. The
Party that defends the Third Party Claim shall keep the other
Party fully advised of the progress and disposition of such
claim.
(ii) In the event the Indemnifying Party elects not
to undertake the defense of a Third Party Claim or fails to
pursue diligently the defense of such claim and the
Indemnified Party litigates or otherwise contests or settles
the Third Party Claim, then, provided that and to the extent
that a final determination has been made that the Indemnified
Party is entitled to indemnification therefor hereunder, the
Indemnifying Party shall promptly reimburse the Indemnified
Party for amounts paid to litigate or otherwise contest or
settle such claim and all amounts paid in satisfaction of a
judgment against the Indemnified Party in contesting such
claim and in providing its right to indemnification hereunder,
all in accordance with the provisions of this Section 8.
(iii) No Third Party Claim will be settled by the
Indemnifying Party or the Indemnified Party without the
consent of the other, which consent will not be unreasonably
withheld or delayed; provided, however, that if such claim
asserts that the Indemnifying Party is jointly and severally
liable and the Indemnified Party shall be fully released from
all liability relating to such Third Party Claim in connection
with such settlement, the Indemnifying Party shall not be
required to obtain the consent of the Indemnified Party. If,
however, the Indemnified Party refuses to consent to a bona
fide offered settlement which the Indemnifying Party wishes to
accept, the Indemnified Party shall be required to continue to
defend such Third Party Claim free of any participation by the
Indemnifying Party, at the sole expense of the Indemnified
Party. In such event, the Indemnifying Party shall pay to the
Indemnified Party the amount of the offer of settlement which
the Indemnified Party refused to accept, plus the costs and
expenses incurred by the Indemnified Party prior to the date
the Indemnifying Party notifies the Indemnified Party of the
offer of settlement for which the Indemnified Party is
entitled to indemnification, all in accordance with the terms
of this Section 8, and, upon the payment or receipt of such
amount, as the case may be, the Indemnifying Party shall have
no further liability with respect to such Third Party Claim.
The Indemnifying Party shall be entitled to recover from the
Indemnified Party any additional expenses incurred by the
Indemnifying Party as a result of the decision of the
Indemnified Party to pursue the matter.
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(g) Exclusivity.
(i) Except to the extent such limitation is
prohibited by law and such prohibition is not waivable by the
Transferee Indemnitees, the indemnification provisions of this
Section 8 shall constitute the exclusive remedy of the
Transferee Indemnitees in connection with this Agreement or
the transactions contemplated herein, including without
limitation for any of the matters described in Sections 8(b).
To the maximum extent permitted by law, each of the Transferee
Indemnitees waives the benefit of any such prohibition.
(ii) Except to the extent such limitation is
prohibited by law and such prohibition is not waivable by the
Transferor Indemnitees, the indemnification provisions of this
Section 8 shall constitute the exclusive remedy of the
Transferor Indemnitees in connection with this Agreement or
the transactions contemplated herein, including without
limitation for any of the matters described in Sections 8(c).
To the maximum extent permitted by law, each of the Transferor
Indemnitees waives the benefit of any such prohibition.
9. Termination.
(a) If the All Cash Alternative becomes applicable or if the
Stock Purchase Agreement is terminated in accordance with the terms and
conditions thereof, then this Agreement shall automatically terminate without
any liability of any Party to any other Party (except for any liability of any
Party then in breach, which shall survive any such termination).
(b) If this Agreement is terminated pursuant to Section 9(a),
all rights and obligations of the Parties hereunder shall terminate without any
liability of any Party to any other Party (except for any liability of any Party
then in breach, which shall survive any such termination).
10. Miscellaneous.
(a) Press Releases and Public Announcements. Neither Party
(nor any of its Affiliates) shall issue any press release or make any public
announcement or disclosure relating to the subject matter of this Agreement
without the prior written approval of the other Party, which approval shall not
be unreasonably withheld or delayed, unless such disclosure is required by
applicable law or governmental regulation or by order of a court of competent
jurisdiction (in which case prior to making such disclosure the Party which
proposes to make such disclosure shall give written notice to the other Party,
describing in reasonable detail the proposed content of such disclosure, and
shall permit the other Party to review and comment upon the form and substance
of such disclosure).
(b) No Third-Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any Person other than the Parties and their
respective successors and permitted
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assigns; provided, however, that the provisions of Section 8 concerning
indemnification are intended for the benefit of the Indemnified Parties and
their respective heirs, executors, personal representatives, successors and
assigns.
(c) Expenses. Whether or not the transactions contemplated by
this Agreement are consummated, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the Party incurring such expenses; provided that the Transferee shall promptly
pay all out-of-pocket expenses incurred by the Transferor or any of its
Subsidiaries in connection with any assistance or cooperation requested by the
Transferee pursuant to the second sentence of Section 6(a).
(d) Entire Agreement. This Agreement constitutes the entire
agreement between the Parties and supersedes any prior understandings,
agreements or representations by or between the Parties, written or oral (other
than the Stock Purchase Agreement), to the extent they related in any way to the
subject matter hereof.
(e) Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties and their respective successors and
permitted assigns. No Party may assign either this Agreement or any of its
rights, interests or obligations hereunder without the prior written approval of
the other Party.
(f) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original but which together shall
constitute one and the same instrument.
(g) Headings. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand, claim
or other communication hereunder shall be sent by registered or certified mail,
return receipt requested, postage prepaid and addressed to the intended
recipient as set forth below:
If to the Transferor:
Agrilink Foods, Inc.
00 Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, Chief Executive Officer
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With a copy (which shall not constitute notice to the Transferor) to:
Xxxxxx Beach & Xxxxxx, LLP
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
If to the Transferee:
Xxxx Foods Company
0000 X. Xxxxx Xxxx
Xxxxxxxx Xxxx, XX 00000-0000
Attention: President
With a copy (which shall not constitute notice to the Transferee) to:
Xxxxxxxx & Xxxxx
000 X. Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Esq.
or by any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail or electronic mail). No such notice,
request, demand, claim or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims and
other communications to it hereunder are to be delivered by giving the other
Party notice in the manner herein set forth.
(i) Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Illinois without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Illinois or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Illinois.
(j) Amendments and Waivers. The Parties may mutually amend any
provision of this Agreement at any time prior to the Closing with the prior
authorization of their respective boards of directors. No amendment of any
provision of this Agreement shall be valid unless the same shall be in writing
and signed by the Parties. No waiver by any Party of any default,
misrepresentation or breach of warranty or covenant hereunder shall, unless
expressly so provided therein, be deemed to extend to any prior or subsequent
default, misrepresentation or breach of warranty or covenant hereunder
or affect in any way any rights arising by virtue of any prior or subsequent
occurrence.
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(k) Severability. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
(l) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean "including, without limitation." As used in this
Agreement (including any amendments hereto), the masculine, feminine or neuter
gender and the singular or plural number shall be deemed to include the others
whenever the context so requires.
(m) Incorporation of Exhibits and Disclosure Schedules. The
Exhibits identified in this Agreement and the Transferor Disclosure Schedule are
incorporated herein by reference and made a part hereof.
*****
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
AGRILINK FOODS, INC.
By: _________________________________________
Title: ______________________________________
XXXX FOODS COMPANY
By: _________________________________________
Title: ______________________________________
EXHIBIT A
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (including Schedule A hereto, this "Agreement")
is made on [__________], 1998, by and between Agrilink Foods, Inc., a New York
corporation ("Licensor"), and Xxxx Foods Company, a Delaware corporation
("Licensee"). Certain capitalized terms used herein are defined in Section 1.
Recitals:
Pursuant to the Asset Transfer Agreement, dated July 24, 1998, by and
between Licensee and Licensor (the "Asset Transfer Agreement"), Licensor is
transferring to Licensee its Aseptic Business (as hereinafter defined). Licensor
is retaining certain of the trademarks used in the Aseptic Business, but, as
required by the Asset Transfer Agreement, the Licensor is granting to the
Licensee pursuant to this Agreement a royalty-free and perpetual license with
respect to the trademarks set forth on Exhibit A attached hereto for certain
uses (the "Trademarks").
THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which the parties acknowledge, the parties agree as follows:
1. Definitions
In this Agreement, the following terms shall have the following
meanings:
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Aseptic Business" means the aseptic business of the Transferor,
including without limitation all operations of the Transferor conducted out of
its Benton Harbor, Michigan facility and all operations of the Transferor
related to or supporting the sales shown in the Financial Statements (as defined
in the Asset Transfer Agreement).
"Aseptic Product" means (i) any product currently being manufactured or
processed by the Aseptic Business and (ii) any other product which, at the time
of Licensee's first use of a Trademark thereon, the Licensor is not then and has
not theretofore been using such Trademark on such product.
"Confidential Information" means and includes all information relating
to Aseptic Products, together with all information concerning any party's
business activities, processes, technology, know-how of every kind, customers,
suppliers, contracts, finances, personnel, research, plans,
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policies and intentions, including matters which, though technically not
confidential or trade secrets, might prove prejudicial to the relevant party if
disclosed to others. Confidential Information shall not include information
which (a) is or becomes publicly known otherwise than by a breach of this or any
other agreement, (b) is already known to the disclosing party prior to
disclosure by the party claiming the information was Confidential Information,
(c) is disclosed to the disclosing party by a third party who has a legal right
to make the disclosure or (d) is required to be disclosed to the public by
applicable law. The parties acknowledge that any party shall be permitted to
disclose Confidential Information required to be disclosed by law to certain
governmental authorities and, in such circumstances, the disclosing party shall
take all reasonable steps to protect the confidentiality of such Confidential
Information.
"Xxxx Logo" means the bird-on-mailbox logo of Licensee, U.S. Reg. Nos.
1,519,979 and 1,342,947.
"Permitted Use" means use of a Trademark in association with the sale
of an Aseptic Product.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization or a governmental entity (or any
department, agency or political subdivision thereof).
"Promotional and Advertising Material" means labels, packages,
advertising brochures, catalogues and other written or graphic material, all
media advertising including television, radio, newspaper and other media
advertising and all other materials upon which any of the Trademarks is placed.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
"Term" means a term commencing as of the date hereof and continuing
perpetually.
"Territory" means anywhere in the United States or the world.
"Trademarks" has the meaning set forth in the Recitals, and also
includes any additional registered trademarks obtained by Licensor pursuant to
Section 2.3 of this Agreement.
2. Grant of Rights
2.1. Subject to the terms and conditions of this Agreement, Licensor
grants to Licensee an exclusive right (including without limitation as against
Licensor) to use the Trademarks for any Permitted Use in the Territory during
the Term.
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2.2. Licensor shall maintain at its expense the registration of the
Trademarks currently in effect as described on Schedule A attached hereto.
2.3. In the event Licensee makes a Permitted Use of a Trademark in
association with the sale of an Aseptic Product that is not included within the
product class or classes to which such Trademark relates, Licensor consents to
such Permitted Use and agrees that, upon the request of and at the expense of
Licensee, Licensor shall use commercially reasonable efforts to promptly obtain
such registration as Licensee requests of such Trademark for such Permitted Use.
3. No Royalty
3.1. Licensee will have the right to use the Trademarks for any
Permitted Use during the Term of this Agreement on a royalty-free basis.
Licensee shall have no obligation to use the Trademarks or to sell or attempt to
sell any Aseptic Products in association with any of the Trademarks.
4. Rights of Ownership
4.1. Licensee acknowledges that:
(a) the Trademarks are the exclusive property of Licensor;
(b) nothing in this Agreement gives Licensee any right,
title or interest in or to the Trademarks by itself
or in combination with any other words, except in
accordance with this Agreement; and
(c) all use and any goodwill generated through the use of
the Trademarks shall enure exclusively to the benefit
of Licensor.
5. Standards
5.1. Aseptic Products manufactured and sold, or caused to be sold, by
Licensee in association with any of the Trademarks shall be of a character or
quality substantially equivalent to the respective standards, specifications and
operating procedures relating to Aseptic Products manufactured and sold, or
caused to be sold, by Licensee before the date of this Agreement.
5.2. Licensee shall use the Trademarks only for a Permitted Use.
5.3. Licensee shall not use any other xxxx, name, style or design
(other than the Xxxx Logo on the back panel of product packaging) in association
with any of the Trademarks without the written consent of Licensor, which
consent shall not be unreasonably withheld or delayed. Licensee shall not add to
or modify any of the Trademarks without the prior written consent of Licensor.
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5.4. Licensee shall not register or attempt to register any of the
Trademarks or any other xxxx, name, style or design which is confusingly similar
to any of the Trademarks, but shall fully cooperate with Licensor by providing
any and all information and materials and executing whatsoever documents as may
be reasonably necessary to enforce the Trademarks against infringement, as may
be requested by Licensor at the expense of Licensor.
6. Right to Inspect
6.1. Licensee shall maintain a vigorous quality control and safety
assurance program with respect to Aseptic Products. From time to time during the
Term and upon reasonable notice, Licensor shall have the right to appoint at its
expense an independent quality inspector or other representative or professional
to conduct inspections during normal business hours of the manufacturing
operations of Licensee for Aseptic Products on which Licensee uses any of the
Trademarks and to ensure that Licensee is complying with its obligations under
this Agreement. Licensor shall cause any inspector or other representative or
professional appointed pursuant to this Section to execute a confidentiality
agreement in favor of Licensee, the form of such confidentiality agreement to be
acceptable to Licensee in its reasonable judgment.
7. Infringement
7.1. Licensee shall promptly notify Licensor of any conflicting use or
any act of infringement, passing-off or unfair competition involving any of the
Trademarks or any marks which may be confusingly similar to any of the
Trademarks which come to Licensee's attention.
7.2. Licensor, at its own expense, shall have the exclusive right to
institute, defend and settle any litigation or proceedings involving the
Trademarks. At Licensor's expense, Licensee shall cooperate with Licensor and
shall supply such information and do such acts as are reasonably requested by
Licensor or desirable in relation to any such litigation or proceedings.
Notwithstanding the foregoing, if Licensor fails to pursue or diligently pursue
a claim or action against a third party which is infringing on any of the
Trademarks (each of such determinations to be made in the good faith judgment of
Licensee), Licensee shall have the right to commence litigation or take any
other action against such third party, with counsel of its own choice, at the
sole cost and expense of (and with any recovery for the sole benefit of)
Licensee. In such event, Licensee shall keep Licensor fully advised of the
progress and disposition of such litigation or action. Licensor shall have no
right to participate in any such litigation or other action or in connection
with any settlement discussions related thereto or to make any decision or
determination in connection therewith. Licensor shall cooperate with Licensee
and its counsel as reasonably requested by Licensee, at the sole cost and
expense of Licensee.
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8. Indemnity and Recalls
8.1. Licensee shall indemnify Licensor and its successors and assigns,
and their respective directors, officers, employees and agents, and the heirs,
executors and personal representatives of each of the foregoing (the
"Indemnified Parties") in respect of any and all claims, costs, damages, fines,
penalties, expenses and liabilities, including without limitation all economic
losses and all legal and other professional costs, which may be suffered or
incurred by any Indemnified Party, in connection with a claim, demand, action,
suit or proceeding brought by a Person and arising out of or relating to (a) the
manufacture, sale or distribution of any Aseptic Product bearing any of the
Trademarks, (b) the use or distribution by Licensee or its agents of Promotional
and Advertising Material bearing any of the Trademarks or (c) any product
liability matter relating to any Aseptic Product bearing any of the Trademarks
or any alleged defect or failure or impurity in any Aseptic Product or its
packaging bearing any of the Trademarks including, without limitation, all costs
of any product recall in connection with any Aseptic Product bearing any of the
Trademarks and any loss of property, economic loss, bodily injury or death of
any Person relating to any such Aseptic Product or its packaging; provided,
however, that such indemnification shall not extend to claims that any Trademark
used in accordance with this Agreement infringes the trademark or copyright
rights of third parties. Licensor shall not settle any such matter without
obtaining Licensee's prior written consent to the terms of settlement, such
consent not to be unreasonably withheld.
8.2. The need for any product recall of any Aseptic Product bearing any
of the Trademarks and the manner in which such product recall shall occur shall
be determined by senior executive officers of Licensee in consultation with
senior executive officers of Licensor. Licensee shall pay the costs of all
product recalls relating to any Aseptic Product bearing any of the Trademarks.
Licensee shall handle all aspects of any such product recall relating to any
Aseptic Product bearing any of the Trademarks. In the event of a product recall,
Licensor and Licensee shall mutually agree upon the manner in which all consumer
queries and complaints are to be handled, and Licensee hereby agrees to
expressly disclaim in each communication required as part of such recall, any
association between such recall and the businesses of the Licensor relating to
the Trademarks.
9. Termination
9.1. If one party is in material default of its obligations under this
Agreement, the other party may give notice in writing to the defaulting party
requiring the defaulting party to remedy the default within 30 days. If the
defaulting party fails to remedy the default within 30 days, the other party may
terminate this Agreement by notice in writing to the defaulting party effective
on the date of delivery of the written notice in accordance with this Agreement.
9.2. If Licensee files a petition under any federal or state bankruptcy
or insolvency law seeking reorganization, arrangement or any other relief
thereunder, or a petition is filed against Licensee under any federal or state
bankruptcy or insolvency law, or Licensee makes an assignment for the benefit of
creditors or seeks or consents to the appointment of a receiver, liquidator or
trustee,
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or a receiver, liquidator or trustee is appointed for Licensee or its property,
or Licensee otherwise demonstrates an inability to pay its debts as they become
due, then this Agreement shall terminate automatically.
10. Consequences of Termination
10.1. Upon termination of this Agreement, Licensee shall:
(a) immediately cease all use of the Trademarks and
thereafter shall not sell any products bearing any of
the Trademarks; and
(b) immediately cease use of the Promotional and
Advertising Material which is in Licensee's
possession, power or control.
11. Disclosure of Confidential Information
11.1. The parties agree that they shall not, directly or indirectly, at
any time either during the continuance of this Agreement or at any time
following the termination hereof, disclose or use any Confidential Information
which they acquire or learn by reason of this Agreement.
11.2. The parties acknowledge that a breach of this Section of this
Agreement by any party may cause irreparable harm and in the event of such a
breach, the nondefaulting party may seek immediate equitable and other relief
from a court of competent jurisdiction upon proof of such breach.
12. Amendments and Waivers
The parties may mutually amend any provision of this Agreement. No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by the parties. No waiver by any party of any
default, misrepresentation or breach of warranty or covenant hereunder shall,
unless expressly so provided therein, be deemed to extend to any prior or
subsequent default, misrepresentation or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent occurrence.
13. Headings
The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.
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14. Governing Law
This Agreement shall be governed by and construed in accordance with
the domestic laws of the State of Illinois without giving effect to any choice
or conflict of law provision or rule (whether of the State of Illinois or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Illinois.
15. Notices
All notices, requests, demands, claims and other communications
hereunder shall be in writing. Any notice, request, demand, claim or other
communication hereunder shall be sent by registered or certified mail, return
receipt requested, postage prepaid and addressed to the intended recipient as
set forth below:
If to Licensor:
Agrilink Foods, Inc.
00 Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Xx. Xxxxxx X. Xxxxxx, Chief Executive Officer
With a copy (which shall not constitute notice to Licensor) to:
Xxxxxx Beach & Xxxxxx, LLP
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
If to Licensee:
Xxxx Foods Company
0000 X. Xxxxx Xxxx
Xxxxxxxx Xxxx, XX 00000-0000
Attention: President
With a copy (which shall not constitute notice to Licensee) to:
Xxxxxxxx & Xxxxx
000 X. Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Esq.
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or by any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail or electronic mail). No such notice,
request, demand, claim or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
party may change the address to which notices, requests, demands, claims and
other communications to it hereunder are to be delivered by giving the other
party notice in the manner herein set forth.
16. Independent Contractors
The relationship between the parties is that of independent
contractors. Nothing contained in this Agreement shall be deemed to create a
partnership, association, joint venture or agency between the parties.
17. Extended Meanings
The use of the singular in this Agreement shall include the plural and
vice versa.
18. Entire Agreement
This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes any prior
understandings, agreements or representations by or between the parties, written
or oral, to the extent they relate in any way to such subject matter.
19. Other Limitations
Notwithstanding anything to the contrary contained in this Agreement,
Licensor shall be excused from its obligations under Section 2 of this Agreement
to the extent that there is any infirmity in any of the Trademarks or its
respective registration listed on Schedule A attached hereto as of the date of
this Agreement or the use of any of the Trademarks by Licensee as of the date of
this Agreement or thereafter infringes the rights of any third party.
20. Severability
Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction.
21. Assignment
Either party may assign this Agreement in connection with the transfer
or sale of all or substantially all of its business to which the Trademarks
relate, with the prior written consent of the other party, or in connection with
the merger or consolidation of that party with or into another
-45-
entity, without the prior written consent of the other party. In addition,
Licensee may assign this Agreement, or sublicense any of its rights under this
Agreement, to any of its Affiliates, and shall promptly thereafter notify the
Licensor of any such assignment. This Agreement shall be binding upon any
permitted assignee or successor of either party and any permitted sublicensee of
Licensee. No assignment by either party or sublicense by Licensee shall relieve
the assignor or sublicensor from its obligations hereunder.
22. Counterparts
This Agreement may be executed in counterparts, each of which shall be
deemed an original but which together shall constitute one and the same
instrument.
* * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
AGRILINK FOODS, INC.
By: _____________________________________
Title: __________________________________
XXXX FOODS COMPANY
By: _____________________________________
Title: __________________________________
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SCHEDULE A
TRADEMARKS
XXXX REGISTRATION NO.
---- ----------------
THANK YOU 384,355
THANK YOU 592,509
THANK YOU 746,304
THANK YOU 749,255
THANK YOU 831,933
THANK YOU 32739
THANK YOU 300126
GLOBE 65,552
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EXHIBIT B
TRANSITION SERVICES AGREEMENT
SEE ATTACHED.
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EXHIBIT B
TRANSITION SERVICES AGREEMENT
THIS TRANSITION SERVICES AGREEMENT (this "Agreement"), is dated as of
the __ day of __________, 1998, by and between AGRILINK FOODS, INC.("Seller")
and XXXX FOODS COMPANY ("Xxxx").
W I T N E S S E T H
WHEREAS, pursuant to an Asset Transfer Agreement, dated July 24, 1998
(the "Transfer Agreement"), by and among Seller and Xxxx, Seller has sold,
transferred, assigned, conveyed and delivered to Xxxx certain assets related to
its Aseptic business; and
WHEREAS, in connection therewith, Seller and Xxxx desire that Seller
provide Xxxx with certain transition services as set forth herein;
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt of which is hereby acknowledged, Seller and
Xxxx agree as follows:
1. Services.
a. Seller agrees to provide to Xxxx during the Transition Period (as
hereinafter defined) or for such longer period as set forth in Exhibit A, the
services set forth on Exhibit A, in the manner and at a relative level of
service consistent with that provided by Seller immediately preceding the date
hereof. Each of such services will be provided at no charge.
b. Services under this Agreement shall only be supplied in relation
to the Business (as defined in the Transfer Agreement) and not to Xxxx in
connection with any of the other businesses of Xxxx or its affiliates.
2. Transition Period.
The "Transition Period" shall commence on the date hereof and shall
continue (unless sooner terminated by Xxxx by written notice to Seller) until
ninety (90) days after the date hereof.
3. Assignment.
This Agreement shall not be assignable in whole or in part by either
party hereto without the prior written consent of the other party; provided
that upon any assignment the assignor will remain jointly and severally liable
with the assignee for performance of all assigned obligations.
4. Confidentiality.
(a) Seller shall and shall cause each of its affiliates and each of
their officers, directors and employees to hold all information relating to the
business of Xxxx disclosed to it by reason of this Agreement confidential and
not disclose any of such information to any party unless legally compelled to
disclose such information; provided, however, that to the extent that any of
them may become so legally compelled they may only disclose such information if
they shall first have used reasonable efforts to, and, if practicable, shall
have afforded Xxxx the opportunity to obtain an appropriate protective order, or
other satisfactory assurance of confidential treatment, for the information
required to be so disclosed.
(b) Xxxx shall and shall cause each of its affiliates and each of
their officers, directors and employees to hold all information relating to the
business of Seller, other than the "Business" as described in the Purchase
Agreement, disclosed to its by reason of this Agreement confidential and not
disclose any of such information to any party unless legally compelled to
disclose such information; provided, however, that to the extent that any of
them may become so legally compelled they may only disclose such information if
they shall first have used reasonable efforts to, and, if practicable, shall
have afforded Seller the opportunity to obtain an appropriate protective order,
or other satisfactory assurance of confidential treatment, for the information
required to be so disclosed.
5. Governing Law.
This Agreement shall be governed by and construed in accordance
with the laws of the State Illinois without reference to the choice of law
principles thereof.
6. Counterparts.
This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same Agreement, and shall become effective
when one or more counterparts have been signed by each of the parties and
delivered to the other parties.
2
7. Notices.
Unless otherwise indicated herein, all notices, requests, demands or
other communications to the respective parties hereto shall be deemed to have
been given or made when deposited in the mails, registered or certified mail,
return receipt requested, postage prepaid, or by means of overnight delivery
service when delivered to such service address or by facsimile to the
respective party at the following address:
To Seller: Agrilink Foods, Inc.
00 Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx
Chief Executive Officer
To Xxxx: Xxxx Foods Company
0000 X. Xxxxx Xxxx
Xxxxxxxx Xxxx, XX 00000
Attention: President
Fax No.: (000) 000-0000
8. Force Majeure.
If Seller is prevented from complying, either totally or in part,
with any of the terms or provisions of this Agreement by reason of fire, flood,
storm, strike, lockout or other labor trouble, riot, war, rebellion, accident or
other acts of God, then upon written notice to the other party, the requirements
of this Agreement shall be suspended during the pendency of such disability.
9. Modification, Nonwaiver, Severability.
Neither this Agreement nor any part hereof may be changed, altered
or amended orally. Any modification must be by written instrument signed by the
parties. Failure by either party to exercise promptly any right granted herein
or to require strict performance of any obligation imposed hereunder shall not
be deemed a waiver of such rights. If any provision of this Agreement is held
ineffective for any reason, the other provisions shall remain effective.
10. Seller's Costs; Expenses
Seller agrees to furnish the services described in Exhibit A on the
terms and conditions set forth therein, free of charge to Xxxx, using Seller's
existing personnel, resources and facilities. To the extent that Seller is
required to incur costs with unaffiliated third parties, or expenses for travel,
meals and lodging, in respect of furnishing such services, then Xxxx agrees to
promptly reimburse Seller upon written request for all such costs and expenses
reasonably and necessarily incurred.
3
IN WITNESS WHEREOF, the parties have signed this Transition Services
Agreement on the date first set forth above.
AGRILINK FOODS, INC. XXXX FOODS COMPANY
By: ______________________________ By: _____________________________
Its: ______________________________ Its: _____________________________
4
EXHIBIT A
to
TRANSITION SERVICES AGREEMENT
A. SALES
1. Seller will provide Buyer a list of commitments, promotions, rebates
and programs made by Seller to customers as of the Closing Date.
2. Seller will provide headquarters sales service including broker
communication, field communication, and Buyer communication.
3. Buyer will maintain Seller's brokers through the Transition Period.
4. Buyer will continue to use Seller's UPC Codes through the Transition
Period. Buyer will permanently cease from using any Seller UPC Codes
or any packaging using Seller UPC Codes as soon as practicable
following the Transition Period.
5. Seller will continue consulting services for sales and trade issues
during the Transition Period and for ninety (90) days after the
Transition Period expires.
B. ORDER ENTRY/CUSTOMER SERVICE
1. Seller will perform all order entry functions for Buyer at Seller's
Rochester, New York facility consistent with Seller's current
practice, including "flat file" transmission to GATX in Coloma,
Michigan.
2. Seller will promptly refer all customer orders to Buyer for one
hundred eighty (180) days after the Transition Period.
3. Seller will promptly refer all customer inquiries and complaints to
Buyer during Transition Period for one hundred eighty (180) days after
the Transition Period.
C. ADMINISTRATION
1. Seller will provide the following information to Buyer during the
Transition Period:
a. Daily Sales/Orders Report
5
b. Receivable aging and customer payment history as currently
available.
c. Monthly Reports
-Consistent with prior practices and sufficient for Xxxx to
record sales activity in the General Ledger
d. Within thirty (30) days after the Closing
-Twelve (12) month sale history by customer/item/month/
ship-to location
e. At conclusion of Transition Period
-Open account receivable balances by customer/invoice
2. Seller will invoice all orders to customers, process all customer
deductions, perform all credit and collection responsibilities and
provide all information necessary for Xxxx to make all broker
payments.
3. Seller will process freight payments in a manner consistent with
existing procedures through GATX.
4. Seller will provide support relating to cost accounting and general
ledger processes within 30 days of closing.
D. MARKETING
1. Seller will provide all available packaging and promotion files
including camera-ready artwork and R&D files containing all formulas,
procedures and market research.
2. Seller will provide support to Buyer in connection with all necessary
packaging and UPC changes.
E. RESEARCH
1. Seller will provide support in connection with the transfer of
formulas, procedures, ingredient and Q.A. Specifications, including
on-going research for packaging, product and market innovations.
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F. LOGISTICS
1. Seller will ensure logistics services pursuant to the Logistics
Services Agreement ("Agreement") dated April 1, 1998 between GATX
Logistics, Inc. ("GATX") and Seller are provided to Xxxx with respect
to the Aseptic business on a basis and cost currently provided to
Seller under the terms of the Agreement for the Transition Period and
for a period of up to 12 months from the date hereof, absent a
separate logistics agreement between Xxxx and GATX.
G. CASH SETTLEMENT
1. Seller will deliver to Buyer a cash settlement worksheet twenty (20)
days after the end of each month during the Transition Period
detailing the amounts billed and collected on the behalf of Buyer.
Seller will pay Buyer such collected amounts within ten (10) business
days of the date the cash settlement worksheet is mailed to Buyer.
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EXHIBIT C
TRANSFERRED EMPLOYEE SEVERANCE PAY AND BENEFITS
Continued Employee Severance Pay and Benefits
1. Entitlement to Severance Benefits. An Employee shall be entitled to
the Benefits set forth in Section 2 below (a) upon any involuntary termination
of his or her employment with the Transferee subsequent to the Closing Date,
unless such termination is due to his or her death or is a termination by
Transferee for Cause or Disability, or (b) upon any voluntary termination of his
or her employment with Transferee subsequent to the Closing Date (other than
voluntary retirement) that is for Good Reason; provided in either case that the
termination occurs within one year after the Closing Date. No employee of the
Aseptic Business who is offered employment with the Transferee as provided in
the Agreement but who refuses such offer shall be entitled to any benefit
hereunder. The termination of employment with the Transferor as part of this
transaction shall not entitle any person to any benefit hereunder.
2. Amount of Severance Benefits. The Benefits payable to each Employee
under the circumstances set forth in Section 1 shall be equal to the following:
an amount equal to 1.5 times Weekly Compensation times the number of completed
years of service with the Transferor (and related companies) and its
predecessors as of the date of termination, which amount shall be payable in
cash in equal monthly installments over the 24 month period beginning in the
first month immediately following such termination.
In addition to the foregoing, under the circumstances set forth in
Section 1, the Transferee will also pay in cash to each Employee who immediately
prior to the Closing Date is a participant in any of the Transferor's Incentive
Plans an amount equal to (a) the pro rata portion (based on days elapsed since
the next preceding June 27) of the target bonus for such Employee under such
Transferor's Incentive Plan in which such Employee participates at the time of
such termination or (b) if such termination occurs on or prior to June 26, 1999,
and if such amount is greater than the amount described in (a), the amount
accrued for the 1999 fiscal year of the Transferor under such Transferor's
Incentive Plan as of the Closing Date with respect to such Employee, which
amount shall be payable promptly following June 26, 1999; provided that if the
employment of any such Employee is terminated prior to June 26, 1999 for
any reason other than by the Transferee for Cause, such bonus payment shall
be made immediately following such termination.
3. Voluntary Termination for Good Reason. Voluntary termination by the
Employee for Good Reason means termination due to the occurrence of one or more
of the following events:
(a) a material adverse change in the Employee's duties or job
responsibilities without the Employee's express written
consent;
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(b) a reduction in the Employee's base salary or target
incentive compensation without the Employee's express
written consent; or
(c) a material reduction, in the aggregate, in the kind or level
of employee benefits or fringe benefits to which the
Employee was entitled immediately prior to the Closing Date,
provided that the substitution of a nonqualified plan or
arrangement for a qualified plan or arrangement in and of
itself shall not be deemed to involve a change in benefits;
or
(d) the Transferee requiring the Employee to relocate the
Employee's office to a place more than fifty miles from its
present location, without the Employee's express written
consent.
4. Definitions.
"Cause" means with respect to an Employee (i) the Employee's conviction
of a felony or a crime involving moral turpitude; (ii) the Employee's conviction
of a fraud; (iii) the Employee's commission of any act involving dishonesty or
disloyalty with respect to the Transferee (or any related entity); (iv)
intentional conduct by the Employee tending to bring the Transferee (or any
related entity) into substantial public disgrace or disrepute; (v) the
Employee's gross negligence or willful misconduct with respect to the Transferee
(or any related entity); or (vi) the Employee's abandonment of employment with
the Transferee (or any related entity) other than as a result of death or
Disability.
"Compensation" means the Employee's base annual salary as of the
Closing Date, or as of the date of termination, if greater, plus the amount of
the targeted incentive compensation bonus that would be payable for the year in
which the termination occurs under any such incentive plan in which the Employee
participates. "Weekly Compensation" is determined by dividing Compensation by
52.
"Disability" means termination under the circumstances set forth in
the applicable disability policies in effect immediately prior to the Closing
Date.
"Employee" means each Transferred Employee other than any Transferred
Employee covered by a collective bargaining agreement.
"Transferor's Incentive Plans" means the Transferor's Management
Incentive Plan, Excellence in Performance Rewards Program and arrangement for
incentive contributions to the Transferor's Retirement Savings and Incentive
Plan.
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