Exhibit 10.1
AMERICAN ITALIAN PASTA COMPANY
AND
▇▇▇▇▇ FOODS, INC.
AND
▇▇▇▇▇▇-▇▇▇▇▇▇▇-MIDLAND COMPANY
ASSET PURCHASE AGREEMENT
SEPTEMBER 30, 2002
EXECUTION COPY
TABLE OF CONTENTS
Page No.
ARTICLE I. DEFINITIONS AND INTERPRETATIONS....................................1
SECTION 1.1. DEFINED TERMS.................................................1
SECTION 1.2. TERMS DEFINED IN THE AGREEMENT................................2
SECTION 1.3. INTERPRETATIONS...............................................3
ARTICLE II. PURCHASE AND SALE OF ASSETS.......................................4
SECTION 2.1. ASSETS........................................................4
SECTION 2.2. EXCLUDED ASSETS...............................................5
SECTION 2.3. ASSUMED LIABILITIES...........................................5
SECTION 2.4. RETAINED LIABILITIES..........................................5
ARTICLE III. PURCHASE PRICE OF ASSETS.........................................6
SECTION 3.1. PURCHASE PRICE................................................6
SECTION 3.2. ADJUSTMENTS TO PURCHASE PRICE.................................6
SECTION 3.3. CLAIMS........................................................7
SECTION 3.4. ALLOCATION OF PURCHASE PRICE..................................7
ARTICLE IV. CLOSING...........................................................7
SECTION 4.1. DATE, TIME AND PLACE OF CLOSING...............................7
SECTION 4.2. DELIVERIES BY SELLER AT CLOSING...............................8
SECTION 4.3. DELIVERIES BY BUYER AT CLOSING................................9
SECTION 4.4. EFFECTIVE TIME................................................9
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF SELLER...........................9
SECTION 5.1. EXISTENCE.....................................................9
SECTION 5.2. POWER AND AUTHORITY..........................................10
SECTION 5.3. EXECUTION AND DELIVERY PERMITTED.............................10
SECTION 5.4. CONSENTS.....................................................10
SECTION 5.5. AFFILIATE CONTRACTS..........................................10
SECTION 5.6. OWNERSHIP OF ASSETS..........................................10
SECTION 5.7. CONTRACTS....................................................10
SECTION 5.8. INTANGIBLE PERSONAL PROPERTY.................................11
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SECTION 5.9. BINDING EFFECT...............................................11
SECTION 5.10. DOCUMENTS SUFFICIENT........................................11
SECTION 5.11. LITIGATION AND COMPLIANCE WITH LAW..........................11
SECTION 5.12. TAXES.......................................................11
SECTION 5.13. PERMITS.....................................................12
SECTION 5.14. CUSTOMERS...................................................12
SECTION 5.15. BOOKS AND RECORDS; DISCLOSURE...............................12
SECTION 5.16. BROKERS FEES................................................12
SECTION 5.17. INVENTORY...................................................12
SECTION 5.18. DISCLAIMER..................................................12
ARTICLE VI. COVENANTS OF SELLER..............................................13
SECTION 6.1. PERFORMANCE OF CONTRACTS AND RETAINED LIABILITIES............13
SECTION 6.2. CONDUCT OF BUSINESS..........................................13
SECTION 6.3. ACCESS TO INFORMATION........................................14
SECTION 6.4. NO SALE NEGOTIATIONS.........................................14
SECTION 6.5. CONFIDENTIALITY..............................................15
SECTION 6.6. REPORTING REQUIREMENTS.......................................15
SECTION 6.7. COOPERATION OTHER ACTIONS....................................15
SECTION 6.8. SUBSEQUENT CONTRACTS.........................................15
SECTION 6.9. TRANSFER AND SALES TAX.......................................15
SECTION 6.10. PASTA PRODUCTS..............................................16
SECTION 6.11. INSURANCE...................................................16
SECTION 6.12. SUPPLY OF SOY PROTEIN.......................................16
SECTION 6.13. SOY 7 LICENSE...............................................16
ARTICLE VII. REPRESENTATIONS AND WARRANTIES OF BUYER.........................16
SECTION 7.1. CORPORATE EXISTENCE..........................................16
SECTION 7.2. CORPORATE POWER AND AUTHORITY................................16
SECTION 7.3. EXECUTION AND DELIVERY PERMITTED.............................16
SECTION 7.4. BINDING EFFECT...............................................17
SECTION 7.5. CONSENTS.....................................................17
SECTION 7.6. BROKERS FEES.................................................17
ARTICLE VIII. COVENANTS OF BUYER.............................................17
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SECTION 8.1. BUYER PERFORMANCE............................................17
SECTION 8.2. CONFIDENTIALITY..............................................17
SECTION 8.3. OTHER ACTIONS................................................17
SECTION 8.4. NOTIFICATION OF CERTAIN MATTERS..............................17
SECTION 8.5. POST CLOSING IDENTIFICATION..................................17
ARTICLE IX. CONDITIONS TO CLOSING............................................18
SECTION 9.1. BUYER'S CONDITIONS TO CLOSING................................18
SECTION 9.2. SELLER'S CONDITIONS TO CLOSING...............................18
ARTICLE X. SURVIVAL AND INDEMNIFICATION......................................19
SECTION 10.1. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.......19
SECTION 10.2. INDEMNIFICATION BY SELLER...................................19
SECTION 10.3. INDEMNIFICATION BY BUYER....................................19
SECTION 10.4. TIME TO ASSERT CLAIMS.......................................20
SECTION 10.5. THIRD PARTY CLAIM INDEMNIFICATION PROCEDURE.................20
SECTION 10.6. LIMITATIONS ON INDEMNIFICATION..............................20
ARTICLE XI. DISPUTE RESOLUTION...............................................21
SECTION 11.1. GENERAL.....................................................21
SECTION 11.2. NEGOTIATION.................................................21
SECTION 11.3. ARBITRATION; CLAIMS COVERED; CONCLUSIVE DETERMINATION.......21
SECTION 11.4. ARBITRATION PROCEDURES; SURVIVAL............................21
SECTION 11.5. CONFIDENTIALITY.............................................21
ARTICLE XII. SETTLEMENT AND RELEASE..........................................22
SECTION 12.1. CONTRACT MANUFACTURING AGREEMENT AMENDMENT..................22
SECTION 12.2. SETTLEMENT AND RELEASE......................................22
ARTICLE XIII. MISCELLANEOUS..................................................22
SECTION 13.1. NOTICES.....................................................22
SECTION 13.2. APPLICABLE LAW..............................................23
SECTION 13.3. BENEFIT AND ASSIGNMENT......................................23
SECTION 13.4. NO THIRD PARTY BENEFICIARY..................................23
SECTION 13.5. EXPENSES....................................................23
SECTION 13.6. WAIVER......................................................23
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SECTION 13.7. EQUITABLE RELIEF; REMEDIES CUMULATIVE; INTEREST.............24
SECTION 13.8. FURTHER ACTIONS; TRANSITION.................................24
SECTION 13.9. ENTIRE AGREEMENT; AMENDMENT.................................24
SECTION 13.10. COUNTERPARTS...............................................25
SECTION 13.11. TERMINATION................................................25
SECTION 13.12. PUBLIC ANNOUNCEMENTS.......................................25
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TABLE OF SCHEDULES
Schedule 2.1 (a) Intellectual Property
Schedule 2.1 (c) Material Contracts
Schedule 2.1 (d) UPC's
Schedule 3.4 Purchase Price Allocation
Schedule 5.4 ADM Required Consents
Schedule 5.5 Affiliate Contracts
Schedule 5.7 Material Contracts Requiring Consent to Assign
Schedule 5.11 Litigation Matters
Schedule 11.4 Arbitration Procedures
Schedule 13.12 Press Release
TABLE OF EXHIBITS
Exhibit 4.2(a) ▇▇▇▇ of Sale
Exhibit 4.2(b) Assignment and Assumption Agreement
Exhibit 4.2(d) Cross Receipt
Exhibit 4.2(i) Transition Agreement
Exhibit 6.12 Protein Purchase Agreement
Exhibit 6.13 Soy 7 License
Exhibit 12.1 Contract Manufacturing Agreement Amendment
EXECUTION COPY
ASSET PURCHASE AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into as of September 30, 2002,
by and among ▇▇▇▇▇ FOODS, INC., a Delaware corporation ("▇▇▇▇▇"), and
▇▇▇▇▇▇-▇▇▇▇▇▇▇-MIDLAND COMPANY, a Delaware corporation ("ADM"; and together with
▇▇▇▇▇, "Seller"), and AMERICAN ITALIAN PASTA COMPANY, a Delaware corporation
("Buyer").
WHEREAS, Seller owns various items of personal and intellectual property,
as more fully defined in Section 2.1, used in the marketing and sale of the
Branded Products (the "Business"); and
WHEREAS, Seller desires to sell the Assets (as defined below) to Buyer and
Buyer desires to purchase the Assets from Seller in exchange for cash and other
valuable consideration.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements, covenants, representations, warranties and promises set forth
herein, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS AND INTERPRETATIONS
Section 1.1. Defined Terms. Capitalized terms not otherwise defined in this
Agreement shall each have the meaning given in this Section 1.1.
"Affiliate" means any Person that controls, is controlled by, or is under common
control with, a Person.
"Branded Products" means potato, dinner and pasta products, but not including
soy enriched pasta products, marketed and sold using the Brands.
"Brands" means the ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ brands.
"Code" means the Internal Revenue Code of 1986, as amended from time to time,
and any successor thereto and any regulations promulgated thereunder.
"Confidentiality Agreement" means that certain Secrecy Agreement by and between
▇▇▇▇▇ and the Buyer dated as of August 16, 2002.
"Contract Manufacturing Agreement" means that certain Contract Manufacturing
Agreement by and between ▇▇▇▇▇ and Buyer dated as of December 1, 2000.
"Governmental Authority" means any federal, state, local or foreign governmental
or regulatory or administrative department, court, commission, board, bureau,
agency, authority or instrumentality.
"Lien" means any mortgage, pledge, lien, charge, claim, option, conditional
sale, deed of trust, security interest or other encumbrance, restriction or
limitation of any nature whatsoever.
"Material Adverse Event" means an event that causes or is reasonably likely to
lead to or result in a material adverse effect on, or a material adverse change
in, the operations or condition (financial or otherwise) of the Business or the
Assets and that will result or is reasonably likely to result in an obligation
or liability in excess of $250,000, or a material adverse effect on the ability
of Seller to execute, deliver or perform this Agreement or any of the other
agreements and documents contemplated by this Agreement.
"Ordinary Course of Business" means the ordinary course of business of the
Business consistent with past custom and practice (including with respect to
quantity, frequency, expense level, personnel resources, promotional and sales
activity, etc.).
"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, a Governmental Authority or any other type of
entity.
"Tax" or "Taxes" means any and all taxes, fees, duties, tariffs, imposts and
other charges of any kind imposed by any Governmental Authority or taxing
authority, including: federal, state, local or foreign income, gross receipts,
windfall profits, property, motor vehicle, ad valorem, value added, production,
sales, use, license, excise, franchise, capital, transfer, recordation, payroll,
employment, severance, stamp, occupation, premium, environmental (including
taxes under Code s.59A), customs duties, social security (or similar),
unemployment, disability, withholding, alternative or add-on minimum tax, or
other tax or governmental assessment, together with any interest, additions, or
penalties with respect thereto and any interest in respect of such additions or
penalties, whether disputed or not.
Section 1.2. Terms Defined in the Agreement. In addition to the defined
terms in Section 1.1, the following is a list of defined terms used in this
Agreement and a reference to the Section in which such term is defined:
Defined Term Section in which Defined
ADM Recitals
Agreed Amount s. 2.3
Arbitrator Schedule 11.4
Assets s. 2.1
Assumed Liabilities s. 2.3
Business Recitals
Buyer Indemnification Claim s. 10.2
Cash Amount s. 3.1
Claim Notice s. 11.2
Claiming Party s. 11.2
Claims s. 11.1
Closing s. 4.1
Closing Date s. 4.1
Closing Date Balance Sheet s. 3.2
Contract Manufacturing
Agreement Amendment s. 12.1
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Contracts s. 2.1(c)
Customer Claims s. 3.3(a)
Customer Lists s. 2.1(b)
Effective Time s. 4.4
Excluded Assets s. 2.2
Financial Statements s. 5.15
▇▇▇▇▇ Recitals
Indemnification Claim s. 10.4
Indemnification Claim Notice s. 10.4
Intangible Personal Property s. 5.8
Intellectual Property s. 2.1(a)
Intentional Claims s. 10.6(d)
Inventory s. 2.1(e)
Inventory Purchase Amount s. 3.2
Other Intangible Rights s. 2.1(d)
Paying Party s. 3.3(a)
Post-Closing Claims s. 3.3(a)
Procedures s. 11.3
Promotional Payable Claims s. 3.3
Promotional Payables s. 2.3
Protein Supply Agreement s. 6.12
Purchase Price s. 3.1
Receiving Party s. 3.3(a)
Released Parties s. 12.2
Retained Liabilities s. 2.4
Selected Inventory s. 2.1(e)
Seller Indemnification Claim s. 10.3
Soy 7 License Agreement s. 6.13
Submitted Claims s. 3.3(a)
Subsequent Contracts s. 6.8
Trade Loading s. 6.2(a)(iv)
Unintentional Claims s. 10.6(c)
UPC Codes s. 2.1(d)
Section 1.3. Interpretations. Words used in this Agreement, regardless of
the gender and number specifically used, shall be construed to include any other
gender and any other number as the context requires. Use of the word "including"
throughout this Agreement shall mean "including but not limited to." Except as
otherwise provided in this Agreement in a particular instance, a reference to a
Section, Article, Schedule or Exhibit is a reference to a Section or Article of
this Agreement or a Schedule or Exhibit attached hereto, each of which is
incorporated into this Agreement by reference. The terms "hereof," "herein,"
"this Agreement" and other like terms refer to this Agreement as a whole,
including the Schedules and Exhibits hereto, all certificates and closing
documents delivered herewith, and not solely to any particular part of this
Agreement. The titles of the sections of this Agreement are for convenience of
reference only, and are not to be considered in construing this Agreement.
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ARTICLE II.
PURCHASE AND SALE OF ASSETS
Section 2.1. Assets. Subject to the terms and conditions set forth in this
Agreement, Seller shall at the Closing sell, transfer, convey, assign and
deliver to Buyer free and clear of all Liens, and Buyer shall at the Closing
purchase and accept from Seller, all of Seller's right, title and interest in
and to those assets, whether tangible or intangible, specifically set forth
below (the "Assets"):
(a) all trademarks, trade names, copyrights, recipes, logos,
marketing materials, designs used exclusively with the Branded Products
(including all trade dress and packaging artwork and logos presently, or
within five (5) years from the date of Closing, used in promoting the
Brands and the physical plates or screens used to make, manufacture or
press the same), confidential and proprietary information and other
intellectual property (regardless of whether registered with any
Governmental Authority) exclusively used in connection with the Branded
Products, including those set forth on Schedule 2.1(a), and all goodwill
associated with each of the foregoing (the "Intellectual Property");
(b) all lists of current and past customers of the Branded Products
for two years prior to the Closing, which list shall include the business
address and shipping address for such customers (the "Customer Lists");
(c) all agreements, contracts, contract rights, understandings,
commitments and arrangements of Seller (regardless of whether prepaid)
related exclusively to the Branded Products, whether oral or written (the
"Contracts"), including (i) the material Contracts identified or summarized
on Schedule 2.1(c); (ii) any and all material purchase orders delivered to
suppliers, identified or summarized on Schedule 2.1(c), for which the goods
or services being purchased by Seller relate exclusively to the Branded
Products and are delivered to Buyer after Closing; (iii) any and all
material open customer purchase orders taken in the Ordinary Course of
Business that have not been fulfilled and paid for as of the Closing Date
identified or summarized on Schedule 2.1(c); (iv) material customer and
shelf space contracts (regardless of whether pre-paid) identified or
summarized on Schedule 2.1(c); and (v) material supplier contracts
identified or summarized on Schedule 2.1(c). A Contract will be deemed
material if the Contract is for the purchase or sale of goods or services,
or otherwise creates an obligation or liability, in an aggregate amount of
more than $25,000.00;
(d) all of Seller's rights to all of Seller's Uniform Product Codes
exclusively used for the Branded Products (the "UPC Codes"), including
those listed on Schedule 2.1 (d) (collectively, the "Other Intangible
Rights"); and
(e) all Branded Product inventories (the "Inventory") located at
Buyer's Excelsior Springs, Missouri plant or any other location owned or
controlled by Buyer, and determined by Buyer in its reasonable judgment to
be within date, merchantable and suitable for human consumption (the
"Selected Inventory").
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Section 2.2. Excluded Assets. All other assets of Seller, whether or not
related to the Business, not specifically included in the Assets set forth in
Section 2.1 (collectively, the "Excluded Assets") will not be included in the
Assets.
Section 2.3. Assumed Liabilities. As of the Closing, Buyer will assume and
agree to discharge and perform (i) all of Seller's obligations under the
Contracts, but only to the extent that such obligations arise from and after the
Closing, and with respect to material Contracts, are set forth on Schedule
2.1(c), (ii) Seller's obligations for marketing and promotional expenses,
including coupons, discounts and the like offered by Seller prior to the Closing
but not yet paid ("Promotional Payables"), but only to the extent that such
Promotional Payables do not exceed $1,000,000.00 ("Agreed Amount") and were
incurred in the Ordinary Course of Business, and (iii) Seller's wheat price
increase reserve payable to Buyer, if any, in the amount of up to $500,000.00,
(collectively, the "Assumed Liabilities"). "Assumed Liabilities" does not
include and Buyer shall not assume any liability for any tortious or other
wrongful action, breach of contract, or nonperformance of any duty by Seller at
any time before or after the Closing.
Section 2.4. Retained Liabilities. Notwithstanding anything contained in
this Agreement to the contrary, Buyer does not assume or agree to pay, satisfy,
discharge or perform, and will not be deemed by virtue of the execution and
delivery of this Agreement or any document delivered at the Closing pursuant to
this Agreement, or as a result of the consummation of the transactions
contemplated by this Agreement, to have assumed, or to have agreed to pay,
satisfy, discharge or perform, any liability, obligation or indebtedness of
Seller, whether primary or secondary, direct or indirect, other than the Assumed
Liabilities. Seller shall retain and pay, satisfy, discharge and perform in
accordance with the terms thereof, all liabilities and obligations other than
the Assumed Liabilities (the "Retained Liabilities"). Without limitation, the
Retained Liabilities shall include:
(a) all obligations or liabilities of Seller or any Affiliate of
Seller in respect of the Contracts arising from or attributable to the
period before Closing, except with respect to Promotional Payables up to
the Agreed Amount;
(b) all obligations or liabilities of Seller or any Affiliate of
Seller in respect of trade payables, other accounts payable and accrued
expenses, except with respect to Promotional Payables up to the Agreed
Amount;
(c) all obligations or liabilities of Seller or any Affiliate of
Seller that relate to any of the Excluded Assets;
(d) all obligations or liabilities of Seller or any Affiliate of
Seller that relate to Taxes arising from or attributable to the period
before Closing;
(e) all obligations or liabilities for any legal, accounting,
investment banking, brokerage or similar fees or expenses incurred by
Seller or any Affiliate of Seller in connection with, resulting from or
attributable to the transactions contemplated by this Agreement;
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(f) all obligations or liabilities of Seller or any Affiliate of
Seller for any borrowed money, and all obligations or liabilities arising
under any letter of credit or guaranty issued in connection therewith;
(g) except for the Assumed Liabilities, all obligations or liabilities
of Seller or any Affiliate of Seller resulting from, caused by or arising
out of, directly or indirectly, the conduct of the Business by Seller, or
the ownership or lease of any of the Assets or any properties or assets
previously used in the Business at any time prior to the Closing, including
such of the foregoing as constitute, may constitute or are alleged to
constitute a tort, or violation of any legal requirement, contract or
agreement by which Seller is bound; and
(h) all obligations in respect of present or former employees or
independent contractors of Seller or any Affiliate of Seller, including (i)
claims for severance, unemployment compensation or insurance, any employee
benefits or other compensation or damages by or on behalf of any present or
former employees or independent contractors of Seller or by or on behalf of
any Governmental Authority in respect of present or former employees or
independent contractors of Seller; (ii) all liabilities and obligations of
Seller or any Affiliate of Seller with respect to present or former
employees or independent contractors of Seller under any Plan; and (iii)
all liabilities and obligations with respect to physical, mental or other
health conditions of present or former employees or independent contractors
of Seller.
ARTICLE III.
PURCHASE PRICE OF ASSETS
Section 3.1. Purchase Price. Subject to the terms and conditions provided
in this Agreement, Buyer shall pay to Seller the amount of $5,000,000.00,
adjusted as set forth in Section 3.2 (the "Cash Amount" and together with the
Assumed Liabilities, the "Purchase Price"). Buyer shall pay to Seller by wire
transfer $1,000,000.00 upon the execution of this Agreement as ▇▇▇▇▇▇▇ money to
be credited against the Purchase Price at the Closing. Buyer shall pay the
remaining Purchase Price to Seller by wire transfer at the Closing. All wire
transfers made by Buyer to Seller shall be sent to ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇,
▇▇▇ ▇▇▇▇-▇▇▇▇▇, Account # 01 4982. If Buyer terminates this Agreement prior to
Closing pursuant to Section 13.11(a)(i), (ii) or (iii), or if the conditions set
forth Section 9.1(f), (g) or (h) are not met and Buyer fails to complete the
Closing as a result thereof, then in either case Seller shall return to Buyer
the ▇▇▇▇▇▇▇ money paid without interest. In all other cases where the Agreement
is terminated or the parties fail to complete the Closing, Seller shall be
entitled to retain the ▇▇▇▇▇▇▇ money paid, and pursue any remedies that may be
available pursuant to this Agreement, in law or at equity.
Section 3.2. Adjustments to Purchase Price. On the Closing Date, Seller
shall deliver to Buyer a balance sheet setting forth, among other things, the
Seller's liability for Promotional Payables as of the Closing Date (the "Closing
Date Balance Sheet"). To the extent that the Promotional Payables on such
Closing Date Balance Sheet exceed the Agreed Amount, the Purchase Price shall be
reduced by reducing the Cash Amount on a dollar-for-dollar basis. In addition,
the Purchase Price shall be increased, by increasing the Cash Amount by the
Inventory
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Purchase Amount. The Inventory Purchase Amount shall be determined by
multiplying the number of cases of Selected Inventory by Seller's documented
average cost per case.
Section 3.3. Claims.
(a) Claim Payment. The parties acknowledge that after the Closing
Buyer may receive claims for or be subject to offsets related to claims for
Promotional Payables in excess of the Agreed Amount ("Promotional Payable
Claims") and that Seller may receive claims from, or be subjected to
offsets by customers that relate to matters for which Buyer is responsible
under this Agreement ("Customer Claims") (Promotional Payable Claims and
Customer Claims being referred to herein as "Post-Closing Claims"). In the
event a party (the "Receiving Party") receives Post-Closing Claims, it may
submit such claims to the other party (the "Paying Party") on a weekly
basis, with any documentation related to the Post-Closing Claims received
by the Receiving Party ("Submitted Claims"), and the Paying Party shall pay
the Receiving Party, by wire transfer, the amount of such Submitted Claims
on the third business day following the date on which it received the
Submitted Claims. If such payment is not made timely, the Receiving Party
will be entitled to interest thereon at the rate of 18% per annum.
(b) Monthly True-up. A Paying Party may, after the end of each
calendar month, conduct an audit of the books and records of a Receiving
Party to confirm the existence of all Submitted Claims and the accuracy of
the calculation of the Submitted Claims and Receiving Party will provide
Paying Party and its agents reasonable access to its books and records for
this purpose. In the event a Paying Party reasonably determines that it
overpaid a Submitted Claim, the Receiving Party will reimburse the
overpayment by wire transfer on the third business day following the
receipt by it of written notice of overpayment.
(c) Time Limit. The provisions of Section 3.3 shall terminate on June
30, 2003.
Section 3.4. Allocation of Purchase Price. Seller and Buyer shall allocate
the Purchase Price among the Assets in accordance with Section 1060 of the Code.
Such allocation shall be established by mutual agreement of Seller and Buyer and
shall be attached to this Agreement as Schedule 3.4 within 30 days after
Closing. The allocations will be used by Buyer and Seller as the basis for
reporting asset values and other items for purposes of all required returns,
statements and reports with respect to taxes, including any reports required to
be filed under Section 1060(b) of the Code. Seller and Buyer agree not to
assert, in connection with any audit or other proceeding with respect to Taxes,
any asset values or other items inconsistent with the allocations set forth in
Schedule 3.4.
ARTICLE IV.
CLOSING
Section 4.1. Date, Time and Place of Closing. The consummation of the
transactions contemplated hereby (the "Closing") shall be held on the first
Monday (or if such Monday is not a business day, the first Tuesday) following
the date on which all conditions to Closing in Article
7
IX have been satisfied or waived at a time mutually acceptable to the parties,
but in any event not later than October 31, 2002 (the "Closing Date"). The
Closing shall take place at the offices of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, LLP,
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other place
as the parties agree.
Section 4.2. Deliveries by Seller at Closing. At the Closing, Seller shall
convey, transfer, assign, and deliver all of its right, title and interest in
and possession of the Assets to Buyer, and shall also deliver to Buyer the
following:
(a) A ▇▇▇▇ of Sale, duly executed by Seller, in the form attached
hereto as Exhibit 4.2(a);
(b) An Assignment and Assumption Agreement, duly executed by Buyer and
Seller, in the form attached hereto as Exhibit 4.2(b);
(c) Such other instruments of conveyance, assignment and transfer, in
form and substance satisfactory to Buyer, as appropriate to convey,
transfer and assign to, and to vest in, Buyer, good, clear, record and
marketable title to the Assets, including a consent or assignment related
to the UPC Codes;
(d) A Cross Receipt, duly executed by Buyer and Seller, in the form
attached hereto as Exhibit 4.2(d);
(e) A certified copy of duly adopted resolutions of ADM's Board of
Directors authorizing ADM's representative to execute and deliver
agreements of the nature of this Agreement, and a certificate of incumbency
certifying that the individual signing documents on behalf of ADM holds one
of the offices set forth in the above-referenced resolution;
(f) A certified copy of duly adopted resolutions of Seller's Board of
Directors authorizing, approving and consenting to the execution and
delivery of this Agreement, to the consummation of the transactions
contemplated herein, and to the performance of the agreements set forth
herein;
(g) A certificate of a duly authorized officer of Seller stating that
the representations and warranties of Seller in this Agreement are true as
of the Closing;
(h) The waiver, release, consent, certificate or other document of any
Person that is necessary to consummate the transactions contemplated
hereby, and to make the warranties and representations made in this
Agreement true;
(i) A duly executed copy of a Transition Agreement, in the form
attached hereto as Exhibit 4.2(i);
(j) Originals of all Contracts in Seller's possession;
(k) A duly executed copy of the Contract Manufacturing Agreement
Amendment;
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(l) A duly executed copy of the Soy 7 License Agreement;
(m) A duly executed copy of the Protein Purchase Agreement; and
(n) The Customer List.
Section 4.3. Deliveries by Buyer at Closing. Buyer shall deliver to Seller
at Closing:
(a) The Purchase Price;
(b) An Assignment and Assumption Agreement, duly executed by Buyer and
Seller, in the form attached hereto as Exhibit 4.2(b);
(c) A Cross Receipt, duly executed by Buyer and Seller, in the form
attached hereto as Exhibit 4.2(d);
(d) A certified copy of duly adopted resolutions of Buyer's Board of
Directors authorizing, approving, and consenting to the execution and
delivery of this Agreement, to the consummation of the transactions
contemplated herein, and to performance of the agreements set forth herein;
(e) A certificate of a duly authorized officer of Buyer stating that
the representations and warranties of Buyer in this Agreement are true as
of the Closing;
(f) A duly executed copy of a Transition Agreement, in the form
attached hereto as Exhibit 4.2(i);
(g) A duly executed copy of the Contract Manufacturing Agreement
Amendment;
(h) A duly executed copy of the Soy 7 License Agreement; and
(i) A duly executed copy of the Protein Purchase Agreement.
Section 4.4. Effective Time. The effective time of the transactions
contemplated by the Agreement shall be deemed to be as of 12:01 a.m. on the
Closing Date (the "Effective Time"). Provided the Closing occurs, Buyer shall be
entitled to possession of, and to exercise all rights arising under, the Assets
as of the Effective Time. The risk of loss or damage to the Assets by fire,
storm, flood, theft, or other casualty or cause shall be in all respects upon
Seller prior to the Effective Time and upon Buyer thereafter.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Buyer to enter this Agreement and to consummate the
transactions contemplated hereby, Seller represents and warrants to Buyer as
follows:
Section 5.1. Existence. Seller is duly organized, validly existing, and in
good standing under the laws of the State of Delaware and is qualified to do
business and is in good standing in
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all jurisdictions in which it is required to be so qualified and in good
standing as a result of its operation of the Business, except where the failure
to be so qualified or in good standing would not be a Material Adverse Event.
Section 5.2. Power and Authority. Seller has all requisite power and
authority to own its properties and assets, including the Assets, and to carry
on the Business as now conducted. Seller has all requisite corporate power and
authority to execute and deliver this Agreement, to perform the agreements and
covenants of Seller set forth in this Agreement and to consummate the
transactions contemplated by this Agreement, including the conveyance,
assignment and transfer of the Assets.
Section 5.3. Execution and Delivery Permitted. The execution, delivery and
performance of this Agreement will not (i) violate or result in a breach of any
term of Seller's Certificate of Incorporation or Bylaws, (ii) result in a breach
of or constitute a default under any term in any agreement or other instrument,
including any Contract, to which Seller is a party, (iii) violate any law or any
order, rule or regulation applicable to Seller, of any Governmental Authority
having jurisdiction over Seller, its properties or the Assets or (iv) result in
the creation or imposition of any Lien upon any of the Assets. The Seller has
taken all action required by law and by Seller's Certificate of Incorporation
and Bylaws to authorize the execution, delivery and performance of this
Agreement and the other agreements executed in connection herewith by Seller and
the transfer all of the Assets to Buyer in accordance with this Agreement.
Section 5.4. Consents. Except as set forth on Schedule 5.4, the execution,
delivery and performance of this Agreement and the other agreements executed in
connection herewith, and the consummation by Seller of the transactions
contemplated hereby and thereby do not require any filing with, notice to or
consent, waiver or approval of any third party, including but not limited to,
any Governmental Authority or entity other than any disclosure of this Agreement
required by applicable securities laws, regulations and rules.
Section 5.5. Affiliate Contracts. Except as set forth in Schedule 5.5
(including as to any oral matters an accurate and reasonably detailed summary
thereof), there are no contracts, agreements, commitments, understandings or
arrangements affecting or relating to the Business or the Assets to which any
Affiliate of Seller is a party or by which any such Affiliate is bound.
Section 5.6. Ownership of Assets. Seller has sole and good, clear and
marketable title to the Assets, which title will be transferred to Buyer at
Closing, free and clear of all Liens. Seller has the full, absolute and
unrestricted right to assign, transfer and convey to Buyer the Assets, subject
only to such consents and approvals as listed on Schedule 5.4, which consents
and approvals Seller shall deliver to Buyer at Closing. To the Seller's
knowledge, the Assets constitute all of the intellectual property (except
software), customer lists, contracts, inventory and Uniform Product Codes
necessary to conduct the marketing and sale of the Branded Products in the
Ordinary Course of Business.
Section 5.7. Contracts. The Contracts have been entered into in the
Ordinary Course of Business. Except as specifically provided on Schedule 5.7,
Seller has full, absolute and unrestricted right to assign, transfer and convey
to Buyer the Contracts. Each Contract is in full force and effect and
constitutes the legal, valid, binding and enforceable obligation of the parties
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thereto. Seller and the other parties thereto are current in all obligations
under each Contract. There have been no events of default, and no state of facts
exist that with notice or passage of time, or both, would constitute an event of
default by Seller under any Contract. To the Seller's knowledge, there have been
no events of default, and no state of facts exists that with notice or the
passage of time, or both, would constitute an event of default under any
contract by any party other than Seller. Except as set forth on Schedule 5.7,
the consummation of the transactions contemplated by this Agreement will not
(and will not give any Person a right to) terminate or modify any rights of, or
accelerate or increase any obligation of Seller under any Contract. A true and
complete copy of every written Contract listed on Schedule 2.1(c) has been made
available to Buyer and such Schedule contains an accurate and reasonably
detailed summary of all oral contracts.
Section 5.8. Intangible Personal Property. Seller has full right, title and
interest in and to the Intellectual Property, the Customer Lists, and the Other
Intangible Rights (collectively, the "Intangible Personal Property"). Seller is
not (i) a licensor or licensee in respect of any Intangible Personal Property or
(ii) obligated to make any royalty or other payments with respect to any
Intangible Personal Property. To Seller's knowledge, Seller is not infringing
upon or otherwise acting adversely to the intangible personal property owned by
any other Person, and there is no notice, claim or action by any such Person
pending with respect thereto.
Section 5.9. Binding Effect. This Agreement and each other agreement
required to be executed and delivered by Seller in connection herewith, when
executed and delivered, will be the legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms, except as
enforceability may be limited by (i) applicable bankruptcy, reorganization,
insolvency, moratorium and similar laws affecting the enforcement of creditors'
rights generally, and (ii) general equitable principles (regardless of whether
enforceability is considered in a proceeding in equity or at law).
Section 5.10. Documents Sufficient. The documents delivered by Seller to
Buyer pursuant to Article IV of this Agreement will be valid, sufficient and
effective to completely transfer to Buyer all of Seller's right, title and
interest in and to all of the Assets, free and clear of all Liens.
Section 5.11. Litigation and Compliance with Law. Except as set forth on
Schedule 5.11, there are no suits, actions, claims, demands, investigations,
complaints, or other proceedings of any nature whatsoever in law or in equity,
that are pending or, to the knowledge of Seller, threatened against Seller, that
affect any of the Assets or the Branded Products, by or before any Governmental
Authority. Seller is not in default or violation with respect to any order,
writ, injunction, garnishment, levy, or decree of any Governmental Authority
applicable to the Assets or the Branded Products, and the use, operation,
ownership, or transfer of the Assets does not constitute a default or violation
thereunder. Neither the condition of the Assets nor the Branded Products
violates in any material respect any federal, state, or municipal law,
regulation or rule.
Section 5.12. Taxes. Seller has timely filed (or will timely file) all
federal, state, local and other Tax returns and reports of whatever kind
pertaining to the Assets or the Business and
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required to be filed by Seller for all periods up to and including the Closing
Date. Seller has paid (or will timely pay) all Taxes that are due and payable
(or that relate to any period up to and including the Closing Date) or for which
assessments relating to any period up to and including the Closing Date have
been levied, the nonpayment of which could result in a Lien on any of the
Assets. There are no audits, suits, actions, claims, investigations, inquiries,
or proceedings pending or, to the knowledge of Seller, threatened against Seller
with respect to any Taxes, nor are any such matters under discussion with any
Governmental Authority as they relate to the Business or the Assets.
Section 5.13. Permits. To the Seller's knowledge, there are no governmental
permits or licenses necessary to operate the Business.
Section 5.14. Customers. Since August 1, 2002, to Seller's knowledge,
Seller has not received any notice from any of its top twenty (20) customers
purchasing Branded Products from Seller that any such customer intends to
terminate, or to reduce by more than 50% on an annual basis, its purchases of
Branded Products from Seller.
Section 5.15. Books and Records; Disclosure. The books and records of
Seller relating to the Business are in all material respects complete and
correct and have been maintained in accordance with good business practices. The
financial statements of the Business provided to Buyer accurately present in all
material respects the results of operations and financial position of the
Business for the periods and at the times indicated (the "Financial
Statements"). The Financial Statements have been maintained and prepared in
accordance with generally accepted accounting principles. As of the Closing
Date, the Closing Date Balance Sheet will be accurate and complete in all
material respects. None of (i) the Financial Statements, (ii) the information
concerning the Assets, Business or Seller delivered to Buyer, (iii) the
representations and warranties made by Seller in this Agreement or (iv) the
statements made by or on behalf of Seller in any certificate, document or
Schedule delivered or to be delivered in connection with the transaction
contemplated by this Agreement, contains or will contain any untrue statement of
material fact, and there is no omission of any material fact necessary to make
such representation or warranty or any such statement not misleading, in light
of the circumstances in which they are made. The items listed in the Schedules
attached to this Agreement constitute all of the matters required to be shown on
such Schedules.
Section 5.16. Brokers Fees. Seller has no liability or obligation to pay
any brokerage or finders fees or commissions with respect to the transactions
contemplated herein.
Section 5.17. Inventory. As of the Closing, the Selected Inventory shall be
merchantable, suitable for human consumption, comply with all applicable law,
and bear no name, ▇▇▇▇ or other designation that knowingly infringes the
intellectual property rights of any other party.
Section 5.18. Disclaimer. Except as to the warranties expressly set forth
in this Article V, Seller makes no representations or warranties relative to the
Assets whatsoever. Unless expressly granted in this Article V, SELLER HEREBY
DISCLAIMS ANY AND ALL IMPLIED WARRANTIES, INCLUDING THE IMPLIED WARRANTY OF
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MERCHANTABILITY AND THE WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.
ARTICLE VI.
COVENANTS OF SELLER
Seller covenants and agrees as follows:
Section 6.1. Performance of Contracts and Retained Liabilities. Seller
shall, from the date hereof through the Closing, continue to faithfully,
diligently and promptly perform each and every obligation of Seller, if any,
under each of the Contracts and pay and satisfy each Retained Liability.
Section 6.2. Conduct of Business. From the date hereof through the Closing,
Seller shall operate the Business in accordance with the Ordinary Course of
Business and with at least as much attention and support as is currently being
provided, using its best efforts to preserve and maintain its relationships with
suppliers and customers and to preserve its current level of sales volume, shelf
space and historical operating margins. Seller shall pay all bills and debts
incurred by it and related to the operation of the Business promptly as they
become due. Seller shall consult in advance with Buyer on all decisions not in
the Ordinary Course of Business relating to the, Assets or the Business.
(a) In particular, and without limiting the foregoing, with respect to
the Business, Seller shall:
(i) continue to conduct marketing, product pricing, promotional
and advertising activities consistent with historical
practices;
(ii) maintain the sales force in a manner consistent with past
practices, including, but not limited to, maintaining the
number of active salespersons assigned to the Business, and
maintain the levels of and the payment of bonus, incentive
and other compensation;
(iii)continue to purchase and maintain inventories in such
quantities and quality as necessary to operate the Business
in the Ordinary Course of Business;
(iv) refrain from shipping manufactured pasta ahead of normally
maintained schedules or shipping dates or otherwise
accelerating sales or the amount of Inventory less than 90
days old in a manner not in the Ordinary Course of Business
("Trade Loading"), or permitting or tolerating any brokers
or other representatives of Seller to engage in Trade
Loading;
(v) continue all customer service and fulfillment levels at
historical levels and maintain all shelf space and
promotional displays at least at the levels in existence as
of the date hereof,
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(vi) continue to operate the Business in compliance with all
applicable local, state and federal laws and regulations;
and
(vii)notify Buyer within 48 hours of any termination,
cancellation, limitation of, or any adverse modification of
or change in, any, Contract or any business relationship of
Seller with any customer described in Section 5.14.
(b) Further, Seller shall not, without the express prior written
approval of Buyer:
(i) change in any material manner the ownership of the Assets
(other than inventories sold in the Ordinary Course of
Business);
(ii) terminate or decrease the rate of compensation or benefits
of, any salesperson responsible for the sale and/or
distribution of products within the Business;
(iii) mortgage, pledge or subject to Lien any of the Assets;
(iv) enter into or commit to enter into any Contract other than
in the Ordinary Course of Business or any contract,
agreement or commitment that would be required to be set
forth on Schedule 5.5 hereto; or
(v) other than in the Ordinary Course of Business, cancel or
terminate or consent to or accept any cancellation or
termination of any Contract, amend or otherwise modify any
of the material terms or provisions or give any consent,
waiver or approval with respect to any Contract, waive any
breach of any material terms or provisions or take any other
action in connection with any Contract that would materially
impair the interests or rights of Seller to be transferred
to Buyer hereunder.
Section 6.3. Access to Information. Seller shall afford Buyer, its counsel,
financial advisors, auditors and other authorized representatives reasonable
access for any purpose consistent with this Agreement from the date hereof
through the Closing or termination of this Agreement, whichever occurs first,
during normal business hours, to the offices, properties, books, and records of
Seller related to the Assets and the Branded Products and shall furnish to Buyer
such additional financial and operating data and other information as Seller may
possess and as Buyer may reasonably request related to the Assets and the
Branded Products.
Section 6.4. No Sale Negotiations. Seller and its representatives and
agents shall not solicit, entertain or engage in any negotiations, discussions
or contact with any party other than Buyer, with respect to the sale, transfer
or other disposition of any of the Assets (other than the sale of Inventory in
the Ordinary Course of Business), or any interest, legal, equitable or
beneficial, in the above.
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Section 6.5. Confidentiality. Seller will hold, and will cause its
directors, officers, employees, accountants, counsel, financial advisors and
other representatives and Affiliates to hold, any nonpublic information of Buyer
in confidence to the extent required by, and in accordance with, the provisions
of the Confidentiality Agreement.
Section 6.6. Reporting Requirements. From the date hereof through the
Closing, Seller shall promptly notify Buyer of:
(a) Any (i) Material Adverse Event, (ii) any fact that, if known as of
the date of this Agreement, would have been required to be disclosed to
Buyer, (iii) event that causes any representation or warranty contained
herein to be untrue or inaccurate in any respect or (iv) event that causes
any covenant, condition or agreement of Seller hereunder not to be complied
with or satisfied in any respect;
(b) all claims, actions, charges, orders or other directives that, if
adversely determined, would cause a Material Adverse Event; and
(c) such other information respecting the Assets or the operations,
business prospects or condition (financial or otherwise) of the Business as
Buyer may from time to time reasonably request.
Section 6.7. Cooperation Other Actions.
(a) Seller will use its best efforts to facilitate and cause the
consummation of the transactions contemplated hereby and to obtain from all
Persons, and take all other actions with respect to, all consents or
approvals required on the part of such party with respect to the
consummation of the transactions contemplated hereby.
(b) From the date hereof through the Closing, Seller shall not take
any action that would, or that would reasonably be expected to, result in
any of the conditions to the transactions contemplated hereby set forth in
Sections 9.1 and 9.2 hereof not being satisfied, or in the satisfaction
thereof being delayed.
Section 6.8. Subsequent Contracts. From the date hereof through the
Closing, Seller shall (i) include in any agreements entered into by Seller
relating in any way to the Assets or the Branded Products ("Subsequent
Contracts") a provision permitting the assignment of any such Subsequent
Contract to Buyer and providing that upon such assignment, Buyer shall succeed
to all of Seller's rights, title and interests thereunder and (ii) ensure that
no Subsequent Contract contains any provision which would limit in any way the
rights, title and interest of Seller in the Assets.
Section 6.9. Transfer and Sales Tax. Notwithstanding any provisions of law
imposing the burden of such taxes on Seller or Buyer, as the case may be, Seller
shall be responsible for and shall pay (a) all sales, use and transfer taxes,
and (b) all governmental charges, if any, upon the sale or transfer of any of
the Assets hereunder. If Seller shall fail to pay such amounts on a timely
basis, Buyer may pay such amounts to the appropriate Governmental Authority or
authorities, and Seller shall promptly reimburse Buyer for any amounts so paid
by Buyer.
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Section 6.10. Pasta Products. Commencing on the Closing and for so long as
the Contract Manufacturing Agreement, as amended pursuant to Section 12.1,
remains in effect between the parties, Seller or Seller's Affiliates will not
manufacture, market, sell or distribute any branded retail dry pasta product,
alone or in combination with any other product, unless such branded retail dry
pasta product is manufactured by Buyer.
Section 6.11. Insurance. Seller shall continue to maintain product
liability insurance for all periods through the Effective Time.
Section 6.12. Supply of Soy Protein. Buyer shall purchase all of its
requirements for soy protein exclusively from Seller for a period of three years
pursuant to the terms and conditions of the Protein Purchase Agreement, in the
form of Exhibit 6.12 hereto.
Section 6.13. Soy 7 License. Seller shall grant to Buyer a non-exclusive
license to use the Soy 7 marks in conjunction with the manufacture, sale,
marketing and use of dry pasta, on the terms and conditions of the Soy 7
License, in the form of Exhibit 6.13 hereto, which shall include a 2(cent) per
pound royalty and the obligation to purchase soy isolate from Seller on products
bearing the Soy 7 marks.
ARTICLE VII.
REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to Seller to enter into this Agreement and to consummate
the transactions contemplated hereby, Buyer represents and warrants to Seller as
follows:
Section 7.1. Corporate Existence. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and is qualified to do business and is in good standing in all jurisdictions in
which it is required to be so qualified as a result of the operation of its
business, except where the failure to be so qualified or in good standing would
have a material adverse effect on the Buyer.
Section 7.2. Corporate Power and Authority. Buyer has all requisite
corporate power and authority to own its properties and assets, and to carry on
the business in which it is now engaged. Buyer has all requisite corporate power
and authority to execute and deliver this Agreement, to perform the agreements
and covenants of Buyer set forth in this Agreement and to consummate the
transactions contemplated by this Agreement.
Section 7.3. Execution and Delivery Permitted. The execution, delivery and
performance of this Agreement will not (i) violate or result in a breach of any
term of Buyer's Certificate of Incorporation or Bylaws; (ii) result in a breach
of or constitute a default under any term in any agreement or other instrument
to which Buyer is a party; or (iii) violate any law or any order, rule or
regulation applicable to Buyer, of any Governmental Authority having
jurisdiction over Buyer or its properties. The Buyer has taken all action
required by law, and by Buyer's Certificate of Incorporation and Bylaws to
authorize the execution, delivery and performance of this Agreement and the
other agreements executed in connection herewith by Buyer and the purchase of
the Assets from Seller in accordance with this Agreement.
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Section 7.4. Binding Effect. This Agreement and each other agreement
required to be executed and delivered by Buyer in connection herewith, when
executed and delivered, will be the legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms, except as
enforceability may be limited by (i) applicable bankruptcy, reorganization,
insolvency, moratorium and similar laws affecting the enforcement of creditors'
rights generally, and (ii) general equitable principles (regardless of whether
enforceability is considered in a proceeding in equity or at law).
Section 7.5. Consents. The execution, delivery and performance of this
Agreement and the other agreements executed in connection herewith, and the
consummation by Buyer of the transactions contemplated hereby and thereby do not
require any filing with, notice to or consent, waiver or approval of any third
party, including but not limited to, any Governmental Authority other than any
disclosure of this Agreement required by applicable securities laws, regulations
and rules.
Section 7.6. Brokers Fees. Buyer has no liability or obligation to pay any
brokerage or finders fees or commissions with respect to the transactions
contemplated herein.
ARTICLE VIII.
COVENANTS OF BUYER
Section 8.1. Buyer Performance. Buyer hereby covenants and agrees to accept
conveyance of the Assets, and to assume and perform the Assumed Liabilities.
Section 8.2. Confidentiality. Buyer will hold, and will cause its
respective directors, officers, employees, accountants, counsel, financial
advisors and other representatives and affiliates to hold any nonpublic
information of the Seller in confidence to the extent required by, and in
accordance with, the provisions of the Confidentiality Agreement.
Section 8.3. Other Actions. From the date hereof to the Closing, Buyer
shall not take any action that would, or that would reasonably be expected to,
result in any of the conditions to Closing set forth in Sections 9.1 or 9.2 not
being satisfied, or in the satisfaction thereof being delayed.
Section 8.4. Notification of Certain Matters. From the date of this
Agreement through the Closing, Buyer shall promptly notify Seller of the
occurrence of any fact or event that would reasonably be expected (i) to cause
any representation or warranty of Buyer contained in this Agreement to be untrue
in any material respect or (ii) to cause any covenant, condition or agreement of
Buyer hereunder not to be complied with or satisfied in any material respect.
Section 8.5. Post Closing Identification. Buyer shall ensure that products
produced after the Effective Time and any coupons or other promotional items
issued after the Effective Time are distinguishable from products produced prior
to the Effective Time and coupons and other promotional items issued prior to
the Effective Time.
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ARTICLE IX.
CONDITIONS TO CLOSING
Section 9.1. Buyer's Conditions to Closing. The obligations of Buyer
hereunder are subject to satisfaction of each of the following conditions at or
before Closing, the occurrence of which may, at the option of Buyer, be waived:
(a) All representations and warranties of Seller in this Agreement and
each Schedule hereto shall be true on and as of the Closing as if made as
of the Closing, and Seller shall have delivered to Buyer a certificate to
such effect dated as of the Closing Date;
(b) There shall be no Material Adverse Event from the date hereof to
the Closing Date;
(c) Seller shall have performed and complied with all of its
obligations under this Agreement which are to be performed or complied with
by Seller prior to or on the Closing Date;
(d) Seller shall be willing and able to deliver all of the items and
documents required to be delivered by it pursuant to Article IV of this
Agreement;
(e) The form and substance of the documents delivered by Seller
pursuant to this Agreement shall be reasonably acceptable to Buyer and
Buyer's counsel;
(f) There shall be no claims, actions or suits pending or threatened
regarding the Assets other than those disclosed in Schedule 5.11 or that
otherwise would restrict or prohibit Buyer or Seller from consummating the
transactions contemplated herein;
(g) Seller shall have obtained and delivered to Buyer all necessary
consents to transfer the Assets and assign the Contracts to Buyer; and
(h) During Buyer's review and investigation of the Assets, Buyer shall
not have discovered (i) any material misrepresentations or omissions with
respect to the disclosures previously made to Buyer, in the context of
negotiations of the transactions contemplated herein, concerning the Assets
or the Branded Products; or (ii) any obligations or liabilities, contingent
or otherwise, which do or reasonably could materially affect the value of
any of the Assets in an amount in excess of $250,000.
Section 9.2. Seller's Conditions to Closing. The obligations of Seller
hereunder are subject to satisfaction of each of the following conditions at or
before Closing, the occurrence of which may, at the option of Seller, be waived:
(a) All representations and warranties of Buyer in this Agreement
shall be true on and as of the Closing as if made as of the Closing, and
Buyer shall have delivered to Seller a certificate to such effect dated as
of the Closing Date;
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(b) Buyer shall have performed and complied with all of its
obligations under this Agreement which are to be performed or complied with
by Buyer prior to or on the Closing Date;
(c) Buyer shall be willing and able to deliver all of the items and
documents required to be delivered by it under Article IV of this
Agreement; and
(d) The form and substance of the documents delivered by Buyer
pursuant to this Agreement shall be reasonably acceptable to Seller and
Seller's counsel.
ARTICLE X.
SURVIVAL AND INDEMNIFICATION
Section 10.1. Survival of Representations, Warranties and Covenants. The
representations, warranties, covenants, agreements and indemnification
obligations of the parties contained in this Agreement shall survive the Closing
until June 30, 2003. The parties shall be entitled to rely on the
representations and warranties contained herein, notwithstanding any due
diligence investigation conducted by the parties. If, as the result of any due
diligence investigation or otherwise, a party learns of a breach of any
representation or warranty, such party shall promptly inform the other in
writing of such breach. Either party's knowledge prior to Closing of a breach of
a representation, warranty, covenant or agreement contained herein by the other
party shall not modify the representations, warranties covenants or agreements
of any party contained herein or waive or impair such party's right to seek
indemnification for such breach after Closing.
Section 10.2. Indemnification by Seller. Seller agrees to defend,
indemnify, and hold harmless Buyer and its officers, directors, agents,
employees, and Affiliates against and in respect of any and all loss, liability,
lien, damage, cost and expense (each, a "Buyer Indemnification Claim") incurred
or resulting from:
(a) except for Assumed Liabilities, any matter or event of any nature
whatsoever relating to Seller or the ownership or operation of the Assets
or the Business that occurred prior to the Closing, and without limiting
the generality of the foregoing, such matters or events shall include all
Retained Liabilities and all Excluded Assets;
(b) any misrepresentation or breach of warranty made by Seller in this
Agreement or in any document, certificate or Schedule delivered hereunder;
or
(c) any non-fulfillment of any covenant or agreement by Seller under
this Agreement or any liability related to noncompliance with any bulk
sales laws.
Section 10.3. Indemnification by Buyer. Buyer agrees to defend, indemnify,
and hold harmless Seller and its officers, directors, agents, employees and
Affiliates against and in respect of any and all loss, liability, lien, damage,
costs and expense (each a "Seller Indemnification Claim") incurred or resulting
from:
(a) the ownership or operation of the Assets or the Business from and
after the Closing or the nonperformance of Assumed Liabilities;
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(b) any misrepresentation or breach of warranty made by Buyer in this
Agreement or in any document, certificate or Schedule delivered hereunder;
or
(c) any non-fulfillment of any covenant or agreement by Buyer under
this Agreement.
Section 10.4. Time to Assert Claims. Any Buyer Indemnification Claims or
Seller Indemnification Claims made pursuant to this Article must be asserted by
providing written notice to the party against which the Indemnification Claim is
made reasonably promptly after the asserting party becomes aware of such Claim
(the "Indemnification Claim Notice"). The right of a party to be indemnified
hereunder shall not be adversely affected by such party's failure to give such
Indemnification Claim Notice unless, and then only to the extent that, the party
against which the Indemnification Claim is made is prejudiced thereby. The
parties shall resolve disputes between them regarding Indemnification Claims in
accordance with Article XI. The term "Indemnification Claim" shall mean a Buyer
Indemnification Claim or a Seller Indemnification Claim, as appropriate.
Section 10.5. Third Party Claim Indemnification Procedure. An indemnified
person shall promptly notify the indemnifying party of the existence of any
Indemnification Claim resulting from a claim made by a third party and shall
give the indemnifying party the opportunity to defend the same at its own
expense and with counsel of its own selection, provided that such indemnified
person shall at all times also have the right to participate fully in the
defense of the Indemnification Claim at its own expense. If the indemnifying
party shall, within twenty (20) days after such notice, fail to acknowledge its
indemnification obligation hereunder in writing or thereafter fail to defend
such Indemnification Claim adequately and reasonably, and such indemnified
person is entitled to such defense, such indemnified person shall have the
right, but not the obligation, to undertake the defense of, and to compromise or
settle (exercising reasonable business judgment) such Indemnification Claim on
behalf, for the account, and the sole risk and expense, of the indemnifying
party.
Section 10.6. Limitations on Indemnification.
(a) Notwithstanding anything to the contrary, the indemnifying party
shall not be liable for an Indemnification Claim under this Article for:
(i) any Indemnification Claim, unless and until the aggregate
amount of all such Indemnification Claims otherwise due
exceeds an accumulated total of One Hundred Thousand Dollars
($100,000.00); or
(ii) any Indemnification Claim to the extent arising directly out
of the acts or omissions of the party seeking
indemnification.
(b) The maximum aggregate amount of all Indemnification Claims (except
for those set forth in subsection (c) below) for which a party may be
responsible or otherwise liable (whether for indemnification, breach,
default or otherwise) under this Article and this Agreement (the
"Unintentional Claims") shall be the sum of One Million Dollars
($1,000,000.00).
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(c) The maximum aggregate amount of all Indemnification Claims based
upon intentional misrepresentation, fraud or willful misconduct for which a
party may be responsible or otherwise liable (whether for indemnification,
breach, default or otherwise) under this Article and this Agreement (the
"Intentional Claims") shall be the sum of Five Million Dollars
($5,000,000.00).
(d) The maximum aggregate amount of all Unintentional Claims and
Intentional Claims combined shall be the sum of Five Million Dollars
($5,000,000.00).
ARTICLE XI.
DISPUTE RESOLUTION
Section 11.1. General. All disputes between the parties arising under or in
connection with this Agreement, including Indemnification Claims (as more fully
described below, "Claims"), shall be resolved in accordance with the following
procedures.
Section 11.2. Negotiation. A party with a Claim (the "Claiming Party")
shall give reasonably prompt notice (the "Claim Notice") to the other,
specifically identifying the issue and amount in dispute. Senior executives of
the parties or their representatives shall negotiate in good faith to attempt to
resolve the Claim in the absence of attorneys and other non-employer advisors.
During this process, either party may request that an independent third party be
used to mediate the dispute. If the parties do not resolve the Claim by
negotiation within 60 days after receipt of the Claim Notice, either party may
submit the Claim for binding arbitration.
Section 11.3. Arbitration; Claims Covered; Conclusive Determination. Claims
not settled by negotiation shall be resolved by arbitration in accordance with
the American Arbitration Association procedures for Commercial Arbitration and
any supplemental rules deemed appropriate by the arbitrator (the "Procedures").
The arbitration shall be conducted in the city of Kansas City, Missouri. Claims
by either party for injunctive or other equitable relief, for unfair competition
and the use or unauthorized disclosure of trade secrets, confidential
information, or intellectual property, are not covered by this Section and
either party may seek and obtain relief for such Claims from a court of
competent jurisdiction. The decision of the arbitrator may be entered as a
judgment in any court of competent jurisdiction thereof. Any arbitral award
shall be a conclusive determination of the matter, final and binding upon all
parties.
Section 11.4. Arbitration Procedures; Survival. The parties agree that the
procedures and provisions set forth in Schedule 11.4 shall apply to any
arbitration under this Section. This Agreement to arbitrate shall survive the
termination of this Agreement.
Section 11.5. Confidentiality. All aspects of the proceedings provided for
by this Agreement, including the exchange of information during discovery, any
hearings, and the record of the proceedings, are confidential and shall not be
open to the public, except (a) to the extent the parties agree otherwise in
writing, (b) as may be appropriate in any subsequent proceedings between the
parties, or (c) as may otherwise be required by a Governmental Authority or the
rules of the New York Stock Exchange.
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ARTICLE XII.
SETTLEMENT AND RELEASE
Section 12.1. Contract Manufacturing Agreement Amendment. From the date
hereof through Closing, the parties shall continue to perform under the Contract
Manufacturing Agreement. As of the Closing, the Contract Manufacturing Agreement
shall be amended pursuant to the terms and conditions of the Contract
Manufacturing Agreement Amendment, in the form of Exhibit 12.1 hereof.
Section 12.2. Settlement and Release. Except as otherwise provided in this
Section 12.2, as of the Closing each of Buyer and Seller, for itself and its
Affiliates, successors and assigns, does hereby fully, finally and
unconditionally release and forever discharge the other, the others' Affiliates,
agents, attorneys, employees, directors and officers, and all successors and
assigns, and representatives of each of the foregoing (collectively, the
"Released Parties") and agrees to indemnify and hold harmless the Released
Parties, from any and all debts, claims, obligations, damages, costs, attorneys'
fees, suits, demands, liabilities, actions, proceedings and causes of action, in
each case whether known or unknown, contingent or fixed, direct or indirect and
of whatever nature or description and whether in law or in equity, under
contract, tort, statute or otherwise, which each has heretofore had or now or
hereafter can, shall or may have against the Released Parties arising from acts,
claims or events related to or arising out of the Contract Manufacturing
Agreement prior to the Closing and any performance or nonperformance prior to
the Closing thereunder. Notwithstanding the foregoing, this Section in no way
pertains to the following:
(a) this Agreement, the other agreements executed in connection with
this Agreement and the transactions contemplated by this Agreement;
(b) the obligations of Seller to pay the production invoices of Buyer
under the Contract Manufacturing Agreement for pasta produced through the
Closing;
(c) Seller's obligations under any of the Retained Liabilities; or
(d) the ongoing obligations of the parties set forth in Section 12.1.
ARTICLE XIII.
MISCELLANEOUS
Section 13.1. Notices. Except as otherwise expressly provided, all notices
or other communications required or permitted under this Agreement shall be made
in writing and shall be deemed given (i) upon delivery, if sent by (A) personal
delivery or (B) courier (e.g., overnight delivery), (ii) 3 days after being sent
by certified mail, return receipt requested, postage and registration fees
prepaid and correctly addressed to a party as set forth below or (iii) upon
sending, if sent by telecopy to a party at the number listed below for such
party (with a telecopy machine generated confirmation sheet retained by the
sender):
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If to Buyer: American Italian Pasta Company
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇. ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇
Telecopy: (▇▇▇)▇▇▇-▇▇▇▇
If to Seller: ▇▇▇▇▇▇-▇▇▇▇▇▇▇-Midland Company
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President, ADM Natural Health & Nutrition Division
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇-▇▇▇▇▇▇▇-Midland Company
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
or to such other address as Buyer or Seller shall have last designated by notice
to the other party.
Section 13.2. Applicable Law. This Agreement, and the rights and
obligations of the parties hereto, shall be governed by and determined in
accordance with the laws of the State of Missouri, without giving effect to the
choice or conflicts of law provisions thereof.
Section 13.3. Benefit and Assignment. This Agreement shall be binding upon,
and inure to the benefit of, the parties hereto and their respective successors
and permitted assigns. Neither this Agreement nor any rights hereunder may be
assigned or transferred, and no duties may be delegated, by Seller without the
prior written consent of Buyer. Buyer may assign or transfer its rights and
delegate its duties hereunder to any Affiliate of Buyer.
Section 13.4. No Third Party Beneficiary. This Agreement is for the benefit
of, and may be enforced only by, the parties who are signatories hereto and
their respective successors and permitted assigns. This Agreement is not for the
benefit of, and may not be enforced by, any third party.
Section 13.5. Expenses. Except as otherwise provided in this Agreement,
each party hereto shall pay its own expenses incurred in connection with this
Agreement and in the preparation for and consummation of the transactions
provided for herein.
Section 13.6. Waiver. Except as otherwise provided in this Agreement, no
delay or failure on the part of any party hereto in exercising any right, power
or privilege under this Agreement or under any other instrument or document
given in connection with or pursuant to
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this Agreement shall impair any such right, power or privilege or be construed
as a waiver of any default or any acquiescence therein. No single or partial
exercise of any such right, power or privilege shall preclude the further
exercise of such right, power or privilege, or the exercise of any other right,
power or privilege. No waiver shall be valid against any party hereto unless
made in writing and signed by the party against whom enforcement of such waiver
is sought and then only to the extent expressly specified therein.
Section 13.7. Equitable Relief; Remedies Cumulative; Interest. Seller
hereby acknowledges that irreparable injury may result to Buyer in the event of
a breach of this Agreement to Seller. It is therefore agreed that, if Seller
breaches this Agreement, Buyer may seek, in addition to any other remedies and
damages available: (i) an injunction to restrain the violation thereof by such
party, or its shareholders, directors, agents, servants, employers or employees
of such party, and all Persons acting for or with such party and (ii) specific
performance of the terms and conditions of this Agreement. All rights and
remedies granted in this Agreement or available under law or at equity shall be
deemed concurrent and cumulative, and not alternative or exclusive remedies, to
the full extent permitted by law and this Agreement. Any party may proceed with
any number of remedies at the same time or in any order. The exercise of any one
right or remedy shall not be deemed a waiver or release of any other right or
remedy. The parties waive any right they may have to require, or any obligation
on the part of, another party to post a bond in connection with any equitable
remedies. Except as otherwise provided herein, each party shall be entitled to
interest on any amounts owed by and not timely paid by the other from the date
such amount was first due to be paid until the date of actual payment thereof at
the prime rate of Citibank, N.A., as published from time to time in The Wall
Street Journal.
Section 13.8. Further Actions; Transition.
(a) If at any time after the Closing any further action is necessary
or desirable to carry out the purposes of this Agreement, each party 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 Article
X).
(b) Seller shall not take any action that is designed or intended to
have the effect of discouraging any customer, supplier or other business
associate of Seller from establishing or maintaining the same business
relationships with Buyer after the Closing as it maintained with Seller
prior to the Closing relating to the Assets. Seller will refer all customer
inquiries relating to the Branded Products to Buyer from and after the
Closing.
(c) In the event that Buyer or Seller receives funds after the Closing
which belong to or are property payable to the other, the receiving party
shall promptly endorse over or otherwise pay to the other all such
erroneously received funds.
Section 13.9. Entire Agreement; Amendment. This Agreement, the Exhibits and
Schedules attached hereto and the Confidentiality Agreement contain the entire
Agreement of the parties hereto with respect to the transactions contemplated
hereby and supersede any and all prior agreements, arrangements, and
understandings between the parties. No inducements
24
contrary to the terms of this Agreement exist. No waiver of any term, provision,
or condition of this Agreement, whether by conduct or otherwise, in any one or
more instances shall be construed as a further or continuing waiver of any such
term, provision or condition or any other term, provision or condition of this
Agreement. This Agreement may not be modified orally and may only be amended in
a writing executed by all parties hereto.
Section 13.10. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, but all of which
together shall constitute a single agreement.
Section 13.11. Termination.
(a) This Agreement may be terminated prior to the Closing as follows
(i) At any time by the mutual consent of Seller and Buyer;
(ii) By either party, at its sole election, if the Closing shall
not have occurred on or before October 31, 2003, unless such
party has taken action (or failed to take action) in
violation of this Agreement and which caused delay in the
Closing;
(iii)By Buyer upon a material breach of any representation,
warranty, covenant or agreement on the part of Seller set
forth in this Agreement; or
(iv) By Seller upon a material breach of any representation,
warranty, covenant or agreement on the part of Buyer set
forth in this Agreement.
(b) In the event of the termination of this Agreement pursuant to
subparagraph (iii) or (iv) above because Seller or Buyer, as the case may
be, shall have willingly or in bad faith failed to satisfy a condition to
the Closing, the other party shall be entitled to pursue, exercise, and
enforce any and all remedies, rights, powers, and privileges available to
it at law or in equity.
Section 13.12. Public Announcements. Buyer and Seller will coordinate with
each other regarding the content and timing of the initial public announcement
of, the transactions contemplated by this Agreement. Buyer and Seller
acknowledge and consent that each may issue a press release concerning the
transactions contemplated by this Agreement so long as such press release
contains substantially the same information as set forth on Schedule 13.12.
[The remainder of this page is intentionally blank.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
▇▇▇▇▇▇-▇▇▇▇▇▇▇-Midland Company ▇▇▇▇▇ Foods, Inc.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------- -----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇ Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President Title: Vice President
American Italian Pasta Company
By:
------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President -
Operations and Corporate Development
26
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
▇▇▇▇▇▇-▇▇▇▇▇▇▇-Midland Company ▇▇▇▇▇ Foods, Inc.
By: By:
----------------------------------- -----------------------------------
Name: Name:
----------------------------------- -----------------------------------
Title: Title:
----------------------------------- -----------------------------------
American Italian Pasta Company
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President -
Operations and Corporate Development
26
