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Exhibit 2.1
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ASSET PURCHASE AGREEMENT
BY AND AMONG
VLASIC FOODS INTERNATIONAL INC.,
VF BRANDS, INC.
AND
X.X. XXXXX COMPANY
DATED AS OF JANUARY 25, 2001
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ASSET PURCHASE AGREEMENT, dated as of January 25, 2001 (this
"Agreement"), by and among Vlasic Foods International Inc., a New Jersey
corporation ("Seller"), VF Brands, Inc., a Delaware corporation and a wholly
owned Subsidiary of Seller ("VFB" and, together with Seller and any other
Subsidiary (as defined in Section 8.11) of Seller selling or assigning any
Acquired Assets (as defined in Section 1.1), "Sellers"), and X.X. Xxxxx Company,
a Pennsylvania corporation ("Purchaser").
RECITALS:
WHEREAS, Sellers are engaged in the business of (i) developing,
producing, selling and marketing a variety of pickled food products, including
pickles, peppers, sauerkraut and relish (the "Pickles Business"), and (ii)
developing, manufacturing, selling, licensing, marketing and distributing
barbecue sauce and grilling sauce products in the Retail Industry (as defined in
Section 8.11) under the trademark "Open Pit," and exclusively licensing the
"Open Pit" trademark for use in the Institutional and Food Service Industry (as
defined in Section 8.11) (collectively, the "Sauce Business" and, together with
the Pickles Business, the "Business"); and
WHEREAS, Seller will file as promptly as practicable, but in no event
later than two Business Days, after the date hereof, a voluntary petition (the
"Petition") for reorganization relief pursuant to Chapter 11 of title 11 of the
United States Code, 11 U.S.C. Section 101-1330 (as amended, the "Bankruptcy
Code"), in the United States Bankruptcy Court for the District of Delaware (the
"Bankruptcy Court") (the "Bankruptcy Case"); and
WHEREAS, upon the terms and subject to the conditions set forth herein
and as authorized under Sections 105, 363 and 365 of the Bankruptcy Code,
Purchaser desires to purchase and assume from Sellers, and Sellers desire to
sell, transfer, assign, convey and deliver to Purchaser, substantially all of
the assets relating to the Business, together with certain obligations and
liabilities relating thereto;
NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements contained herein,
and intending to be legally bound hereby, the parties hereto agree as follows:
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ARTICLE I
SALE OF ASSETS
Section 1.1. Acquired Assets. On the terms and subject to the
conditions set forth herein, on the Closing Date (as defined in Section 1.8),
Sellers shall sell, transfer, assign, convey and deliver, or cause to be sold,
transferred, assigned, conveyed and delivered, to Purchaser, and Purchaser shall
purchase and accept, all of Seller's, VFB's and any other Subsidiaries' right,
title and interest in and to (i) the assets, properties, rights, claims,
contracts and businesses of every kind, character and description, whether
tangible or intangible, whether real, personal or mixed, whether accrued,
contingent or otherwise, and wherever located, which are shown on the Closing
Balance Sheet (as defined in Section 1.7(a)) and (ii) the assets, properties,
rights, claims, contracts and businesses of every kind, character and
description, whether tangible or intangible, whether real, personal or mixed,
whether accrued, contingent or otherwise, and wherever located, which are
primarily used or held for use in, or are otherwise required for the normal
operation of, the Business, including all those items in the following
categories, whether or not shown on the Closing Balance Sheet, other than assets
described in clause (i) or clause (ii) above which are Retained Assets (as
defined in Section 1.2 below) (collectively, the "Acquired Assets"):
(a) Equipment. All machinery, fixtures, furniture, equipment,
automobiles, trucks, vehicles, tooling, tools, dies, molds, office equipment,
furnishings and other items of personal property;
(b) Inventory. All inventory, finished goods, works in process, raw
materials, ingredients and packaging materials (collectively, the "Inventory")
owned by Seller or its Subsidiaries at the time of the Closing (as defined in
Section 1.8);
(c) Materials and Supplies. All materials, supplies, parts, point of
purchase materials, accessories, goods and other like products or items;
(d) Intellectual Property. All registered and common law trademarks and
trade names, service marks and service names, and registrations and applications
for registration thereof, and foreign counterparts thereof (if any), Internet
domain names and associated content, logos, designs, slogans, trade dress and
general intangibles of like nature, together with the goodwill associated
therewith, including, without limitation, the "hot pockets" trademark rights of
any Seller and its Subsidiaries (whether or not related to the Business) and
those identified in Section 2.13(a)(i) of the Seller Disclosure Schedule (as
defined in the introduction to Article II) ("Trademarks"); all patents, patent
applications and foreign counterparts thereof (if any) ("Patents"); all
copyrights, copyright applications and copyright registrations and foreign
counterparts thereof (if any); and all inventions, customer lists, discoveries,
trade secrets, improvements, formulae, practices, processes, methods,
technology, process sheets, mixing instructions, recipes and know-how and
similar proprietary rights and related licenses and other agreements (all of the
foregoing are collectively referred to as the "Intellectual
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Property"); provided, however, that computer software, programs and source
disks, and related program documentation, tapes, manuals, forms, guides and
other materials that are owned by or are licensed to Seller or any Affiliate (as
defined in Section 8.11) of Seller shall not constitute or be deemed to
constitute Intellectual Property for any purposes of this Agreement).
(e) Contracts. All rights in and to all written and oral distribution
agreements, consignment agreements, agency agreements, co-packing agreements,
license agreements, leases, broker agreements, confidentiality agreements (under
which any Seller has provided information to or received information from a
third party in respect of the Business), all purchase orders for the sale or
purchase of goods and services, or both, and all other contracts and other
agreements of whatever nature (whether written or oral) to which any
transferring party is a party or otherwise has rights under (collectively, the
"Contracts");
(f) Accounts Receivable. All accounts and notes receivable, letters of
credit and other rights to receive payments (collectively, "Accounts
Receivable");
(g) Prepaid Expenses. All prepaid expenses, credits or similar advance
payments;
(h) Claims. All rights, privileges, claims, demands, prepayments,
deposits, refunds, indemnification agreements in favor of any transferring party
with, and indemnification and similar rights against, third parties, warranty
claims (to the extent transferable), offsets and other claims (other than any
claims by Sellers under this Agreement and under Sections 544, 545, 547 and 548
of the Bankruptcy Code);
(i) Books and Records. Except as provided in Section 1.2(c), all sales
and business records, files, books of account, customer and supplier lists,
books and records relating to Taxes (as defined in Section 2.16) related solely
to the Business and the Acquired Assets, product specifications, product
formulations, drawings, correspondence, engineering, maintenance, operating and
production records, advertising materials, customer lists, cost and pricing
information, business plans, quality control records and manuals, blueprints,
research and development files, litigation files, personnel records, credit
records of customers and other books and records, manuals and other materials
(in any form or medium);
(j) Goodwill. All goodwill;
(k) Permits. All Permits (as defined in Section 2.3);
(l) Real Property. All owned real property, including the real property
located at Xxxxx City, Michigan and Millsboro, Delaware;
(m) UPC Codes. All UPC codes used on products sold in the Business; and
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(n) Information Technology. All application systems and software,
systems hardware and networking and communications assets as generally and
specifically described on Exhibit 1.1(n) (the "Information Technology").
Subject to the terms and conditions hereof, at the Closing, the Acquired Assets
shall be transferred or otherwise conveyed to Purchaser free and clear of all
liabilities, obligations and Liens (as defined in Section 8.11) excepting only
Assumed Liabilities (as defined in Section 1.3) and Permitted Liens (as defined
in Section 2.12(a)) other than Permitted Liens required hereby to be released on
or prior to the Closing Date.
Section 1.2. Retained Assets. Notwithstanding anything to the contrary
set forth herein, the Acquired Assets shall not include the Retained Assets.
"Retained Assets" shall mean the following assets which are to be retained by
any Seller and not sold or assigned to Purchaser:
(a) Subject to Section 4.11, Contracts (i) which, by their terms and
pursuant to Applicable Law (as defined in Section 8.11), are non-transferable or
non-assignable, or (ii) are set forth in Section 2.8 of the Seller Disclosure
Schedule under the heading "The following agreements will not be assumed by
Purchaser";
(b) All computer hardware and software, programs and source disks and
related program documentation, tapes, manuals, forms, guides and other similar
materials used in the Business and in the other businesses owned by Seller,
except as set forth on Exhibit 1.1(n);
(c) All books and records relating to Taxes (excluding those books and
records relating to Taxes relating solely to the Business and the Acquired
Assets), provided that Seller shall make such information available to Purchaser
pursuant to Section 4.9 of this Agreement;
(d) Subject to Section 4.11, all non-assignable or non-transferable
Permits;
(e) All real property owned by any Seller and located at Bridgeport,
Michigan;
(f) All machinery, equipment, tooling, tools, office equipment and
similar items of personal property formerly used in the manufacture of pickled
food products at Sellers' formerly owned manufacturing facility in Bridgeport,
Michigan, none of which is currently used in the Business;
(g) All deferred tax assets relating to the Business;
(h) All rights, demands, claims, damages, suits, controversies and
causes of action of any kind or character whatsoever, whether known or unknown,
asserted or unasserted, and including but not limited to any state, federal,
contractual, tort, equitable, statutory or common law claims for damages,
injunctive relief or other recovery of any
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kind whatsoever, that Seller or any of its Subsidiaries
or Affiliates have or may have that are set forth on Exhibit 1.2(h);
(i) All rights, title and interest in the assets set forth on Exhibit
1.2(i); and
(j) All claims by Sellers under this Agreement and under Sections 544,
545, 547 and 548 of the Bankruptcy Code.
Section 1.3. Assumed Liabilities. Subject to the terms and conditions
set forth in this Agreement and excluding the Retained Liabilities (as defined
in Section 1.4), on the Closing Date, Purchaser shall assume and thereafter pay,
perform and discharge when due the following obligations, liabilities, debts,
charges, fees, commitments, expenses and disbursements of any Seller which have
not been paid, performed or discharged as of the Closing (the "Assumed
Liabilities"):
(a) any and all liabilities and obligations relating primarily to the
Business or the Acquired Assets that are (i) reflected on, but only to the
extent reflected on, the Reference Balance Sheet (as defined in Section 2.5) or
(ii) trade accounts payable and accrued expenses incurred after the date of the
Reference Balance Sheet in the ordinary course of business consistent with prior
practice in accordance with the terms of this Agreement, except, in each case,
for (A) liabilities for Taxes (other than payroll Taxes) relating to or arising
out of the Business accruing, or with respect to any event or time period
occurring, at or prior to Closing, (B) liabilities in respect of employees of
Seller or its Affiliates or Plans except to the extent specifically assumed by
Purchaser pursuant to Section 4.3, (C) intercompany accounts payable which do
not represent trade accounts payable, (D) any items not included in current
liabilities, (E) any items which are current liabilities that are not consistent
with past practices, and (F) claims and litigation, including worker's
compensation claims, or any other current liability of a type or category not
reflected on the Reference Balance Sheet, except to the extent specifically
assumed by Purchaser pursuant to this Agreement.
(b) any and all liabilities, obligations and commitments arising out of
Contracts (i) set forth on Section 2.8 of the Seller Disclosure Schedule except
as listed under the heading "The following agreements will not be assumed by
Purchaser", or not required to be set forth therein because of the amount
involved, or (ii) that are entered in the ordinary course of business consistent
with past practice after the date hereof and on or prior to Closing in
accordance with this Agreement, in each case to the extent that such Contracts
are validly assigned to Purchaser, and in each case excluding any obligation or
liability for any breach thereof occurring prior to the Closing Date;
(c) any and all liabilities and obligations in respect of Transferred
Employees to the extent specifically assumed by Purchaser pursuant to Section
4.3;
(d) any and all liabilities of Seller and its Subsidiaries to consumers
in respect of any and all products sold by the Business, including liabilities
in respect of product liability claims and liabilities for refunds, adjustments,
allowances, exchanges,
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returns and warranty, merchantability and other claims, to the extent each such
claim does not exceed $25 and the aggregate amount of all such claims does not
exceed $50,000; and
(e) any and all liabilities of Seller and its Subsidiaries in respect
of those lawsuits, actions, proceedings and claims set forth in Exhibit 1.3(e)
to the extent each such claim does not exceed $25,000.
Section 1.4. Retained Liabilities. Notwithstanding any provision of
this Agreement or any Collateral Agreement (as defined in Section 4.13) and
regardless of any disclosure to Purchaser, Purchaser shall not assume and
Sellers shall retain all liabilities and obligations of Sellers and their
Affiliates (a) under the Amended and Restated Credit Agreement, dated as of
September 30, 1998, by and among Seller, Xxxxxx Guaranty Trust Company of New
York and The Chase Manhattan Bank, as agents, and the other banks party thereto,
as amended, (b) under the Indenture, dated as of June 29, 1999, by and between
Seller and The Bank of New York, as trustee, (c) except for any accrued payroll
Taxes assumed pursuant to Section 1.3, for Taxes related to operations of the
Business or ownership of the Acquired Assets for any period ending on or prior
to the Closing Date, (d) relating to or arising out of the operation of the
Business or the ownership of the Acquired Assets prior to the Closing other than
the Assumed Liabilities, (e) relating to the Retained Assets, (f) that are not
items included in current liabilities or are items which are current liabilities
that are not consistent with past practices, (g) which relate to claims and
litigation, including worker's compensation claims, or are current liabilities
of types or categories not reflected on the Reference Balance Sheet, except to
the extent specifically assumed by Purchaser pursuant to this Agreement, (h) in
respect of the lawsuits, actions, proceedings and claims set forth on Exhibit
1.4(h), (i) relating to any fees and expenses owed to Lazard Freres & Co., LLC,
and (j) in respect of employees of Seller or its Affiliates or Plans, except to
the extent specifically assumed by Purchaser pursuant to Section 4.3
(collectively, the "Retained Liabilities").
Section 1.5. Transfer of Assets and Assumption of Assumed Liabilities.
(a) At the Closing, the sale, transfer, assignment, conveyance and
delivery of the Acquired Assets (other than the Owned Real Property (as defined
in Section 2.12) and the Trademarks and Patents) shall be effected pursuant to a
xxxx of sale and assignment substantially in the form of Exhibit 1.5(a) attached
hereto (the "Xxxx of Sale").
(b) At the Closing, the transfer of each Owned Real Property shall be
effected pursuant to a special limited warranty or bargain or sale deed, without
covenants against grantor's acts, in the customary form for the state in which
such Owned Real Property is located (collectively, the "Deeds"), together with
any reasonably necessary transfer declarations or other filings.
(c) [Intentionally omitted].
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(d) At the Closing, the transfer of the Trademarks and Patents owned or
held by Seller or any of its Subsidiaries shall be effected pursuant to
customary instruments of assignment or transfer, in form suitable for recording
in the appropriate office or bureau (collectively, the "Intellectual Property
Instruments").
(e) At the Closing, the assumption of the Assumed Liabilities shall be
effected pursuant to an assignment and assumption agreement substantially in the
form of Exhibit 1.5(e) attached hereto (the "Assumption Agreement") and such
other documents and instruments as may be necessary in order to effect
Purchaser's assumption of the Assumed Liabilities.
Section 1.6. Purchase Price. (a) Subject to the terms and conditions of
this Agreement, in consideration of the aforesaid sale, transfer, assignment,
conveyance and delivery of the Acquired Assets, Purchaser shall (i) assume the
Assumed Liabilities and (ii) pay to Seller at Closing by wire transfer in
immediately available funds, $195,000,000 (the "Purchase Price"), as such
Purchase Price may be adjusted in accordance with Section 1.6(b) (the "Adjusted
Purchase Price"), less the Escrow Amount (as defined in Section 1.12). The
Adjusted Purchase Price shall be subject to further adjustment following the
Closing as provided in Section 1.7.
(b) Not less than five Business Days prior to the scheduled Closing,
Seller will deliver to Purchaser a notice indicating its good faith estimate of
the Net Working Capital (as defined in Section 1.7(a)) for the Business as of
the Closing (the "Estimated Net Working Capital"), along with a certificate of a
duly authorized officer of Seller certifying the foregoing. If the Estimated Net
Working Capital is less than $62,000,000, then such shortfall shall be deducted
from the Purchase Price at Closing. If the Estimated Net Working Capital is
greater than $62,000,000, then such excess shall be added to the Purchase Price
at Closing.
Section 1.7. Working Capital Adjustment.
(a) Closing Balance Sheet. As soon as reasonably practicable following
the Closing Date, and in any event within 90 days thereafter, Seller shall
prepare and deliver to Purchaser (i) the audited balance sheet of the Business
as of the close of business on the Closing Date (the "Closing Balance Sheet"),
together with the audit reports of PricewaterhouseCoopers LLP-Philadelphia
("Seller's Accountant"), and (ii) a calculation of total current assets minus
total current liabilities (excluding cash and cash equivalents, any deferred tax
assets or liabilities or any accrual for any Taxes other than payroll Taxes)
("Net Working Capital") as reflected on the Closing Balance Sheet (the "Closing
Net Working Capital Amount") (together with reasonable back-up information
providing the basis for such balance sheet and calculation). Except as set forth
on Exhibit 1.7(a), the Closing Balance Sheet shall be prepared in accordance
with generally accepted accounting principles and practices of the United States
in effect from time to time ("GAAP"), and on a basis consistent with the
preparation of the Financial Statements (as defined in Section 2.5), including
appropriate closing adjustments as if the Closing were at a fiscal year end. In
order for Seller to prepare the Closing Balance Sheet, Purchaser will provide to
Seller and Seller's employees, Seller's Accountant and other advisors
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prompt and full on-site access as shall be reasonable under the circumstances to
the personnel and books, records, work papers and all other supporting
accounting documents of the Business (and shall provide copies of such books,
records, work papers and other supporting accounting documents as may be
reasonably requested), to the extent reasonably related to the preparation of
the Closing Balance Sheet and the calculation of the Closing Net Working Capital
Amount. Purchaser acknowledges that Seller will have primary responsibility for
preparation of the Closing Balance Sheet. Seller shall also give Purchaser and
its representatives, including PricewaterhouseCoopers LLP-Pittsburgh
("Purchaser's Accountant"), access to all work papers and all other supporting
accounting documents of the Business related to the preparation of the Closing
Balance Sheet. In addition, Purchaser and its representatives, including
Purchaser's Accountant, shall be entitled to ask questions, receive answers and
request such other data and information from Seller and Seller's Accountant as
shall be reasonable under the circumstances; provided, however, that
notwithstanding the foregoing, all questions and requests to Seller's Accountant
shall be made solely by Purchaser's Accountant. Seller shall also cause Seller's
Accountant to provide to Purchaser's Accountant access to work papers prepared
pursuant to the audit of the Closing Balance Sheet; provided, however, that such
access shall be in accordance with generally accepted auditing standards and the
policies of Seller's Accountant.
(b) Disputes. If Purchaser disagrees with the calculation of the
Closing Net Working Capital Amount or any element relevant thereto, it shall
notify Seller of such disagreement in writing within 30 days after its receipt
of the Closing Balance Sheet, which notice shall set forth in reasonable detail
the particulars of such disagreement. In the event that Purchaser does not
provide such a notice of disagreement within such 30-day period or Purchaser
affirmatively notifies Seller that it agrees with the calculation of the Closing
Net Working Capital Amount, Purchaser shall be deemed to have accepted the
Closing Balance Sheet and the calculation of the Closing Net Working Capital
Amount delivered by Seller, which shall be final, binding and conclusive for all
purposes hereunder. In the event any such notice of disagreement is timely
provided by Purchaser, Purchaser and Seller shall use their reasonable best
efforts for a period of 30 days (or such longer period as they may mutually
agree) to resolve any disagreements with respect to the calculation of the
Closing Net Working Capital Amount. If, at the end of such period, they are
unable to resolve such disagreements in a written agreement, then an independent
accounting firm of nationally recognized standing mutually selected by Seller
and Purchaser (the "Auditor") shall resolve any remaining disagreements. If
Seller and Purchaser do not promptly agree on the selection of the Auditor,
which shall occur no later than 10 days after the end of the 30-day period
referred to above, then each such party shall select an independent accounting
firm of nationally recognized standing and such two independent accounting firms
shall jointly select the independent accounting firm of nationally recognized
standing to act as Auditor pursuant to this Section 1.7(b). The Auditor shall
determine (and written notice thereof shall be given to Seller and Purchaser) as
promptly as practicable, but in any event within 30 days of the date on which
such dispute is referred to the Auditor, based solely on written submissions
detailing the disputed items forwarded by Seller and Purchaser to the Auditor
within 10 days following the Auditor's selection, (x) whether the Closing
Balance Sheet was prepared in accordance with the standards set forth in this
Section 1.7 and (y) (only with
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respect to the disputed items submitted to the Auditor) whether and to what
extent (if any) the Closing Net Working Capital Amount determination requires
adjustment. The parties shall share equally the fees and expenses of the
Auditor. The determination of the Auditor shall be final, conclusive and binding
on the parties, and the Auditor's determination of the amount of the Closing Net
Working Capital Amount shall then be deemed to be the Closing Net Working
Capital Amount for purposes of Section 1.7(c). The Closing Balance Sheet, as
adjusted in accordance with the resolution of any disagreement with respect
thereto pursuant to this Section 1.7, or, if no notice of disagreement is
delivered to Seller by Purchaser in accordance with this Section 1.7(b), as
delivered by Seller to Purchaser in accordance with Section 1.7(a), shall be
referred to in this Agreement as the "Final Closing Balance Sheet."
(c) Payment. The date on which the Closing Net Working Capital Amount
is accepted or finally determined in accordance with this Section 1.7 is
referred to as the "Determination Date" and such accepted or finally determined
Closing Net Working Capital Amount is referred to as the "Final Net Working
Capital Amount." On the fifth Business Day (as defined in Section 1.8) following
the Determination Date, the following payments shall be made in immediately
available funds in dollars by wire transfer to an account specified by the
recipient prior to such date:
(i) if the Final Net Working Capital Amount is less than the
Estimated Net Working Capital, an amount in immediately available same
day funds equal to such shortfall (the "Working Capital Shortfall")
will be remitted to Purchaser from the Escrow Account (as defined in
Section 1.12) in accordance with the terms of the Escrow Agreement (as
defined in Section 1.12), together with interest on the Working Capital
Shortfall at an annual rate equal to the prime rate of interest
calculated on a 365-day year (as quoted daily by the Wall Street
Journal) (the "Interest Rate") from the Closing Date to the date of the
payment of the Working Capital Shortfall to Purchaser (collectively,
the "Principal Amount"); provided, however, that in no event shall
Purchaser be entitled to receive, in the aggregate, funds in excess of
the amount held in the Escrow Account either pursuant to this Section
1.7, pursuant to Section 4.17, pursuant to Section 8.9 or pursuant to
any other provision of this Agreement unless expressly permitted
pursuant to Section 8.9 of this Agreement solely with respect to the
Seller Surviving Covenants (as defined in Section 8.9(i)), and,
provided further, all payments to Purchaser pursuant to this Section
1.7 shall only be made by the Escrow Agent out of the Escrow Account;
and
(ii) if the Final Net Working Capital Amount is greater than
the Estimated Net Working Capital, Purchaser shall promptly pay to
Seller an amount equal to such excess, together with interest on such
amount at the Interest Rate from the Closing Date to the date of the
payment of such amount to Seller.
(d) Purchaser and Seller agree that once the Final Net Working Capital
Amount is finally determined pursuant to this Section 1.7, they will promptly
prepare and send a written notice to the Escrow Agent, in accordance with the
terms and conditions of the Escrow Agreement, which states either (i) the
Principal Amount, if the Final Net
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Working Capital Amount is less than the Estimated Net Working Capital, or (ii)
that Purchaser is not entitled to receive any payment from the Escrow Fund
pursuant to this Section 1.7, if the Final Net Working Capital Amount is equal
to or greater than the Estimated Net Working Capital.
(e) The parties acknowledge and agree that the reserve for trade
promotions and deductions contained in the Final Closing Balance Sheet shall be
the amount of such reserve finally determined in accordance with this Section
1.7, and, accordingly, notwithstanding anything to the contrary contained in
this Agreement, Purchaser agrees that it will not, and will not allow its
Subsidiaries and Affiliates to, make any claims against Seller or any of its
Subsidiaries or Affiliates, with respect to such trade promotions and deductions
associated with trade promotions under any provision of this Agreement or any
Collateral Agreement, including any claim for a breach of any representation,
warranty, covenant or agreement contained in this Agreement or any Collateral
Agreement.
(f) Purchaser and Sellers agree that no entry in excess of $500 per
individual deduction or $10,000 in the aggregate per customer remittance or any
other entry will be made by Purchaser to the trade marketing accrual account as
included in the current liabilities accounts on the Closing Balance Sheet unless
it can be conclusively demonstrated to the staff of Seller's Accountant that
such entry is conclusively demonstrated to be a proper charge against marketing
programs which were in force as of the Closing Date.
(g) It is understood and agreed by Purchaser and Sellers that in
connection with the transfer of transaction processing from Sellers to Purchaser
for the revenue process (as defined in Exhibit A to the Transition Services
Agreement (as defined in Section 4.13 of this Agreement)) Purchaser will obtain
and retain proper documentation for customer deductions and cash receipts which
would be available for Seller's Accountant to complete its audit in accordance
with generally accepted auditing standards of the trade marketing accrual and
accounts receivable components of Net Working Capital.
Section 1.8. Time and Place of Closing. Upon the terms and subject to
the conditions of this Agreement, the closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of Skadden,
Arps, Slate, Xxxxxxx & Xxxx LLP, Xxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at
10:00 a.m. eastern standard time upon the first Business Day following the
satisfaction or waiver (subject to Applicable Law) of the conditions precedent
specified in Article VI (other than those conditions that by their nature are to
be fulfilled only at the Closing, but subject to the fulfillment or waiver
(subject to Applicable Law) of such conditions) or at such other time and place
as the parties hereto may mutually agree (such date, the "Closing Date"). For
purposes of this Agreement, the term "Business Day" means any day other than a
Saturday, Sunday or a day on which banks in New York City are authorized or
obligated by Applicable Law or executive order to close or are otherwise
generally closed.
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Section 1.9. Deliveries by Seller. At the Closing, Seller shall deliver
or cause to be delivered to Purchaser the following:
(a) the officer's certificate contemplated by Sections 6.2(a) and
6.2(b);
(b) the Xxxx of Sale duly executed by Seller;
(c) each of the Deeds duly executed by Seller together with any
necessary transfer declarations or other filings;
(d) [intentionally omitted];
(e) [intentionally omitted];
(f) each of the title policies set forth in Section 6.2(i);
(g) each of the surveys set forth in Section 6.2(j);
(h) each of the Intellectual Property Instruments duly executed by the
appropriate Sellers;
(i) a certificate of non-foreign status as provided in Treasury
Regulation Section 1.1445-2(b);
(j) each of the Collateral Agreements duly executed by Seller;
(k) [intentionally omitted];
(l) the officer's certificate contemplated by Section 6.2 (m); and
(m) such other duly executed documents, instruments and certificates as
may be necessary or appropriate to be delivered by Sellers pursuant to the terms
of this Agreement.
Section 1.10. Deliveries by Purchaser. At the Closing, Purchaser shall
deliver or cause to be delivered to Seller, or, with respect to Section 1.10(f),
to the Escrow Agent, the following:
(a) an amount of cash equal to the Adjusted Purchase Price (less the
Escrow Amount) by wire transfer of immediately available same day funds to an
account or accounts designated by Seller;
(b) the officer's certificate contemplated by Sections 6.3(a) and
6.3(b);
(c) the Assumption Agreement duly executed by Purchaser;
(d) [intentionally omitted];
(e) each of the Collateral Agreements duly executed by Purchaser;
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(f) an amount of cash equal to the Escrow Amount by wire transfer of
immediately available same day funds to an account designated by the Escrow
Agent; and
(g) such other duly executed documents, instruments and certificates as
may be necessary or appropriate to be delivered by Purchaser pursuant to this
Agreement.
Section 1.11. Post-Closing Arrangements. Except as agreed to in the
Collateral Agreements, at the Closing all data processing, accounting,
insurance, banking, personnel, legal, communications and other products and
services provided to the Business by Seller or its Affiliates, including any
agreements or understandings (written or oral) with respect thereto, will
terminate without any further action or liability on the part of the parties
thereto. Notwithstanding the foregoing, in the absence of a written agreement,
the provision of any services (similar to those contemplated in the preceding
sentence) by Seller or any of its Affiliates that have been specifically
requested by Purchaser with respect to the Business from and after the Closing
shall be for the convenience, and at the expense, of Purchaser only and shall be
furnished, if reasonably convenient to be furnished, without any liability on
the part of Seller or its Affiliates with respect thereto.
Section 1.12. Escrow Agreement. At the Closing, Seller, Purchaser and a
bank in the United States to be mutually agreed upon by the parties within ten
days of the date of this Agreement (the "Escrow Agent"), will enter into an
escrow agreement in form and substance customary in similar transactions and
substantially the form attached hereto as Exhibit 1.12 (the "Escrow Agreement"),
and Purchaser will deposit $18,000,000 (the "Escrow Amount") with the Escrow
Agent to be held and disposed of by the Escrow Agent pursuant to the terms and
conditions of the Escrow Agreement (the "Escrow Account"). Delivery of funds by
the Escrow Agent to the applicable parties shall be made pursuant to the terms
of the Escrow Agreement and all earnings thereon shall be distributed on a
monthly basis to Seller. Once the Final Net Working Capital Amount is determined
pursuant to Section 1.7, and, if required, the corresponding distribution of
funds out of the Escrow Account is made by the Escrow Agent to Purchaser, and
once the Adjustment Amount (as defined in Section 4.17) is determined pursuant
to Section 4.17, and, if required, the corresponding distribution of funds out
of the Escrow Account is made by the Escrow Agent to Purchaser, the Escrow Agent
shall be required to promptly distribute to Seller the excess, if any, of (i)
$8,000,000 over (ii) the sum of (x) the aggregate amount of funds, if any,
distributed to Purchaser out of the Escrow Account pursuant to Sections 1.7,
4.17 and 8.9, plus (y) the aggregate amount of funds, if any, held in reserve by
the Escrow Agent to satisfy unresolved claims for Losses (as defined in Section
8.9) made pursuant to Section 8.9 and the terms and provisions of the Escrow
Agreement. The distribution referred to in the preceding sentence, if made, is
referred to as the "First Distribution." The balance of the Escrow Account shall
be released to Seller on the first Business Day after the date ending on the
earliest to occur of: (i) the nine month anniversary of the Closing Date, if
Seller's disclosure statement is approved by the Bankruptcy Court on or prior to
such nine month anniversary, (ii) the approval by the Bankruptcy Court of
Seller's disclosure statement, if such approval is given after such nine month
anniversary and (iii) the one year anniversary of the Closing Date (the
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"Expiration Date"), in each case subject to any claims being made against the
Escrow Account in accordance with the terms of this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth in the disclosure schedule being delivered by
Seller to Purchaser on the date hereof (the "Seller Disclosure Schedule"),
Seller represents and warrants to Purchaser as of the date hereof and as of the
Closing Date as follows:
Section 2.1. Corporate Existence and Power. (a) (a) Each Seller is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation. Each Seller has the corporate power
and authority required to own or lease all of its properties and assets and to
carry on its business as it is now being conducted. Each Seller is duly
qualified or licensed to do business and is in good standing in each of the
jurisdictions specified opposite its name in Section 2.1 of the Seller
Disclosure Schedule, which are the only jurisdictions in which the operation of
its portion of the Business or the character of the properties owned, leased or
operated by it in connection with the Business makes such qualification or
licensing necessary, except where the failure to be so licensed or qualified has
not had, and is not reasonably expected to have, a Business Material Adverse
Effect (as defined in Section 2.1(b)).
(b) For purposes of this Agreement, "Business Material Adverse Effect"
means any event, occurrence, fact, condition, change or effect that,
individually or in the aggregate, is materially adverse to the business,
operations, assets, liabilities (contingent or otherwise), results of operations
or condition (financial or otherwise) of the Business or the ability of Seller
to consummate the transactions contemplated by this Agreement, excluding the
effects of general economic, political or financial market conditions that do
not have a disproportionate impact on the Business.
Section 2.2. Authority of Seller; Binding Effect. (a) (a) Subject to
the entry of the order of the Bankruptcy Court approving the consummation by
Purchaser of the transactions contemplated by this Agreement under Sections 105,
363 and 365 of the Bankruptcy Code (the "Sale Order"), each of Seller and VFB
has the requisite corporate power and authority to execute and deliver, and to
perform its obligations under, this Agreement and, as of the Closing, each
applicable Collateral Agreement and to consummate the transactions contemplated
hereby and thereby, and each other Seller has the requisite corporate power and
authority to perform its obligations under this Agreement and, as of the
Closing, each applicable Collateral Agreement. Subject to the entry of the Sale
Order, the execution and delivery by each of Seller and VFB of this Agreement
and each applicable Collateral Agreement and the performance of its obligations
hereunder and thereunder, have been duly authorized by all necessary corporate
action on the part of Seller or VFB, as the case may be, and the performance by
each other Seller of its obligations under this Agreement and each applicable
Collateral Agreement has been duly authorized by all necessary corporate action
on the part of such other Seller. The Board of Directors of Seller has resolved
to request that the Bankruptcy
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Court approve this Agreement, and the transactions contemplated hereby; provided
that such request may be withdrawn, modified or amended only in accordance with
the provisions of Section 4.16. Subject to the entry of the Bidding Procedures
Order (as defined in Section 4.15), Seller has full power and authority to grant
the Break-Up Fee and the Expense Reimbursement (each as defined in Section 4.16)
without further order of the Bankruptcy Court, and the Break-Up Fee and Expense
Reimbursement shall constitute administrative expenses of Seller under section
503(b)(1) of the Bankruptcy Code.
(b) This Agreement has been, and as of the Closing, each applicable
Collateral Agreement will be, duly executed and delivered by each of Seller and
VFB and, subject to the entry of the Sale Order and assuming the due
authorization, execution and delivery of each such agreement by Purchaser, each
such agreement will be a valid and binding obligation of Seller or VFB, as the
case may be, enforceable against Seller or VFB, as the case may be, in
accordance with its terms, except as (i) the enforceability hereof may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting
the enforcement of creditors' rights generally, and (ii) the availability of
equitable remedies may be limited by equitable principles of general
applicability.
Section 2.3. Governmental Authorization.
(a) Except as (i) may be required under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act") and any applicable foreign
antitrust or competition laws or regulations, or (ii) as set forth in Section
2.3 of the Seller Disclosure Schedule, and subject to the entry of the Sale
Order, the execution, delivery and performance by each of Seller and VFB of this
Agreement and each applicable Collateral Agreement, and the consummation by each
of Seller and VFB of the transactions contemplated hereby and thereby, and the
performance by each other Seller of its obligations under this Agreement and
each applicable Collateral Agreement, do not require any Seller to obtain any
consent, approval, Permit or Order (as defined below) of, make any filing with,
or give any notice to, any Governmental Authority under any Applicable Laws,
except where the failure to obtain such consent, approval, Permit or Order, or
to make such filing, or to give such notice, would not reasonably be expected to
(x) result, individually or in the aggregate, in a Business Material Adverse
Effect or (y) prevent or delay the consummation of the transactions contemplated
hereby by Sellers.
(b) For purposes of this Agreement:
(i) "Governmental Authority" means any court, legislative,
executive or regulatory authority or agency of the United States,
Canada or any other country in which the Business conducts any business
operations (or any other state or other political subdivision thereof)
or any supranational body such as the European Union.
(ii) "Order" means any judgement, order, writ, injunction or
decree of any Governmental Authority or arbitrator.
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(iii) "Permit" means any license, permit, approval,
registration, waiver, exemption, consent, authorization, qualification
and filing, notice or report with and under all federal, state, local
or foreign laws or Governmental Authorities.
Section 2.4. Non-Contravention. Except as disclosed in Section 2.4 of
the Seller Disclosure Schedule, and subject to the entry of the Sale Order, the
execution, delivery and performance by each of Seller and VFB of this Agreement
and each applicable Collateral Agreement and the consummation by each of Seller
and VFB of the transactions contemplated hereby and thereby, and the performance
by each other Seller of its obligations hereunder and under each applicable
Collateral Agreement, will not (i) violate any provision of the charter, bylaws
or any other organizational document of any Seller (unless the same is rendered
inapplicable by order of the Bankruptcy Court), (ii) except for breaches and
defaults of the type referred to in Section 365(b)(2) of the Bankruptcy Code,
violate, conflict with, result in the breach of or default under (or with
notice, lapse of time, or both would result in such a breach or default), result
in any modification of the effect of, provide the other contracting party the
right to terminate or materially amend, or require the other contracting party
to consent to the assignment or continuation of, any Contract to which any
Seller is a party or to which any Seller or any Acquired Asset is bound or
subject, (iii) result in or require the creation or imposition of any Liens on
the Acquired Assets, except for Permitted Liens or Liens created by Purchaser,
(iv) violate any Order against or binding upon any Seller, (v) except for
breaches and defaults of the type referred to in Section 365(b)(2) of the
Bankruptcy Code, violate any agreement with, or condition imposed by, any
Governmental Authority upon any Seller, (vi) subject to obtaining the
governmental authorizations referred to in Section 2.3, violate any Applicable
Law, or (vii) result in a breach or violation of any of the terms or conditions
of, constitute a default under, or otherwise cause an impairment or a revocation
of, any Permit utilized in the operation of the Business, except in the case of
clauses (ii), (iii), (iv), (v), (vi) and (vii) above, for violations, conflicts,
breaches, impairments, modifications, terminations, revocations or defaults
which, or consents or waivers the absence of which, individually or in the
aggregate, have not had, or are not reasonably expected to have, a Business
Material Adverse Effect.
Section 2.5. Financial Statements. Section 2.5 of the Seller Disclosure
Schedule contains complete and correct copies of (a) the unaudited balance sheet
of the Business as of July 30, 2000 and the related unaudited management
statement of earnings before interest and income taxes for the 52 weeks then
ended (including any notes thereto), and (b) the unaudited balance sheet of the
Business as of October 29, 2000 (the "Reference Balance Sheet") and the related
unaudited management statement of earnings before interest and income taxes for
the Business for the 13 weeks then ended (including any notes thereto)
(collectively, the "Financial Statements"). The Financial Statements (i) have
been prepared from the books and records of Sellers which contain all properly
recorded transactions of the Business and (ii) have been prepared in accordance
with GAAP on a consistent basis. The balance sheets included in the Financial
Statements fairly present in all material respects the financial position of the
Business as of the dates thereof and the management statements of earnings
before interest and income taxes included in the Financial Statements fairly
present the results of the operations in all
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material respects of the Business for the respective fiscal periods or as of the
respective dates therein set forth.
Section 2.6. Absence of Undisclosed Liabilities. No Seller has any
liabilities or obligations of any nature (whether known or unknown, absolute,
accrued, contingent or otherwise and whether due or to become due) arising out
of or relating to the Business except:
(a) liabilities or obligations as and to the extent accrued or reserved
against as set forth in the Reference Balance Sheet;
(b) liabilities or obligations incurred after the date of the Reference
Balance Sheet (i) in the ordinary course of business consistent with past
practice, (ii) in accordance with the terms of this Agreement, and (iii) that do
not and will not materially impair the ability of any Seller to perform such
Seller's obligations hereunder or under any Collateral Agreement; and
(c) liabilities or obligations as and to the extent disclosed in
Section 2.6 of the Seller Disclosure Schedule.
Section 2.7. Absence of Certain Changes.(a) (a) Since October 29, 2000,
except (x) as disclosed in Section 2.7 of the Seller Disclosure Schedule and (y)
for the transactions contemplated hereby, (i) Seller and its Subsidiaries have
conducted the Business in the ordinary course of business consistent with past
practice, (ii) the Business has not suffered a Business Material Adverse Effect,
and (iii) neither Seller nor any of its Subsidiaries has taken any of the
actions set forth in Section 4.1. For purposes of this Section 2.7, the filing
with the Bankruptcy Court of the Petition in and of itself shall not constitute
a Business Material Adverse Effect, it being understood, however, that the
effects of the filing of the Petition will be taken into consideration in
determining whether or not there has been, or is reasonably likely to be, a
Business Material Adverse Effect.
(b) Between the period of time commencing on July 30, 2000 and ending
on October 28, 2000, Sellers have not (i) changed any of the accounting
principles used by the Business unless required by GAAP or Applicable Law, or
(ii) transferred or granted any rights or licenses under, or entered into any
settlement regarding the breach or infringement of, any United States or foreign
license of any Intellectual Property, or modified any existing rights with
respect thereto or entered into any licensing or similar agreements or
arrangements, except in the ordinary course of business consistent with past
practice.
Section 2.8. Contracts.
(a) Section 2.8(a) of the Seller Disclosure Schedule contains a correct
and complete list of all Contracts (the "Material Contracts") pursuant to which
Seller or any Subsidiary of Seller has any rights or benefits or undertakes any
obligations or liabilities with respect to the Business, in each case that:
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(i) have a duration of one year or more and are not terminable
without penalty upon 90 days or less prior written notice by any party;
(ii) require or could reasonably be expected to require any
party thereto to pay $100,000 or more in any 12 month period, or
$250,000 or more in the aggregate;
(iii) require any severance or retention payments to employees
of the Business after the Closing Date;
(iv) contain any non-competition covenant or exclusivity
arrangement;
(v) constitute a lease, license, arrangement and other
contract providing in whole or in part for the use of, or limiting the
use of, any Intellectual Property;
(vi) regard the employment, services, consulting, termination
or severance from employment relating to or for the benefit of any
director, officer, employee, sales agent, distributor, dealer,
independent contractor or consultant of the Business; (vii) constitute
(x) a trust indenture, mortgage, promissory note, loan agreement,
security agreement, pledge agreement, deeds of trust, guarantees, keep
well agreement or other contract for the borrowing of money or
guarantee of obligation in an amount exceeding $10,000, and (y) letters
of credit and surety, indemnity, performance and similar bonds;
(viii) constitute a collective bargaining agreement;
(ix) constitute licenses, permits, franchises, Governmental
Approvals and other contracts concerning or relating to the Real
Property or with a Governmental Authority (excluding immaterial
licenses, permits, franchises and Government Approvals, the failure of
which to have do not significantly affect the use or normal operation
of the Business or the Acquired Assets);
(x) constitute joint venture, partnership and similar
contracts involving a sharing of profits or expenses (including but not
limited to joint research and development and joint marketing
contracts);
(xi) constitute asset purchase agreements and other
acquisition or divestiture agreements, including, but not limited to,
any agreements relating to the sale, lease or disposal of any Acquired
Assets (other than sales of inventory in the ordinary course of
business) or involving continuing indemnity or other obligations;
(xii) constitute broker, sales agency, manufacturer's
representative, marketing or distributorship agreements;
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(xiii) constitute contracts, agreements or arrangements with
respect to the representation of the Business in foreign countries;
(xiv) constitute master lease agreements providing for the
leasing of material personal property primarily used in, or held for
use primarily in connection with, the Business;
(xv) constitute any contract under which any Liens, except for
Permitted Liens, exist with respect to any Acquired Asset;
(xvi) constitute any material contract with Seller's former
parent company;
(xvii) constitute any other contracts, agreements or
commitments that are material to the Business; or
(xviii) constitute a contract entered into by any of Seller or
any of its Subsidiaries relating primarily to the Business other than
in the ordinary course consistent with past practice.
(b) Except as set forth in Section 2.8(b) of the Seller Disclosure
Schedule: (i) all of the Material Contracts are in full force and effect, (ii)
except for breaches and defaults of the type referred to in Section 365(b)(2) of
the Bankruptcy Code, Sellers are not, and to the Knowledge of Seller none of the
other parties to the Material Contracts are, in material default under, and no
event has occurred which, with the passage of time or giving of notice or both,
would result in Sellers, or to the Knowledge of Seller any of the other parties
to the Material Contracts, being in material default under, any of the terms of
the Material Contracts, and (iii) none of the Material Contracts requires the
consent of any other party thereto in connection with the transactions
contemplated by this Agreement except, in the case of clause (i) above, for
failures to be in full force and effect which have not had, or would not
reasonably be expected to have, a Business Material Adverse Effect, in the case
of clause (ii) above, for such defaults which have not had, or would not
reasonably be expected to have, a Business Material Adverse Effect, and in the
case of clause (iii) above, for consents the absence of which have not had, or
would not reasonably be expected to have, a Business Material Adverse Effect.
Section 2.9. Litigation.
Except as set forth in Section 2.9 of the Seller Disclosure Schedule,
(i) there are no outstanding Orders that relate to the Business or the Acquired
Assets and (ii) there are no claims, actions, suits, arbitrations or proceedings
pending or, to the Knowledge of Seller (as defined below), threatened, against
Seller or any of its Subsidiaries which, with respect to the preceding clauses
(i) and (ii) above are likely, individually or in the aggregate, to (A) have or
reasonably be expected to have a Business Material Adverse Effect or (B)
materially and adversely affect the ability of Sellers to consummate the
transactions contemplated hereby or by the Collateral Agreements. For
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purposes of this Agreement, the term "Knowledge of Seller" means the actual
knowledge after due inquiry of the individuals set forth in Exhibit 2.9 attached
hereto.
Section 2.10. Compliance with Applicable Laws.
(a) Except as set forth in Section 2.10(a) of the Seller Disclosure
Schedule, (i) the Business and the Acquired Assets are, and since January 1,
2000 have been, in compliance in all material respects with all significant
Applicable Laws, and (ii) Seller has not received any written notice from a
Governmental Authority alleging any material violation of any such significant
Applicable Law to which the Business or the Acquired Assets are subject.
(b) Section 2.10(b) of the Seller Disclosure Schedule sets forth a list
of all Permits necessary to conduct the Business in the manner it is presently
conducted (excluding immaterial Permits the failure of which to have do not
significantly affect the use or normal operation of the Business or the Acquired
Assets) or otherwise material to the Business and, except for breaches and
defaults of the type referred to in Section 365(b)(2) of the Bankruptcy Code,
such Permits have been duly obtained and are in full force and effect. Except
for breaches and defaults of the type referred to in Section 365(b)(2) of the
Bankruptcy Code or as set forth in Section 2.10(b) of the Seller Disclosure
Schedule, (i) the Business is not in material violation of the terms of any
Permit (excluding immaterial Permits the failure of which to have do not
significantly affect the use or normal operation of the Business or the Acquired
Assets) and (ii) no violation has been alleged by any Governmental Authority, no
proceeding is pending or, to the Knowledge of Seller, threatened to revoke or
materially limit any such Permit, and, to the Knowledge of Seller, there is no
basis for any such allegation or proceeding.
Section 2.11. Environmental Compliance. Except as set forth in Section
2.11 of the Seller Disclosure Schedule:
(a) The Business is, and has been since January 1, 2000, in compliance
in all material respects with all applicable Environmental Laws (as defined in
Section 2.11(g)), including, but not limited to, possessing and complying with
all Permits and other governmental authorizations required for its operations
under applicable Environmental Laws.
(b) There is no pending or, to the Knowledge of Seller, threatened
claim, lawsuit, complaint, judgment, Order or proceeding, and, to the Knowledge
of Seller, there is no investigation pending or threatened against the Business
under or pursuant to any Environmental Law that has had, or is reasonably likely
to have, individually or in the aggregate, a Business Material Adverse Effect.
Seller has not received notice from any Person (as defined in Section 8.11),
including but not limited to any Governmental Authority, alleging that the
Business has been or is in violation in any material respect or potentially in
violation in any material respect of any applicable Environmental Law or
otherwise may be liable under any applicable Environmental Law, which violation
or liability is unresolved.
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(c) With respect to the Real Property, to the Knowledge of Seller,
there have been no releases, spills or discharges of Hazardous Substances (as
defined in Section 2.11(g)) on or underneath any of the Real Property that have
had, or would be reasonably likely to result in, individually or in the
aggregate, a Business Material Adverse Effect.
(d) Elevated levels of nitrate in the groundwater at Seller's plant in
Millsboro, Delaware have been reduced to levels acceptable to the appropriate
Governmental Authority by means of groundwater extraction and subsequent
discharge of that water by underground injection. Operation of this remediation
system has been discontinued, but the extraction and discharge system, as well
as the permit for underground injection, remain in place, in each case, as
required by the appropriate Governmental Authority.
(e) Asbestos containing material ("ACM"), including encapsulated floor
tiles in the laboratory at Seller's plant in Xxxxx City, Michigan, is present at
the Seller's facilities in a condition that does not require abatement, removal
or remediation pursuant to Environmental Laws.
(f) Neither any Seller, nor to the Knowledge of Seller, any other
Person, has caused or taken any action that will result in, and no Seller is
subject to, any material liability or obligation relating to environmental
conditions arising from its ownership or operation of the Acquired Assets or to
environmental conditions at, above, on or under the Acquired Assets.
(g) For purposes of this Agreement:
(i) "Environmental Laws" means all federal, state, local and
foreign laws, regulations, rules and ordinances relating to pollution
or protection of human health (as it relates to environmental matters,
such as toxic tort or human exposure matters, but not as it relates to
worker safety or Occupational Safety and Health Act matters, which are
covered elsewhere in this Agreement), or the environment, including,
without limitation, laws relating to releases or threatened releases
of Hazardous Substances into the environment (including, without
limitation, ambient air, surface water, groundwater, land, surface and
subsurface strata).
(ii) "Hazardous Substances" means any chemicals, materialsr
or substances defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "hazardous
constituents," "restricted hazardous materials," "extremely hazardous
substances," "toxic substances," "contaminants," "pollutants," "toxic
pollutants," or words of similar meaning and regulatory effect under
any applicable Environmental Law including, without limitation,
petroleum, petroleum products, polychlorinated biphenyls and asbestos.
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Section 2.12. Real Property; Title to Acquired Assets.
(a) Section 2.12(a) of the Seller Disclosure Schedule contains a
complete and correct list of all Owned Real Property (as defined in Section
2.12(b)) setting forth the address and owner of each parcel of Owned Real
Property including, without limitation, the properties reflected as being so
owned on the Financial Statements. Except as set forth in Section 2.12(a) of the
Seller Disclosure Schedule, Seller has good and marketable, fee simple title to
all of the Owned Real Property, free and clear of all Liens except for Permitted
Liens (as defined below). As used in this Agreement, the term "Permitted Liens"
means (i) Liens identified in Section 2.12(a)(i) of the Seller Disclosure
Schedule or reserved against in the Financial Statements (including any notes
thereto) to the extent so reserved, (ii) any Lien that is shown as an exception
and not marked through with a "x", or as otherwise marked on the title
commitments delivered to Purchaser on or before the date hereof which are
attached hereto as Section 2.12(a)(ii) of the Seller Disclosure Schedule, (iii)
mechanics', carriers', workers', repairers', materialmen's, warehousemen's and
other similar Liens arising out of operation of law with respect to a liability
incurred in the ordinary course of business, which are not individually or in
the aggregate material and which are not yet due, (iv) Liens arising under
original purchase price conditional sales contracts and equipment leases with
third parties (provided that there are no such Liens against the Owned Real
Property), (v) Liens for Taxes which are being contested in good faith by
appropriate proceedings and are disclosed on Section 2.12(a)(v) of the Seller
Disclosure Schedule, or Liens for Taxes not yet due, (vi) leases, subleases and
similar agreements disclosed on Section 2.12(a)(vi) of the Seller Disclosure
Schedule, (vii) easements, covenants, rights-of-way and other similar
restrictions of record disclosed on Section 2.12(a)(vii) of the Seller
Disclosure Schedule, (viii) any condition that is shown by the surveys of the
Owned Real Property provided by Seller to Purchaser as specified in Section
6.2(j) herein, (ix) zoning, building and other similar restrictions, and Liens
that have been placed by any developer, landlord or other third party on
property over which the Business has easement rights or on any leased property
and subordination or similar agreements relating thereto, and (x) such other
Liens that, individually or in the aggregate, do not and would not be reasonably
expected to materially detract from the value of or impair the use of the
property subject thereto.
(b) As used in this Agreement, the term "Owned Real Property" means the
real property owned by any Seller which is primarily used or held for use in,
the Business, together with all other structures, facilities, improvements,
fixtures, systems, equipment and items of property, presently or hereafter
located thereon attached or appurtenant thereto or owned by such Seller and
located on Leased Real Property and all easements, licenses, rights and
appurtenances relating to the foregoing, excluding in each case all computer
equipment, hardware, software, programs, source disks and related program
documentation and other materials.
(c) Section 2.12(c) of the Seller Disclosure Schedule sets forth a list
of all real property which is leased or subleased by Seller or any of its
Subsidiaries and is used exclusively in the operation of the Business (the
"Leased Real Property") (the Owned Real Property and the Leased Real Property
being collectively referred to herein as the "Real Property"), setting forth the
address, landlord and tenant for each such lease. Seller and its Subsidiaries
hold good and valid leasehold title to the Leased Real Property, in each case
subject to the provisions of the applicable lease. Seller has
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delivered to Purchaser correct and complete copies of each of the leases with
respect to each Leased Real Property. Each lease grants the tenant under the
lease the exclusive right to use and occupy the demised premises thereunder.
Seller enjoys peaceful and undisturbed possession under each of the leases with
respect to each Leased Real Property. Schedule 2.12(c) of the Seller Disclosure
Schedule also sets forth all leases relating to the Business under which any
Seller is a lessor.
(d) Except as set forth on Section 2.12(d) of the Seller Disclosure
Schedule, Seller and its Subsidiaries have good title to, or valid leaseholds
interest in, or other valid rights to use, all of the Acquired Assets (excluding
the Owned Real Property).
(e) None of the Owned Real Property, and to the Knowledge of Seller,
none of the Leased Real Property, is subject to any pending suit for
condemnation or other taking by any Governmental Authority or other Person, and
to the Knowledge of Seller, no such condemnation or other taking is threatened
or contemplated. There is no Order outstanding, nor any action, claim, suit or
proceeding pending or, to the Knowledge of Seller, threatened, relating to the
ownership, lease, use, occupancy or operation by any Person of any Owned Real
Property, and to the Knowledge of Seller, there is no Order outstanding, nor any
action, claim, suit or proceeding, pending or threatened relating to the
ownership, lease, use, occupancy or operation by any Person of any Leased Real
Property.
(f) As of the date of this Agreement, the leases relating to the Leased
Real Property are in full force and effect, and constitute the legal, valid and
binding obligations of Seller, and to the Knowledge of Seller, the other party
or parties thereto, subject to limitations imposed by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium and other Applicable Laws
relating to or affecting creditors' rights generally and general equitable
principles. Except as set forth on Section 2.12(f) of the Seller Disclosure
Schedule, there are no existing defaults or conditions which with the giving of
notice or the passage of time, or both, would constitute a default by Seller or,
to the Knowledge of Seller, the other party thereto, with respect to the leases
for the Leased Real Property.
(g) The Real Property constitutes all the fee and leasehold interests
in real property held for use in connection with, necessary for the conduct of,
or otherwise material to, the Business.
(h) The use and operation of the Real Property in the conduct of the
Business does not violate in any material respect any of the terms of any
Permitted Lien, any instrument of record or any other agreement affecting the
Real Property. There is no material violation of any covenant, condition,
restriction, easement or Order of any Governmental Authority having jurisdiction
over such property or of any other Person entitled to enforce the same affecting
the Real Property or the use or occupancy thereof.
(i) The Real Property is in material compliance with all applicable
building, zoning, subdivision and other land use and similar Applicable Laws
affecting the Real Property (collectively, the "Real Property Laws"), and no
Seller has received
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any notice of material violation of any Real Property Law. To the Knowledge of
Seller, no current use by any Seller of the Real Property is dependent on a
nonconforming use or other Governmental Approval the absence of which would
materially limit the use of such properties or assets held for use in connection
with, necessary for the conduct of, or otherwise material to, the Business;
provided, however, that for purposes of this sentence the term "Knowledge of
Seller" means "the actual knowledge (with no obligation to inquire into the
matters covered by this sentence) of the individuals set forth in Exhibit 2.9
attached hereto."
(j) Each parcel included in the Owned Real Property is assessed for
real property tax purposes as a wholly independent tax lot, separate from
adjoining land or improvements not constituting a part of that parcel.
Section 2.13. Intellectual Property.
(a) Section 2.13(a) of the Seller Disclosure Schedule sets forth, for
the following Intellectual Property owned by any Seller, a complete and accurate
list of all U.S., state and foreign: (i) patents and patent applications; (ii)
trademark and service xxxx registrations (including Internet domain name
registrations), trademark and service xxxx applications and material
unregistered trademarks and service marks; and (iii) copyright registrations,
copyright applications and material unregistered copyrights.
(b) Section 2.13(b) of the Seller Disclosure Schedule lists all
material agreements granting or obtaining any right to use or practice any
rights under any Intellectual Property to which any Seller is a party or is
otherwise bound, as licensee or licensor thereunder, including, without
limitation, license agreements, settlement agreements and covenants not to xxx
(collectively, the "IP License Agreements").
(c) Except as set forth in Section 2.13(c) of the Seller Disclosure
Schedule:
(i) Seller, or one of its Subsidiaries, owns or possesses
adequate licenses or other legal rights to use, sell or license all
Intellectual Property, free and clear of all Liens, except for any
Liens listed on Section 2.13(b) of the Seller Disclosure Schedule;
(ii) any registered Trademark or Patent owned by any Seller
or, to the Knowledge of Seller, used but not owned by any Seller, has
been duly maintained, and has not been cancelled, expired or abandoned;
(iii) all registered Trademarks are valid and subsisting and
in full force and effect, and, to the Knowledge of Seller as of the
Closing Date, all registered Patents are valid and subsisting and in
full force and effect;
(iv) no claims, or to the Knowledge of Seller, threat of
claims, have been asserted by any third party against any Seller
related to the use in the conduct of the Business of any Intellectual
Property rights or challenging or questioning the validity or
effectiveness of any IP License Agreement, and to the Knowledge of
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Seller, the practice or use of the Intellectual Property in the conduct
of the Business does not infringe, misappropriate, violate or dilute
any intellectual property rights of any third party;
(v) no claims, demands or proceedings are pending charging any
third party with infringement, misappropriation, dilution or violation
of any Intellectual Property owned by any Seller, and to the Knowledge
of Seller, no third party is misappropriating, infringing, diluting or
violating any Intellectual Property owned by any Seller;
(vi) no settlement agreements, consents, judgments, orders,
forbearance to xxx or similar obligations limit or restrict any
Seller's rights in and to any Intellectual Property;
(vii) no Seller has licensed its rights in any Intellectual
Property, or received or been granted any such rights, other than
pursuant to the IP License Agreements;
(viii) except for breaches and defaults of the type referred
to in Section 365(b)(2) of the Bankruptcy Code, each IP License
Agreement is a valid and binding obligation of the Seller party
thereto, enforceable in accordance with its terms, and to the Knowledge
of Seller no event or condition has occurred which will result in a
violation or breach of, or constitute a default by the Seller party
thereto under, any such IP License Agreement; and
(ix) the consummation of the transactions contemplated hereby
will not result in the loss or impairment of any Seller's rights to own
or use any of the Intellectual Property, nor will such consummation
require the consent of any third party in respect of any Intellectual
Property.
Section 2.14. Employee Benefit Plans; ERISA.
(a) Section 2.14(a) of the Seller Disclosure Schedule sets forth a true
and correct list of each of the material Plans (as defined below). Seller has
heretofore delivered or made available to Purchaser, with respect to each of the
material Plans, true and correct copies of each of the following documents if
applicable: (i) the Plan document (or if the Plan is not a written Plan, a
description thereof); (ii) the most recent annual report (Form 5500) filed with
the Internal Revenue Service (the "IRS"), (iii) the most recent actuarial report
for such Plan, (iv) the most recent determination letter from the IRS for such
Plan and (v) the most recent summary plan description and related summaries of
material modifications, if available.
(b) For purposes of this Agreement, the term "Plan" means (i) each
"employee benefit plan" (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")); (ii) each
retention, consulting, termination or severance agreement, arrangement or
commitment; or (iii) each other employee benefit, fund, program, commitment,
policy or agreement or arrangement, in each case, that is sponsored, maintained
or contributed to or required to be contributed to
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by Seller or any trade or business, whether or not incorporated, that together
with Seller would be deemed a "single employer" within the meaning of Section
4001(b) of ERISA (an "ERISA Affiliate"), for the benefit of any employee or
former employee of the Business, and the beneficiaries and dependents of any
such employee.
(c) No liability under Title IV or Section 302 of ERISA has been
incurred by Seller or any ERISA Affiliate with respect to any of the Plans that
has not been satisfied in full, and no condition exists that presents a material
risk to Seller or any ERISA Affiliate of incurring any such liability, other
than liability for premiums due the Pension Benefit Guaranty Corporation (which
premiums have been paid when due).
(d) Each Plan has been operated and administered in all material
respects in accordance with its terms and applicable law, including but not
limited to ERISA and the Interval Revenue Code of 1986, as amended (the "Code"),
and each Plan intended to be "qualified" within the meaning of section 401(a) of
the Code is so qualified and the trusts maintained thereunder are exempt from
taxation under section 501(a) of the Code.
(e) Except as provided in Section 2.14(e) of the Seller Disclosure
Schedule, no Plan provides retiree medical or retiree life insurance benefits to
any former or current employee of the Business, other than (A) coverage mandated
by Applicable Law or (B) benefits the full cost of which is borne by such
current or former employee (or his or her beneficiary).
(f) Except as provided in Section 2.14(f) of the Seller Disclosure
Schedule, the consummation of the transactions contemplated by this Agreement
will not (i) entitle any current or former employee or officer of the Business
to severance pay, unemployment compensation or any other payment, except as
expressly provided in this Agreement, or (ii) accelerate the time of payment or
vesting, or increase the amount of compensation due any such employee or
officer.
(g) Except as disclosed in Section 2.14(g) of the Seller Disclosure
Schedule, there are no pending, or to the Knowledge of the Seller, threatened
material claims by or on behalf of any Plan, by any employee of the Business or
any beneficiary of such employee covered under any such Plan, or otherwise
involving any such Plan (other than routine claims for benefits).
Section 2.15. Labor Relations and Employment.(a) Except to the extent
set forth in Section 2.15 of the Seller Disclosure Schedule, (i) there is no
labor strike, lockout or other material work stoppage pending, or to the
Knowledge of Seller, threatened against the Business; (ii) Seller is not a party
to, or bound by, any collective bargaining agreement with any labor organization
applicable to employees of the Business; (iii) to the Knowledge of Seller, there
is currently no union organizing activities among employees of the Business;
(iv) there is no material unfair labor practice charge or complaint against the
Business pending or, to the Knowledge of Seller, threatened before the National
Labor Relations Board; and (v) there is no pending material arbitration arising
out of any collective bargaining agreement.
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Section 2.16. Taxes. Except as set forth in Section 2.16 of the Seller
Disclosure Schedule:
(a) Seller (i) has filed (or has caused to be filed) with the
appropriate taxing authorities, all income and other material Tax Returns (as
defined below) relating to the Acquired Assets, the Business and VFB required to
be filed by it, and all such Tax Returns are true and correct in all material
respects, and (ii) subject to any of Sellers' obligations as debtors or
debtors-in-possession under the Bankruptcy Code, has paid or made adequate
provision in accordance with GAAP for the payment of all Taxes shown to be due
and payable on such Tax Returns;
(b) there is no action, suit, claim, assessment or, to the Knowledge of
Seller, audit pending or proposed in writing with respect to Taxes relating to
the Business and the Acquired Assets; and
(c) there are no Liens for Taxes upon the Acquired Assets, except for
Liens for current Taxes not yet due and payable or Liens for Taxes being
contested in good faith.
(d) For purposes of this Agreement, the term "Tax" or "Taxes" means
taxes of any kind, levies or other like assessments, customs, duties, imposts,
charges or fees, including income, gross receipts, ad valorem, value added,
excise, real or property, asset, sales, use, license, payroll, transaction,
capital, net worth, withholding, estimated, social security, utility, workers'
compensation, severance, production, unemployment compensation, occupation,
premium, windfall profits, transfer and gains taxes imposed by or payable to any
Governmental Authority, together with any interest, penalties or additions with
respect thereto. For purposes of this Agreement, the term "Tax Return" shall
mean all returns, reports, statements, declarations, estimates and forms or
other documents (including any related or supporting information), required to
be filed with respect to any Taxes.
Section 2.17. Brokerage and Financial Advisers. No broker, finder or
financial adviser has acted, directly or indirectly, as such for, or is entitled
to any compensation from, Seller or its Affiliates in connection with this
Agreement or the transactions contemplated hereby, except Lazard Freres & Co.,
LLC, whose fees for services rendered in connection therewith will be paid by
Seller or an Affiliate of Seller.
Section 2.18. Customers; Suppliers.
(a) Section 2.18(a) of the Seller Disclosure Schedule sets forth each
customer of the Business that individually accounts for more than 5% of the
gross sales of the Business for the fiscal year ended July 30, 2000. Except as
set forth in Section 2.18(a) of the Seller Disclosure Schedule, no Seller has,
since the date of the Reference Balance Sheet, received any notice that any
significant customer of the Business (i) has ceased, or will cease, to use the
products, goods or services of the Business, or (ii) has substantially reduced
or will substantially reduce, the use of products, goods or services
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of the Business, including in each case after the consummation of the
transactions contemplated hereby.
(b) Section 2.18(b) of the Seller Disclosure Schedule sets forth each
supplier of the Business that individually accounts for more than 5% of the
operating expenses of the Business for the fiscal year ended July 30, 2000.
Section 2.19. Inventory.
(a) Except as set forth in Section 2.19 of the Seller Disclosure
Schedule, the Inventory and all products sold or delivered by or on behalf of
the Business for sale to consumers within 18 months of the Closing Date consists
or consisted of merchandise of a quality and quantity usable and saleable in the
ordinary course of business, are or were fit for their intended purpose and were
neither adulterated nor misbranded within the meaning of the Federal Food Drug
and Cosmetic Act of 1938, as amended, the Federal Fair Packaging or Labeling Act
of 1966, as amended, and any other applicable federal, state or local food and
drug, consumer safety or consumer protection law or regulation, and will comply,
or complied, with all other applicable state and local laws and regulations. The
Inventory, at the time of the Closing Balance Sheet, will be valued at the lower
of cost (standard cost adjusted for variance allocation which approximates
average cost) or market in accordance with GAAP.
(b) The existing manufacturing practices, ingredients, composition and
labeling for each of the products of the Business are in compliance in all
material respects with, and subject to Purchaser's continuing to adhere to such
practices, and assuming no change in existing laws, Purchaser may produce,
distribute and sell each of such products on and after the Closing Date without
violating in any material respect, any federal, state or local food and drug,
consumer safety or consumer protection laws or regulations. All labeling used on
the Inventory and the products sold or delivered by or on behalf of the Business
for sale to consumers within 18 months of the Closing Date has been filed or
registered with and/or approved by each state regulatory agency which requires
such filing, registration and/or approval.
Section 2.20. Insurance. Section 2.20 of the Seller Disclosure Schedule
contains a complete and correct list and summary description of all insurance
policies maintained by any Seller for the benefit of or in connection with the
Acquired Assets or the Business. Sellers have delivered to Purchaser complete
and correct copies of all such policies together with all riders and amendments
thereto. Such policies are in full force and effect, and all premiums due
thereon have been paid. Sellers have complied in all material respects with the
terms and provisions of such policies. Section 2.20 of the Seller Disclosure
Schedule sets out all material claims made by Sellers under any policy of
insurance during the one year period prior to the execution of this Agreement
with respect to the Business.
Section 2.21. Receivables. All of Sellers' receivables (including
accounts receivable, loans receivable and advances) that are reflected in the
Reference Balance Sheet, and all receivables that have arisen since the date of
the Reference
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Balance Sheet until the date hereof, have arisen only from bona fide
transactions in the ordinary course of business.
Section 2.22. Trade Spending. On or prior to the date hereof, Seller
has provided to Purchaser a true and complete copy of Seller's (i) national
trade merchandising (the "Trade Events Calendar") and (ii) national consumer
promotions (the "Consumer Events Calendar"), provided that Seller shall not
disclose to Purchaser data relating to specific customer trade promotions, deal
rates and net pricing contained in the Trade Events Calendar and coupon values
contained in the Consumer Events Calendar (collectively, the "Excluded
Information"). On or prior to the date hereof, Seller has provided a copy of the
Trade Events Calendar and the Consumer Events Calendar with the Excluded
Information to Xxxxx Xxxxxxx of Xxxx & Co.
Section 2.23. Information Technology.
(a) Exhibit 1.1(n) sets forth all of the applications and software,
hardware systems and networking and communication assets: (i) which are used in
connection with the acquired facilities located at Xxxxx City, Michigan and
Millsboro, Delaware and/or (ii) which are used solely in connection with the
operation of the Business.
(b) Except as set forth in Section 2.23(b) of the Seller Disclosure
Schedule:
(i) Seller owns or possesses adequate licenses or other legal
rights to use, sell or license all Information Technology free and
clear of all Liens, subject to the terms of the licenses listed on
Exhibit 1.1(n);
(ii) no claims, or to the Knowledge of Seller, threat of
claims, have been asserted by any third party against Seller related to
the use in the conduct of the Business of any Information Technology or
challenging or questioning the validity or effectiveness of any
Information Technology license or lease agreement; and to the Knowledge
of Seller, the practice or the use of the Information Technology in the
conduct of the Business does not infringe, misappropriate, violate or
dilute any intellectual property rights of any third party;
(iii) no claims, demands or proceedings are pending charging
any third party with infringement, misappropriation, dilution or
violation of any rights in any Information Technology owned by Seller
and to the Knowledge of Seller, no third party is infringing,
misappropriating, diluting or violating any rights in any Information
Technology used by Seller;
(iv) no settlement agreements, consents, judgments, orders,
forbearance to xxx or similar obligations limit or restrict any
Seller's rights in and to any Information Technology;
(v) all Information Technology is in good working condition
(normal wear and tear excepted);
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(vi) Seller has not licensed rights in any Information
Technology or received or been granted any such rights other than
pursuant to the Information Technology license and lease agreements to
be transferred to Purchaser pursuant to this Agreement;
(vii) except for breaches and defaults of the type referred to
in Section 365(b)(2) of the Bankruptcy Code, each Information
Technology license and lease agreement is a valid and binding
obligation of the Seller party thereto, and is enforceable in
accordance with its terms, and to the Knowledge of Seller no event or
condition has occurred which will result in a violation or breach of,
or cause to default by the Seller party thereto under, any such
Information Technology license and lease agreement; and
(viii) the consummation of the transactions, contemplated
hereby will not result in a loss or impairment of any Seller's rights
to own or use any of the Information Technology, nor will such
consummation require the consent of any third party in respect of any
Information Technology.
Section 2.24. Assets Necessary to the Business. Except as set forth in
Section 2.24 of the Seller Disclosure Schedule, the Acquired Assets and the
services to be provided pursuant to the Collateral Agreements constitute all of
the assets, properties and services utilized to conduct the Business as
presently conducted in all material respects. All material Acquired Assets
actively used in the normal operation of the Business are in reasonably good
repair and operating condition (subject to normal wear and tear).
Section 2.25. No Other Representations. Except for the representations
and warranties contained in this Article II, no Seller or any other Person makes
any representation or warranty, express or implied, on behalf of Seller, its
Subsidiaries or the Business.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Except as set forth in the disclosure schedule being delivered by
Purchaser to Seller on the date hereof (the "Purchaser Disclosure Schedule"),
Purchaser represents and warrants to Seller as of the date hereof and as of the
Closing Date as follows:
Section 3.1. Corporate Existence and Power. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania and has all corporate powers required to carry on
its business as now conducted.
Section 3.2. Authority. Purchaser has all requisite power and authority
to execute and deliver, and to perform its obligations under this Agreement and,
as of the Closing, each Collateral Agreement and to consummate the transactions
contemplated hereby and thereby, and the execution and delivery by Purchaser of
this Agreement and each Collateral Agreement, and the performance by Purchaser
of its obligations under
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this Agreement and each Collateral Agreement, have been duly authorized by all
necessary corporate action on the part of Purchaser. This Agreement has been,
and as of the Closing, each Collateral Agreement will be, duly executed and
delivered by Purchaser, and subject to the entry of the Sale Order and assuming
the due authorization, execution and delivery by Seller and VFB, as applicable,
each such agreement will be a valid and binding obligation of Purchaser,
enforceable against Purchaser in accordance with its terms, except as (i) the
enforceability hereof may be limited by bankruptcy, insolvency, moratorium or
other similar Applicable Laws affecting the enforcement of creditors' rights
generally, and (ii) the availability of equitable remedies may be limited by
equitable principles of general applicability.
Section 3.3. Governmental Authorization. Except as required under the
HSR Act and any applicable foreign antitrust or competition laws or regulations,
and subject to the entry of the Sale Order, the execution, delivery and
performance by Purchaser of this Agreement and each Collateral Agreement and
consummation of the transactions contemplated hereby and by each Collateral
Agreement do not require Purchaser to obtain any consent, approval or action of,
make any filing with, or give any notice to, any Governmental Authority.
Section 3.4. Non-Contravention. Except as set forth in Section 3.4 of
the Purchaser Disclosure Schedule and subject to the entry of the Sale Order,
the execution, delivery and performance by Purchaser of this Agreement and each
Collateral Agreement and the consummation by Purchaser of the transactions
contemplated hereby and thereby will not (i) violate any provision of the
charter, bylaws or any other organizational document of Purchaser, (ii) violate,
conflict with, result in the breach of or default under (or with notice, lapse
of time, or both would result in such a breach or default), result in any
modification of the effect of, provide the other contracting party the right to
terminate or materially amend, or require the other contracting party to consent
to the assignment or continuation of, any material contract to which Purchaser
is a party or to which Purchaser is subject, (iii) violate any Order against or
binding upon Purchaser, (iv) violate any agreement with, or condition imposed
by, any Governmental Authority upon Purchaser, (v) subject to obtaining the
governmental authorizations referred to in Section 3.3, violate any Applicable
Law, or (vi) result in a breach or violation of any of the terms or conditions
of, constitute a default under, or otherwise cause an impairment or a revocation
of, any Permit related to Purchaser's business, except in the case of clauses
(ii), (iii), (iv), (v) and (vi) above, for violations, conflicts, breaches,
impairments, modifications, terminations, revocations or defaults which, or
consents or waivers the absence of which, would not have a material adverse
effect on Purchaser or which would not prevent or materially delay the
consummation of the transactions contemplated by this Agreement.
Section 3.5. Compliance with Applicable Laws. Purchaser is in
compliance with all Applicable Laws, except where such non-compliance would not,
individually or in the aggregate, be reasonably expected to prevent or
materially delay consummation of the Closing.
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Section 3.6. Litigation. As of the date hereof, there are no claims,
actions, suits, investigations or proceedings pending or, to the knowledge of
Purchaser, threatened against Purchaser that would prevent or materially delay
consummation of the Closing or any other transactions contemplated hereby or by
the Collateral Agreements.
Section 3.7. Brokerage and Financial Advisers. No broker, finder or
financial adviser has acted directly or indirectly as such for, or is entitled
to any compensation from, Purchaser in connection with this Agreement or the
transactions contemplated hereby, except UBS Warburg, whose fees for services
rendered in connection therewith will be paid by Purchaser.
Section 3.8. Availability of Funds. Purchaser has, and on the Closing
Date will have, sufficient funds available to enable it to (i) pay the Purchase
Price pursuant to the terms of this Agreement, (ii) perform its other
obligations hereunder and (iii) pay the amounts, if any, required to be paid
pursuant to Section 1.7. Purchaser represents that its obligations under this
Agreement are not subject to any condition regarding Purchaser's ability to
obtain funding for the consummation of the transactions contemplated hereby.
Section 3.9. No Other Representations. Except for the representations
and warranties contained in this Article III, neither Purchaser nor any other
Person makes any representation or warranty, express or implied, on behalf of
Purchaser.
ARTICLE IV
COVENANTS OF THE PARTIES
Section 4.1. Conduct of Business. Except (w) as to those matters set
forth on Exhibit 4.1 attached hereto, (x) as otherwise set forth in this
Agreement, (y) with the consent of Purchaser (which consent shall not be
unreasonably withheld or delayed), or (z) as required by Applicable Law, during
the period from the date of this Agreement to the Closing Date, Sellers shall,
in connection with or relating to the Business or the Acquired Assets:
(a) conduct the Business in the ordinary course consistent with past
practice, and use reasonable best efforts to preserve intact its business
organization and maintain its customary relationships with suppliers, employees
and customers of the Business, subject to any of Sellers' obligations as debtors
or debtors-in-possession under the Bankruptcy Code;
(b) not terminate or amend in any material respect any Material
Contract, except in the ordinary course of business consistent with past
practice;
(c) not make any material capital expenditure with respect to the
Business not previously committed or make any new commitment for capital
expenditures in excess of $250,000 individually or $1,000,000 in the aggregate
other than (i) capital expenditures made in the ordinary course of business,
(ii) the capital expenditures set forth in the capital expenditure budget for
fiscal year 2001 previously
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made available to Purchaser and (iii) maintenance capital expenditures made in
the ordinary course of business;
(d) not permit the Business to: (i) incur or assume any long-term debt
relating to the Business; (ii) assume, guarantee, endorse or otherwise become
liable or responsible (whether directly, contingently or otherwise) for the
obligations of any other Person; (iii) make any loans, advances or capital
contributions to any other Person; or (iv) mortgage or pledge any of the
Acquired Assets or create any Lien upon the Acquired Assets except for Permitted
Liens;
(e) not change any of the accounting principles used by the Business
unless required by GAAP or Applicable Law;
(f) not incur any material obligation or liability, except current
liabilities for trade or business obligations incurred in connection with the
purchase of goods or services in the ordinary course of business consistent with
prior practice;
(g) not sell, transfer, lease to others or otherwise dispose of any of
the Acquired Assets, except for inventory sold in the ordinary course of
business, or cancel or compromise any debt or claim in excess of $10,000, or
waive or release any right of substantial value;
(h) not transfer or grant any rights or licenses under, or enter into
any settlement regarding the breach or infringement of, any United States or
foreign license of any Intellectual Property, or modify any existing rights with
respect thereto or enter into any licensing or similar agreements or
arrangements, except in the ordinary course of business consistent with past
practice, provided, however, that, with respect to any material Intellectual
Property, Seller shall obtain Purchaser's prior consent, such consent not to be
unreasonably withheld or delayed;
(i) not make any increase in the rate of compensation, commission,
bonus or other direct or indirect remuneration payable, or pay or agree or
orally promise to pay, conditionally or otherwise, any bonus, incentive,
retention or other compensation, retirement, welfare, fringe or severance
benefit or vacation pay, to or in respect of any non-union Plant Employee (as
defined in Section 4.3) except, (i) as required under Plans or agreements in
effect as of the date hereof, or (ii) in the ordinary course of business
consistent with past practice;
(j) adopt or amend any employment, collective bargaining, bonus,
profit-sharing, compensation, stock option, pension, retirement, vacation,
severance, deferred compensation or other plan, agreement, trust, fund or
arrangement for the benefit of any Affected Employee (whether or not legally
binding), to the extent the obligations under such plan, agreement, trust, fund
or arrangement will be an Assumed Liability;
(k) not enter into or assume any material agreement, contract or
instrument relating to the Business, or enter into or permit any material
amendment, supplement, waiver or other modification in respect thereof;
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(l) not settle or agree to settle any litigation, action or proceeding
relating to an Assumed Liability other than in the ordinary course of business
consistent with past practices but not in any case involving amounts in excess
of $50,000;
(m) not make any material change in the selling, distribution,
advertising, terms of sale or collection practices for the Business from those
planned or budgeted, or enter into any practices, programs or long-term
allowances not previously used during the past twelve months.
(n) not purchase, order or otherwise acquire inventory for the Business
in excess of the reasonably forecast requirements of the Business;
(o) pay accounts payable and other obligations of the Business when
they become due and payable in the ordinary course of business consistent with
prior practice, subject to any of Sellers' obligations as debtors or
debtors-in-possession under the Bankruptcy Code;
(p) except for breaches and defaults of the type referred to in Section
365(b)(2) of the Bankruptcy Code, use reasonable best efforts to perform in all
material respects all of its obligations under all Contracts and other
agreements and instruments relating to or affecting the Business or the Acquired
Assets;
(q) not take any action or omit to take any action that would result in
the occurrence of any of the foregoing actions set forth in Sections 4.1(b)
through and including Section 4.1(n); and
(r) satisfy, extinguish, terminate, and cause to be removed from the
applicable public records, the following liens and encumbrances listed as
exceptions on the title commitments described in Section 2.12(a)(ii) of the
Seller Disclosure Schedule: (I) with respect to Xxxxx City, MI: Schedule B-1
exceptions 6, 7, 9, 11, 12 and 13; Schedule B-2 exceptions 9 and 10; and (ii)
Millsboro, DE: Schedule B-2 exceptions 3, 7, 8, 9, 10, 15, 16, 17, 19, 20, 21,
22, 27, 28, 29, 30, 31 and 32.
Section 4.2. Reasonable Best Efforts.
(a) Each of Sellers and Purchaser agrees to cooperate with each other
with respect to the notices and filings to be made in connection with the
consents, approvals, waivers, authorizations, licenses, Permits, qualifications
and Orders necessary to consummate the transactions contemplated hereby. Each of
Seller and Purchaser shall use its reasonable best efforts to obtain, as
promptly as practicable, the consents, approvals, waivers, authorizations,
licenses, Permits, qualifications and Orders required to be obtained by it prior
to Closing in order to consummate the transactions contemplated by this
Agreement, if not rendered inapplicable by order of the Bankruptcy Court, and
all other things reasonably necessary to consummate and make effective the
transactions contemplated hereby by the expected Closing Date, provided that
nothing in this Agreement shall be construed as requiring Purchaser to litigate
or agree to hold separate or to dispose of any assets or property in order to
obtain approval of the consummation of the transactions contemplated hereby.
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(b) Sellers and Purchaser shall, as soon as practicable, promptly file
the appropriate applications and documentary materials required to be filed by
them in connection with obtaining all necessary regulatory consents, approvals,
waivers and authorizations required to be obtained prior to Closing, including
making the filings pursuant to the HSR Act (and any foreign competition laws or
regulations applicable to the transactions contemplated by this Agreement)
("Regulatory Authorizations"), and promptly file any additional information
required in connection with such filings as soon as practicable after receipt of
request therefor. Each of Sellers and Purchaser agrees to cooperate with and to
consult promptly with the other party and the other party's counsel with respect
to the Regulatory Authorizations and to provide advance drafts and copies of all
presentations and filings to be made in connection with the Regulatory
Authorizations, and any reasonably available information with respect to such
presentations and filings, to the other party's counsel with appropriate
confidentiality provisions.
(c) At all times prior to the Closing, each party hereto shall promptly
notify the other party hereto in writing of any fact, condition, event or
occurrence that will or may result in the failure of any of the conditions
applicable to such other party's obligation to effect the Closing pursuant to
Article VI, promptly upon such party becoming aware of the same.
(d) Seller shall use reasonable best efforts to assist Purchaser in
accomplishing a smooth transition of the Business from Sellers to Purchaser,
including, without limitation, providing customer information to Purchaser as
appropriate. Purchaser acknowledges and agrees that (i) unless and until the
Closing occurs, any information concerning customers of the Business provided by
Sellers to Purchaser, or any of its Affiliates, Subsidiaries, directors,
officers, employees, representatives or agents (collectively, the "Purchaser
Representatives"), shall be subject to the terms and conditions of the
Confidentiality Agreement (as defined in Section 7.2).
Section 4.3. Employee Matters.
(a) (i) Prior to the Closing Date, Purchaser shall offer in writing to
employ, in the same geographical area as employed immediately prior to the
Closing Date, all of the employees located at Seller's plants (collectively, the
"Plant Employees"), and up to 45 additional salaried employees who either (x)
work exclusively for the Business or (y) work for the Business and one or more
other businesses of Sellers, to the extent that Purchaser has received the prior
written consent of Seller to make such offers, and who are designated by
Purchaser to Seller at least five days before the Closing Date (the "Additional
Employees") (the Plant Employees and the Additional Employees are collectively
referred to as the "Affected Employees"). Such offer shall be effective as of
the Closing Date with respect to Affected Employees who are active employees of
the Business immediately prior to the Closing Date and upon the cessation of
disability or any other approved leave of absence with respect to Affected
Employees who, as of the Closing Date, are employees of the Business but who are
inactive due to disability or other approved leave of absence.
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(ii) Purchaser shall have no responsibility for and Seller
shall reimburse Purchaser for any costs or liabilities that may be
incurred by Purchaser directly or indirectly in connection with any
employee of Sellers who is not a Transferred Employee (as defined in
Section 4.3(b) below), it being the intent of this Agreement that all
costs and liabilities associated with the employment and termination of
employment of such employees (including any duplicated costs that may
be incurred by reason of the foregoing provisions) be entirely borne by
Seller. In the event that any claims are made within the applicable
statute of limitations which are based upon Purchaser's exercise of its
discretion in connection with the selection process set forth in this
Section 4.3(a) or, after the Closing, Purchaser's conduct with respect
to the hiring or employment of any Transferred Employee, Purchaser will
bear the litigation costs and damages and shall indemnify and hold
Seller harmless against any and all such claims. Seller shall remain
solely liable for any employment claims based on acts occurring before
the Closing Date or as a result of the consummation of the transactions
contemplated hereby or the entering into of this Agreement other than
claims based upon Purchaser's exercise of its discretion in connection
with the selection process set forth in this Section 4.3(a).
(iii) Purchaser will pay severance to any Transferred Employee
terminated by Purchaser other than "for cause" after the Closing Date
in accordance with Purchaser's applicable severance plans; provided,
however, that nothing contained in this Agreement shall be construed to
limit the right of Purchaser to terminate the employment of any
Transferred Employee, for cause or otherwise, at any time after the
Closing. Seller shall be responsible for and shall indemnify and hold
Purchaser harmless against any and all severance or other claims
(including, but not limited to, any claims for litigation costs and
damages) made by any and all employees of Seller or its Subsidiaries or
of the Business (other than as a result of a termination by Purchaser
of a Transferred Employee as described above or claims based upon
Purchaser's exercise of its discretion in connection with the selection
process set forth in this Section 4.3(a) or, after the Closing,
Purchaser's conduct with respect to the hiring or employment of any
Transferred Employee), including any claims alleging that their
employment was terminated upon or as a result of the consummation of
the transactions contemplated hereby or the entering into of this
Agreement and including any claims by Transferred Employees alleging
that the "same desk" rule would not be applicable.
(b) Except to the extent necessary to avoid duplication of benefits,
Purchaser shall cause each Affected Employee who accepts Purchaser's offer of
employment and commences employment with Purchaser or a Subsidiary of Purchaser
(collectively, the "Transferred Employees") to be given full credit for all
service with Seller or any Subsidiary of Seller prior to the Closing Date (and
service credited by Seller and/or any Subsidiary of Seller) for all purposes
under any employee benefit plans or arrangements of Purchaser or any Subsidiary
of Purchaser in which such Transferred Employees participate from and after the
Closing Date, to the same extent such service was recognized by Seller or any
Subsidiary of Seller immediately prior to the Closing
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Date. Purchaser shall, or shall cause a Subsidiary of Purchaser to, (i) waive
all limitations as to preexisting conditions, exclusions and waiting periods
with respect to participation and coverage requirements applicable to
Transferred Employees under any welfare plan in which such employees may be
eligible to participate after the Closing Date, other than limitations or
waiting periods that are already in effect with respect to such employees and
that have not been satisfied as of the Closing Date under any welfare plan of
Seller or any Subsidiary of Seller in which Transferred Employees participate
immediately prior to the Closing Date, and (ii) provide each Transferred
Employee with credit for any co-payments and deductibles paid prior to the
Closing Date in satisfying any applicable deductible or out-of-pocket
requirements under any welfare plans in which such employees are eligible to
participate after the Closing Date, as if those deductibles or co-payments had
been paid under the welfare plans in which such employees are eligible to
participate after the Closing Date.
(c) Effective as of the Closing Date, each Transferred Employee shall
cease to accrue any further benefits under Seller's defined contribution plans
listed in Section 2.14(a) of the Seller Disclosure Schedule ("Seller's Defined
Contribution Plans"). Each Transferred Employee who is a participant in any of
the Seller's Defined Contribution Plans shall be given the opportunity to
receive, as soon as practicable following the Closing Date, a distribution of
his or her account balance(s) under such plan(s) and, if Purchaser agrees, shall
be given the opportunity to elect to have such account balance transferred
directly to a tax qualified defined contribution plan maintained by Purchaser,
subject to and in accordance with Applicable Law.
(d) Effective as of the Closing Date, each Transferred Employee shall
cease to accrue any further benefits under Seller's defined benefit plans listed
in Section 2.14(a) of the Seller Disclosure Schedule ("Seller's Defined Benefit
Plans"). As soon as practicable after, and in any event within 90 days after,
and effective as of, the Closing Date, Purchaser shall designate a defined
benefit pension plan(s) of Purchaser or one of its Affiliates intended to
qualify under Section 401(a) and Section 501(a) of the Code (such plan(s),
"Purchaser's Defined Benefit Plan") to receive a transfer of assets and
liabilities from Seller's Defined Benefit Plans pursuant to this Section 4.3(d).
In connection therewith, Seller shall direct the trustee(s) of the
trust(s) under each such Seller's Defined Benefit Plan to transfer from the
trust(s) under such Seller's Defined Benefit Plan to the trust under Purchaser's
Defined Benefit Plan, a "Transfer Amount" equal to an amount determined by
Seller's actuary (it being understood, however, that the amount determined by
Seller's actuary shall be reviewed and determined to be reasonable by
Purchaser's actuary prior to the final determination of such amount) to be equal
to the amount of assets which must be transferred as of the Closing Date solely
on account of Transferred Employees as determined in accordance with Section
414(l) of the Code and the regulations thereunder. The calculation of the
present value of such benefits shall be in accordance with Section 414(l) of the
Code and the regulations promulgated thereunder utilizing assumptions used by
the Pension Benefit Guaranty Corporation as of the Closing Date. In the event
that Purchaser's actuary disagrees with the amount determined by Seller's
actuary, Seller and Purchaser shall select an independent third-party actuary to
settle such disagreement. The determination
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of such third party actuary shall be binding on Seller and Purchaser. The fees,
costs and expenses of said third-party actuary shall be divided equally between
Seller and Purchaser.
Such Transfer Amount shall be calculated as of the Closing Date and
will be credited with investment return until such assets are transferred to
Purchaser's Defined Benefit Plan. Prior to the Closing Date, Seller's actuary
shall make an estimate of such Transfer Amount (it being understood, however,
that such estimate shall be reviewed and determined to be reasonable by
Purchaser's actuary prior to the final determination of such estimate) and
Seller shall segregate an amount of assets in the trust of Seller's Defined
Benefit Plans equal to the amount estimated by Seller's actuary. These
segregated assets shall remain in their existing fixed-income investment
portfolio until the date such Transfer Amount is transferred to Purchaser's
Defined Benefit Plan. The investment return credited to such Transfer Amount
shall be at the same rate as earned by such segregated assets in the trust of
Seller's Defined Benefit Plans. In the event that Purchaser's actuary disagrees
with Seller's actuary's estimate of such Transfer Amount, Seller and Purchaser
shall select an independent third-party actuary to settle such disagreement. The
determination of such third party actuary shall be binding on Seller and
Purchaser. The fees, costs and expenses of said third-party actuary shall be
divided equally between Seller and Purchaser.
Purchaser's Defined Benefit Plan shall assume and be solely responsible
for any and all liabilities and obligations whatsoever for all accrued benefits,
including all ancillary benefits (excluding any benefits arising from any change
in control provision) under Seller's Defined Benefit Plans in respect of
Transferred Employees as of the Closing Date and each of Seller and its
Affiliates and Seller's Defined Benefit Plans shall be relieved of all such
liabilities and obligations for such benefits; provided, however, that such
assumption shall not require Purchaser to provide to such Transferred Employees
future accrual of benefits under Purchaser's Defined Benefit Plans following the
Closing Date.
(e) Following the Closing Date, Purchaser agrees to provide
post-retirement medical benefits under the terms and conditions of Purchaser's
applicable retiree medical plan (including provisions for the modification,
amendment or termination of such plan), to those Transferred Employees (and
their eligible dependents) who elect to receive such benefits and who
immediately prior to the Closing Date would be eligible for such benefits upon
termination of employment with Seller (collectively, "Vested Transferred
Employees").
(f) Purchaser shall be responsible for any workers' compensation
benefits for Transferred Employees that relate to events occurring on or after
the Closing Date. Seller shall be responsible for all workers' compensation
benefits, whether reported or unreported on the Closing Date and regardless of
when notices of such benefits or claims are filed, brought by or in respect of
any Transferred Employee that relate to events occurring prior to the Closing
Date.
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(g) To the extent that any obligations might arise under the Worker
Adjustment Retraining Notification Act ("WARN"), 29 U.S.C. Section 2101 et seq.,
or under any similar provision of any federal, state, regional, foreign or local
law, rule or regulation (hereinafter referred to collectively as "WARN
Obligations") as a consequence of the transactions contemplated by this
Agreement, Seller shall be responsible for any WARN Obligations arising as a
result of any employment losses occurring prior to the Closing Date. Purchaser
shall be responsible for any WARN Obligations arising as a result of any
employment losses occurring on or after the Closing Date with respect to all
Plant Employees located at the Xxxxx City, Michigan and Millsboro, Delaware
facilities who become Transferred Employees.
(h) Effective as of the Closing, Purchaser shall assume and continue in
full force and effect the collective bargaining agreements set forth on Exhibit
4.3(h) attached hereto, including all employee benefit obligations thereunder.
During the period between the signing of this Agreement and the Closing Date,
Seller shall use its reasonable best efforts to extend the Xxxxx City collective
bargaining agreement through October 1, 2001, subject to the approval of the
Bankruptcy Court to the extent such approval is required. If the union that must
approve such extension or, if required, the Bankruptcy Court, does not approve
such proposed extension, then, during the period between the date of this
Agreement and the Closing Date, Seller shall enter into negotiations with such
union with respect to the Xxxxx City collective bargaining agreement and shall
provide to Purchaser periodic updates of the status of such negotiations.
Section 4.4. Seller's Trademarks. It is expressly agreed that Purchaser
is not purchasing, acquiring or otherwise obtaining, any right, title or
interest in any trademark, trade names, service marks, service names, logos,
designs, slogans, trade dress and general intangibles of like nature together
with the goodwill associated therewith of Seller or any of its Affiliates
(collectively, the "Seller's Trademarks") other than the Trademarks (as defined
in Section 1.1(d)).
Section 4.5. Further Assurances. At any time after the Closing Date,
Sellers and Purchaser shall promptly execute, acknowledge and deliver any other
assurances, documents, instruments or conveyances reasonably requested by Seller
or Purchaser, as the case may be, or necessary for Sellers or Purchaser, as the
case may be, to satisfy their respective obligations hereunder or obtain the
benefits contemplated hereby.
Section 4.6. Post-Closing Cooperation. After the Closing, upon
reasonable written notice, each of Purchaser and Sellers shall, in a prompt and
timely manner, furnish or cause to be furnished to the other party and its
employees, counsel, auditors and representatives access during normal business
hours to such party's employees, counsel, auditors and representatives,
including but not limited to, access to any transferred personnel, in connection
with any matter relating to the Business as is reasonably necessary for
financial reporting and accounting matters, the preparation and filing of any
Tax Returns, reports or forms or the defense of any tax audit, claim or
assessment. Each party shall reimburse the other for reasonable out-of-pocket
costs and
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expenses incurred in assisting the other pursuant to this Section 4.6. Neither
party shall be required by this Section 4.6 to take any action that would
unreasonably interfere with the conduct of its business or unreasonably disrupt
its normal operations.
Section 4.7. Announcement. Neither Seller nor Purchaser will issue, or
permit any of its Affiliates to issue, any press release or otherwise make any
public statement with respect to this Agreement or the transactions contemplated
hereby without the prior written consent of the other (which consent shall not
be unreasonably withheld), except as may be required by Applicable Law or stock
exchange regulation. Notwithstanding anything in this Section 4.7 to the
contrary, Seller and Purchaser will, to the extent practicable, consult with
each other before issuing, and provide each other the opportunity to review and
comment upon, any such press release or other public statements with respect to
this Agreement and the transactions contemplated hereby, whether or not required
by Applicable Law or stock exchange regulation.
Section 4.8. Access to Information.
(a) Subject to Section 4.2(d), from the date of this Agreement to the
Closing, Seller will, and will cause each of its Subsidiaries, to (i) give
Purchaser and its authorized representatives reasonable access to all the books,
records, personnel, offices, properties and other facilities relating to the
Business, or expected to be used in connection with the provision of
transitional services under any Collateral Agreement, and to Seller's
accountants, (ii) permit Purchaser to make such copies and inspections thereof
as Purchaser may reasonably request, (iii) permit Purchaser to visit major
customers of the Business and (iv) cause the officers of Seller to furnish
Purchaser with such financial and operating data and other information with
respect to the Business as Purchaser may from time to time reasonably request;
provided, however, that any such access shall be conducted at a reasonable time,
upon reasonable prior notice, under the supervision of Seller's personnel and in
such a manner as to maintain the confidentiality of this Agreement and the
transactions contemplated hereby and not to interfere unreasonably with the
normal operation of the Business or other business operations of Seller. Seller
will keep Purchaser generally informed as to the affairs of the Business.
(b) From the date of this Agreement to the Closing, on or before the
20th day of each month, Seller shall deliver to Purchaser unaudited consolidated
financial statements of the Business as at and for the monthly period ending the
last day of the preceding month (the "Subsequent Monthly Financial Statements"),
which shall include a balance sheet and management statement of earnings before
interest and income taxes. At the time that the Subsequent Monthly Financial
Statements are delivered to Purchaser, Seller shall by such delivery be deemed
to have made the representations and warranties to Purchaser with respect to
such Subsequent Monthly Financial Statements set forth in Section 2.5; provided,
that for all purposes of this Agreement, Seller shall be deemed to have made
such representations and warranties to Purchaser with respect to the Subsequent
Monthly Financial Statements for each monthly period as of the date of delivery
of such financial statements and as of the Closing Date.
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(c) From the date of this Agreement to the Closing, Seller shall
deliver to Purchaser on a weekly basis a true and correct copy of Seller's daily
activity report of sales and order activity for each of the Pickles Business and
the Sauce Business in the format set forth on Exhibit 4.8(c).
(d) To simplify and expedite post-closing transition of the Business
and the Acquired Assets, promptly following the date of this Agreement Purchaser
shall select, contract with, and pay a third party ("Contractor") to review
Seller's Promotion and Price Data, as hereinafter defined. "Promotion and Price
Data" shall mean Seller's data, books, records, computer software and hardware,
software programs and related materials containing Seller's customer prices and
promotions information for the Business, including but not limited to national
prices and deals as well as customer-specific promotional and price activity.
Seller shall make the Promotion and Price Data available to Contractor promptly
following the date of this Agreement. Contractor shall manage and perform the
transfer, migration and conversion of the Promotion and Price Data to a separate
database on a SAP software system (the "Independent Database"), which activity
of Contractor shall require mapping development, data collection and data input
tasks. Contractor shall continually update the Independent Database until
Closing or the termination of this Agreement. The Independent Database shall be
technically developed, maintained and supported by Contractor's personnel and
such Independent Database shall not be accessible to Purchaser or any employees
or agents of Purchaser, except for certain specified employees of Purchaser's
Information Technology and Master Data Maintenance units. Such employees of
Purchaser with access to the Independent Database shall be limited in number and
shall be mutually agreed upon between Purchaser and Seller. Contractor and the
mutually agreed employees of Purchaser with access to the Independent Database
shall execute confidentiality agreements with Seller prohibiting the exchange,
dissemination or discussion of any and all elements of the data exchange process
or the Independent Database to other personnel of Purchaser. The mutually agreed
employees of Purchaser with access to the Independent Database may receive
updates on Contractor's activities and have access to the Independent Database
for the purpose of quality assurance and supervision of Contractor only. Seller,
at its option, may attend all meetings and participate in all communications
between Contractor and the mutually agreed employees of Purchaser with access to
the Independent Database. At the Closing, the Independent Database shall be
delivered to Purchaser as part of the Acquired Assets. If this Agreement is
terminated and the Closing does not occur, the Independent Database shall be
destroyed by Contractor, as certified by Contractor to Seller and Purchaser in
writing. Seller shall cooperate with Contractor and provide Contractor with
access to the Promotion and Price Data and with knowledgeable employees of
Purchaser relating to the Promotion and Price Data to facilitate the creation of
the Independent Database in accordance with the timetable set forth in Exhibit
4.8(d) attached hereto and made a part hereof.
Section 4.9. Maintenance of Books and Records. Each of the parties
hereto shall preserve, until at least the seventh anniversary of the Closing
Date, all pre-Closing Date records possessed or to be possessed by such party
relating to the Business. After the Closing Date and up until at least the
seventh anniversary of the Closing Date, upon any reasonable request from a
party hereto or its representatives, the party holding
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such records shall (x) provide to the requesting party or its representatives
reasonable access to such records during normal business hours and (y) permit
the requesting party or its representatives to make copies of such records, in
each case at no cost to the requesting party or its representatives (other than
for reasonable out-of-pocket expenses). Such records may be sought under this
Section 4.9 for any reasonable purpose, including, without limitation, to the
extent reasonably required in connection with the audit, accounting, tax,
litigation, federal securities disclosure or other similar needs of the party
seeking such records. Notwithstanding the foregoing, any and all such records
may be destroyed by a party if such destroying party sends to the other party
hereto written notice of its intent to destroy such records, specifying in
reasonable detail the contents of the records to be destroyed; such records may
then be destroyed after the 30th day following such notice unless the other
party hereto notifies the destroying party that such other party desires to
obtain possession of such records, in which event the destroying party shall
transfer the records to such requesting party and such requesting party shall
pay all reasonable expenses of the destroying party in connection therewith.
Section 4.10. Non-Solicitation of Employees.
(a) From and after the date hereof, Seller shall not, and shall cause
its Subsidiaries not to, without the prior written approval of Purchaser, for a
period of two years from the Closing Date, directly or indirectly, (i) solicit,
encourage, entice or induce any person who is an employee of the Business at the
date hereof or who becomes an employee of the Business after the date hereof but
prior to the Closing Date, to terminate his or her employment with the Business,
or (ii) hire or employ any person who is an employee of the Business at the date
hereof or who becomes an employee of the Business after the date hereof but
prior to the Closing Date; provided, that the foregoing shall not apply to
persons who approach Seller or any Subsidiary of Seller for the purposes of
employment or who are hired as a result of the use of an independent employment
agency where contact between such person and the independent employment agency
was initiated by such person or as a result of the use of a general solicitation
(such as an advertisement) not specifically directed to employees of the
Business.
(b) Except as otherwise expressly provided in Section 4.3(a)(i) or in
any other provision of this Agreement, from and after the date hereof, Purchaser
shall not, without the prior written approval of Seller, for a period of
eighteen months after the Closing Date, directly or indirectly, (i) solicit,
encourage, entice or induce any person who is an employee of Seller at Seller's
corporate headquarters in Cherry Hill, New Jersey (each, a "Headquarters
Employee") at the date hereof or who becomes a Headquarters Employee after the
date hereof but prior to the Closing Date, to terminate his or her employment
with Seller, or (ii) hire or employ any person who is a Headquarters Employee at
the date hereof or who becomes a Headquarters Employee after the date hereof but
prior to the Closing Date; provided, that the foregoing shall not apply to
persons who approach Purchaser or any of Subsidiary of Purchaser for the
purposes of employment or who are hired as a result of the use of an independent
employment agency where contact between such person and the independent
employment agency was initiated by such person or as a result of the use of a
general solicitation (such as an advertisement) not specifically directed to
employees of Seller.
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(c) If it is ever held by any court of competent jurisdiction that the
restriction placed on any party to this Agreement by this Section 4.10 is too
onerous and is not necessary for the protection of the other party or parties
hereto, each party to this Agreement agrees that any court of competent
jurisdiction may impose lesser restrictions which such court may consider to be
necessary or appropriate to properly protect the other party or parties hereto.
Section 4.11. Transfers Not Effected as of Closing. Nothing herein
shall be deemed to require the conveyance, assignment or transfer of any
Acquired Asset that by its terms or by operation of Applicable Law cannot be
freely conveyed, assigned, transferred or assumed. To the extent the parties
hereto have been unable to obtain any governmental or any third party consents
or approvals required under Applicable Law for the transfer of any Acquired
Asset and to the extent not otherwise prohibited by the terms of any Acquired
Asset, Seller shall continue to be bound by the terms of such applicable
Acquired Asset and Purchaser shall pay, perform and discharge fully all of the
obligations of Seller thereunder from and after the Closing to the extent that
the corresponding benefit is received. Seller shall, without consideration
therefor, pay, assign and remit to Purchaser promptly all monies, rights and
other consideration received in respect of such performance. Seller shall
exercise or exploit its rights in respect of such Acquired Assets only as
reasonably directed by Purchaser and at Purchaser's expense. Subject to and in
accordance with Section 4.2, for not more than 90 days following the Closing
Date, the parties hereto shall continue to use their reasonable best efforts to
obtain all such unobtained consents or approvals required to be obtained by it
at the earliest practicable date. If and when any such consents or approvals
shall be obtained, then Seller shall promptly assign its rights and obligations
thereunder to Purchaser without payment of consideration and Purchaser shall,
without the payment of any consideration therefor, assume such rights and
obligations. The parties shall execute such good and sufficient instruments as
may be necessary to evidence such assignment and assumption.
Section 4.12. Bulk Sales Laws. Purchaser waives compliance by Seller,
and Seller waives compliance by Purchaser, with the provisions of any applicable
bulk sales, fraudulent conveyance or other law for the protection of creditors.
Section 4.13. Collateral Agreements. Simultaneously with the Closing,
Purchaser and Seller shall enter into a transition services agreement (the
"Transition Services Agreement") substantially in the form attached hereto as
Exhibit 4.13 (the Transitional Agreement, along with the Escrow Agreement, are
collectively referred to herein as the "Collateral Agreements").
Section 4.14. Trademark Matters.(a) (a) Purchaser hereby grants to
Seller and its Affiliates ("Licensees"), effective upon the Closing Date, a
non-transferable, non-exclusive, royalty free worldwide transitional right and
license to use the Trademarks set forth on Exhibit 4.14 (a) attached hereto,
together with all slogans, logos, designs and trade dress associated therewith,
which are, in each case, in existence at Closing and currently being used in the
conduct of the Business (the "Vlasic Marks"). This transitional license shall
permit use of the Vlasic Marks solely as follows (except as set
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forth in the next sentence): (i) on existing packaging and labeling inventory
for a period equal to the earlier of the exhaustion of such inventory or 6
months and (ii) on finished product inventory for such inventory's shelf life
(not to exceed 18 months), provided however, that in each case of (i) or (ii),
such use shall be solely in the form and consistent with the manner in which
such Vlasic Marks have heretofore been used in the Business (the "Transitional
License"). In addition, Seller agrees (x) to use its best efforts to obtain an
order from the Bankruptcy Court in connection with the Sale Hearing (as defined
in Section 4.16) changing its name from Vlasic Foods International Inc. to a
name which does not include the word "Vlasic" or a word that is confusingly
similar to the word "Vlasic", and (y) to use the Vlasic Marks for
administrative, corporate and legal use for no more than three months after the
Closing Date except to the extent reasonably necessary in the manner set forth
on Exhibit 4.14 (a)(x) or for compliance with the notice or other requirements
of the Bankruptcy Code or compliance with other Applicable Law. Notwithstanding
the foregoing, Purchaser hereby agrees that Seller may grant a sublicense in
sub-sections (i) and (ii) of this Transitional License with respect to certain
of the Vlasic Marks set forth on Exhibit 4.14(b) ("Transitional Sublicense"), to
the purchaser(s) of Seller's other businesses. Any Transitional Sublicense shall
become effective upon the closing date of the sale of the applicable business,
and shall be in effect for the remainder of the transitional license periods, as
applicable. No other use of the Vlasic Marks shall be made by Licensees or
sublicensees during applicable transitional license periods without Purchaser's
express written consent, such consent not to be unreasonably withheld or
delayed. Any and all rights and goodwill arising from the use of the Vlasic
Marks by Licensees pursuant to this Transitional License, or their assigns
pursuant to any Transitional Sublicense, shall inure solely to Purchaser's
benefit. Licensees agree that neither Seller, nor any of its Affiliates, or
sublicensees shall use, directly or indirectly, the Vlasic Marks in any other
way that suggests that there is a relation or affiliation between Licensees or
sublicensees and Purchaser or any of its Affiliates other than that as created
by this Agreement, or as a trademark, service xxxx or trade name for Licensees
or sublicensees. Nothing in this Agreement or in the performance thereof, or
that might otherwise be implied by law, shall operate to grant Licensees any
right, title or interest in and to the Vlasic Marks. Licensees shall and shall
cause any sublicensees to assign to Purchaser, and do hereby assign to
Purchaser, any rights they may acquire, if any, by the operation of law or
otherwise, in the Vlasic Marks pursuant to this Transitional License or any
Transitional Sublicense. As between the parties, Purchaser shall have the sole
right, and in its sole discretion, may commence, prosecute, defend and control
any action concerning the Vlasic Marks.
(b) Seller agrees to use its best efforts to obtain from the Bankruptcy
Court an order authorizing the consolidation of the Chapter 11 cases of Seller
and its Affiliates under the caption of VF Brands, Inc. To that end, Seller
agrees to file with the Bankruptcy Court a motion and proposed order seeking
such caption in a time and manner such that such motion may be considered by the
Bankruptcy Court on the same date as or prior to the Sale Hearing.
(c) Seller agrees that it will not submit or seek confirmation of, and
will oppose the confirmation of, any plan of reorganization that does not
contain a provision providing that the name of Seller, and each subsidiary of
Seller which has a name
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containing the word "Vlasic," shall be changed to a name which does not include
the word "Vlasic" or a word that is confusingly similar to the word "Vlasic."
Seller acknowledges that this Section 4.14(c) relates to a special, unique and
extraordinary matter and that a violation of this Section 4.14(c) will cause
Purchaser irreparable injury for which adequate remedies are not available at
law. Seller agrees that Purchaser shall be entitled to equitable relief,
including injunction, in the event of any breach of this Section 4.14(c) and
that Seller shall not oppose the granting of such relief.
Section 4.15. Submission for Court Approval.
(a) As promptly as practicable, but in no event later than two Business
Days, after the filing of the Petition with the Bankruptcy Court, Seller shall
file with the Bankruptcy Court a motion, notices and a proposed order, as may be
appropriate (the "Bidding Procedures Order"), seeking the approval of Section
4.16 hereof and authorizing the observance and performance of such terms by
Seller and its Subsidiaries and Purchaser during the pendency of the Bankruptcy
Case.
(b) As promptly as practicable, but in no event later than two Business
Days, after the filing of the Petition with the Bankruptcy Court, Seller shall
file with the Bankruptcy Court a motion, notices and a proposed Sale Order, as
may be appropriate, seeking the approval of this Agreement, Seller's and its
Subsidiaries' performance hereunder, the sale of the Acquired Assets free and
clear of all liens, claims (as defined in Section 101(5) of the Bankruptcy Code)
and interests, and the assumption and assignment of the Contracts as provided in
this Agreement. Purchaser shall cooperate with Seller in obtaining such
Bankruptcy Court approval, including providing evidence, if requested, of
Purchaser's ability to perform the obligations of Seller and its Subsidiaries
under the Contracts to be assumed by Purchaser pursuant to Section 1.3(b).
(c) As promptly as practicable, but in no event later than two Business
Days, after the date hereof, Seller will file the Petition with the Bankruptcy
Court.
Section 4.16. Bidding Procedures. Seller acknowledges that this
Agreement is the culmination of an extensive process undertaken by Seller to
identify and negotiate a transaction with a bidder who was prepared to pay the
highest and best purchase price for the Acquired Assets while assuming or
otherwise satisfying certain liabilities in order to maximize value for Seller's
constituents. Set forth below are the bidding procedures (the "Bidding
Procedures") to be employed with respect to this Agreement concerning the sale
of the Acquired Assets of Seller and its Subsidiaries to Purchaser (the "Sale").
The Sale is subject to competitive bidding as set forth herein and approval by
the Bankruptcy Court at a hearing under Sections 363 and 365 of the Bankruptcy
Code (the "Sale Hearing"). The following overbid provisions and related bid
protections are designed to compensate Purchaser for its efforts and agreements
to date and to facilitate a full and fair process designed to maximize the value
of the Acquired Assets for the benefit of Seller's stakeholders.
(a) Bid Deadline. All Bids must be submitted to Seller c/o Xxxxx
XxXxxxxx Xxxxx at Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, Four Times Square,
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New York, New York 10036, with a copy to Xxxxxx X. Xxxxxxxx at Lazard Freres &
Co., LLC, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, not later than 11:00
a.m. (EST) on the date which is three Business Days prior to the date scheduled
by the Bankruptcy Court for the Sale Hearing (the "Bid Deadline"). Seller will
immediately distribute by facsimile transmission, personal delivery or reliable
overnight courier service in accordance with Section 8.1 a copy of each Bid upon
receipt to (i) counsel to any official committee of unsecured creditors
appointed in the Bankruptcy Case, (ii) counsel to Seller's proposed
debtor-in-possession lenders, and (iii) counsel to Purchaser. For purposes of
this Agreement, "Bid" shall mean a letter from a Person who the Board of
Directors of Seller has determined in the exercise of its fiduciary duty is
financially able to consummate the purchase of the Acquired Assets (a "Qualified
Bidder") stating that (i) such Qualified Bidder offers to purchase the Acquired
Assets upon the terms and conditions set forth in a copy of this Agreement,
together with all Exhibits and Schedules hereto (the "Definitive Sale
Documentation"), marked to show those amendments and modifications to the
Definitive Sale Documentation, including, but not limited to, price and the time
of closing, that such Qualified Bidder proposes, (ii) such Qualified Bidder is
prepared to enter into and consummate the transaction within not more than ten
days after approval by the Bankruptcy Court of the Sale Order, subject to
receipt of any governmental or regulatory approvals, and (iii) such Qualified
Bidder's offer is irrevocable until the closing of a purchase of the Acquired
Assets.
(b) Qualified Bid. Only Qualified Bids will qualify for consideration
at the Auction (as defined below). For purposes of this Agreement, a "Qualified
Bid" is a Bid that:
(i) complies in all respects with Section 4.16(a);
(ii) has a cash component of at least an amount sufficient to
satisfy the Expense Reimbursement and the Break-Up Fee (each as defined
in Section 4.16(d));
(iii) is a proposal that Seller determines, in the good faith
opinion of the Board of Directors of Seller after consultation with the
independent financial advisor of Seller, is not materially more
burdensome or conditional than the terms of this Agreement and has a
value greater than or equal to the sum of (x) the value, as reasonably
determined by the independent financial advisor of Seller, of
Purchaser's offer plus (y) the amount of the Expense Reimbursement and
the Break-Up Fee plus (z) in the case of the initial Qualified Bid,
$1,500,000, and in the case of any subsequent Qualified Bids,
$1,000,000 over the preceding Qualified Bid;
(iv) is substantially on the same or better terms and
conditions as set forth in a copy of Definitive Sale Documentation; and
(v) is accompanied by satisfactory evidence of committed
financing or other ability to perform.
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If Seller does not receive any Qualified Bids, Seller will report the same to
the Bankruptcy Court and will proceed with a sale and assignment of the Acquired
Assets to Purchaser. This Agreement executed by Purchaser shall constitute a
Qualified Bid for all purposes.
(c) Auction, Bidding Increments, and Bids Remaining Open.
(i) If Seller receives a Qualified Bid, Seller will conduct an
auction (the "Auction") at the offices of Skadden, Arps, Slate, Xxxxxxx
& Xxxx LLP on the date that is one Business Day prior to the date
scheduled by the Bankruptcy Court for the Sale Hearing, beginning at
11:00 a.m. (EST) or such later time or other place as Seller shall
notify all Qualified Bidders who have submitted Qualified Bids. Only
Purchaser, Seller, any representative of any official committee
appointed in the Bankruptcy Case, Xxxxxx Guaranty Trust Company of New
York, as administrative agent and collateral agent (the "Administrative
Agent") under the debtor-in-possession credit and guaranty agreement,
dated on or about the date hereof, among Seller, the guarantors party
thereto, the banks party thereto, the Administrative Agent and The
Chase Manhattan Bank, as syndication agent, counsel to the
Administrative Agent and any Qualified Bidders who have timely
submitted Qualified Bids shall be entitled to attend the Auction, and
only Purchaser and Qualified Bidders will be entitled to make any
subsequent Qualified Bids at the Auction. Bidding at the Auction will
continue until such time as the highest and best offer is determined.
Seller may announce at the Auction additional procedural rules that are
reasonable under the circumstances (e.g., the amount of time allotted
to make subsequent overbids) for conducting the Auction so long as such
rules are not inconsistent with these Bidding Procedures.
(ii) At least one Business Day prior to the Auction, Seller
will give Purchaser and all other Qualified Bidders a copy of the
highest and best Qualified Bid received and copies of all other
Qualified Bids. In addition, Seller will inform Purchaser and each
Qualified Bidder who has expressed its intent to participate in the
Auction of the identity of all Qualified Bidders that may participate
in the Auction.
(d) Break-Up Fee and Expense Reimbursement. In the event that Seller
(i) accepts a Bid, other than that of Purchaser, as the highest or best offer
(an "Auction Transaction") or (ii) sells, transfers, leases or otherwise
disposes directly or indirectly, including through an asset sale, stock sale,
merger, reorganization or other similar transaction, of all or substantially all
or a material portion of the Acquired Assets (or agrees to do any of the
foregoing) in a transaction or series of transactions to a party or parties
other than Purchaser within twelve months from the date hereof (either of clause
(i) or (ii) being, an "Alternative Transaction"), Seller shall pay to Purchaser
(i) an amount equal to its reasonable, actual out-of-pocket costs and expenses
(including, without limitation, expenses of counsel, expenses of financial
advisor and expenses of other consultants and the HSR Act filing fee) incurred
by Purchaser in connection with this Agreement and the transactions contemplated
hereby, not to exceed $1,000,000 (the "Expense Reimbursement"), and (ii) a
break-up fee in the amount of $5,000,000 which
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represents Purchaser's fee for its work in (x) establishing a bid standard or
minimum for other bidders, (y) placing estate property in a sales configuration
mode attracting other bidders to the Auction and (z) for serving, by its name
and its expressed interest, as a catalyst for other bidders (the "Break-Up
Fee"); provided, however, that in no event shall the Expense Reimbursement or
the Break-Up Fee be payable to Purchaser (x) if Purchaser terminates this
Agreement (other than in the event of an Auction Transaction) for any reason
other than the willful breach by Sellers of any representation, warranty,
covenant or agreement set forth in this Agreement, or (y) if this Agreement is
terminated by Seller pursuant to Section 7.1(c) or 7.1(d). The Break-Up Fee and
the Expense Reimbursement shall be paid as an administrative priority of Seller
under Section 503(b)(1) of the Bankruptcy Code upon the earlier to occur of the
closing of the Alternative Transaction and the consummation of a plan of
reorganization.
Section 4.17. Accounts Receivable.(a) (a) Promptly after the later of
(x) 120 days from the Closing Date and (y) five Business Days after the
determination of the Final Closing Balance Sheet in accordance with Section 1.7
(the "Adjustment Date"), Purchaser shall deliver a written notice (the
"Purchaser Receivables Notice") to Seller (after receipt of a report from Seller
indicating the amount of Accounts Receivable collected by Seller after the
Closing Date) which states either (i) that as of the Adjustment Date Purchaser
has not been paid in full in respect of all Accounts Receivable (net of reserves
for doubtful accounts and allowances for valid promotional discounts)
outstanding as of the Closing as set forth on the Final Closing Balance Sheet
(the "Final Accounts Receivable"), and, accordingly, Purchaser shall be entitled
to receive out of the Escrow Fund the excess of (x) the amount of the Final
Accounts Receivable (net of reserves for doubtful accounts and allowances for
valid promotional discounts) over (y) the amount of payments actually received
by Purchaser or any of its Affiliates in respect of the Final Accounts
Receivable (such excess, the "Adjustment Amount"), or (ii) that Purchaser has
been paid in full in respect of all Final Accounts Receivable (net of reserves
for doubtful accounts and allowances for valid promotional discounts). Upon
receipt of the Purchaser Receivables Notice by Seller, Purchaser and Seller
shall promptly prepare and deliver a written notice to the Escrow Agent, in
accordance with the terms and conditions of the Escrow Agreement, which restates
the information set forth in the Purchaser Receivables Notice (the "Receivables
Notice"). Upon receipt of the Receivables Notice, and only if the Receivables
Notice indicates that Purchaser is entitled to receive an amount of funds set
forth therein pursuant to this Section 4.17, the Escrow Agent shall promptly
remit to Purchaser, in exchange for Purchaser's transfer of all unpaid Final
Accounts Receivable to Seller, a sum, in immediately available same day funds,
equal to the Adjustment Amount. In calculating the Adjustment Amount pursuant to
this Section 4.17, payments received by Purchaser or its Affiliates in respect
of Final Accounts Receivable before the transfer of any unpaid Final Accounts
Receivable to Seller pursuant to this Section 4.17 shall be credited as directed
by the account debtor, or if no direction is provided, first to the oldest Final
Account Receivable of that customer until all Final Accounts Receivable with
respect to that customer are paid in full; provided, however, that once Seller
receives a non-directed payment from an account debtor, it will promptly forward
to Purchaser all payment support information related to such payment for review
and, if Purchaser and Seller jointly determine that such non-directed payment
should be credited to another Final
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Accounts Receivable, or to an Accounts Receivable that is recorded after the
Closing Date, of such account debtor instead of such account debtor's oldest
Final Accounts Receivable, the parties will credit the account of such account
debtor accordingly. Further, in calculating the Adjustment Amount pursuant to
this Section 4.17, any payments received by Purchaser or its Affiliates in
respect of Final Accounts Receivable after the transfer of any Accounts
Receivable to Seller pursuant to this Section 4.17 shall be credited as directed
by the account debtor. If any unpaid Final Accounts Receivable are, after the
transfer of such Final Accounts Receivable by Purchaser to Seller, ultimately
collected by Purchaser or its Affiliates, Purchaser shall promptly notify Seller
in writing of such collection and will transfer to Seller, in immediately
available same day funds, such collected Reimbursed Accounts Receivable. In
connection with the transfer by Purchaser to Seller of the unpaid Final Accounts
Receivable, Purchaser agrees to execute and cause its Affiliates to execute such
assignments, notices and other instruments as are reasonably requested by Seller
in order to effectively transfer to Seller or its designee(s) such unpaid Final
Accounts Receivable and vest in Seller or its designee(s) all rights in respect
thereof. Purchaser shall not disclose the provisions of this Section 4.17 to any
person other than its employees, advisors and agents who need to know such
information in order for Purchaser to fulfill its obligations hereunder.
(b) If Purchaser is entitled to receive funds equal to the Adjustment
Amount pursuant to Section 4.17(a), an amount equal to the Adjustment Amount, in
immediately available same day funds, will promptly be remitted to Purchaser
from the Escrow Account in accordance with the terms of the Escrow Agreement;
provided, however, that in no event shall Purchaser be entitled to receive, in
the aggregate, funds in excess of the amount held in the Escrow Account, either
pursuant to this Section 4.17, pursuant to Section 1.7, pursuant to Section 8.9
or pursuant to any other provision of this Agreement unless expressly permitted
pursuant to Section 8.9 of this Agreement solely with respect to the Seller
Surviving Covenants; and, provided further, all payments to Purchaser pursuant
to this Section 4.17 shall only be made by the Escrow Agent out of the Escrow
Account.
(c) At and after such time as Purchaser assumes responsibility for the
collection of the Final Accounts Receivable, Purchaser shall use its
commercially reasonable efforts to collect all of the Final Accounts Receivable
(including, but not limited to, the Reimbursed Accounts Receivable) at their
full face value. In addition, so long as Seller has responsibility for the
collection of the Final Accounts Receivable pursuant to any Collateral
Agreement, Purchaser shall use its reasonable commercial efforts to assist
Seller in collecting any Final Accounts Receivable. Purchaser shall not (i)
release, waive or compromise any right in respect of any Final Account
Receivable, or (ii) encourage or facilitate any failure or refusal to pay an
Final Account Receivable. Each party hereto shall provide reasonable assistance
to the other with respect to the collection of the Final Accounts Receivable.
Section 4.18. Environmental Matters.
(a) Purchaser acknowledges the existence of nitrates in the groundwater
at Seller's plant in Millsboro, Delaware. Purchaser agrees that it will not
bring any claim
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for indemnification against Seller or any of its Subsidiaries or Affiliates with
respect to the such condition unless (i) nitrate levels in the groundwater
increase above levels permitted under applicable Environmental Law and such
non-compliance following the Closing is not caused by the actions of Purchaser
or third parties, (ii) there has been an actual claim against Purchaser with
respect to such condition by a Governmental Authority or third party, and (iii)
the remediation ultimately required with respect to nitrates in the groundwater
constitutes more than reactivation of the inactive extraction and discharge
system in place as of the date of this Agreement.
(b) Purchaser agrees that the presence of ACM in a condition that does
not require abatement, removal or other remediation pursuant to Environmental
Laws as of the Closing Date will not constitute a "Retained Liability" hereunder
and that Purchaser will bring no claim for indemnification for removal or other
remediation with respect to such ACM; provided, however, that any claim by
Purchaser for indemnification with respect to ACM that is in a condition that
requires removal or other remediation pursuant to Environmental Law as of the
Closing Date will not be subject to the monetary limitations of Section 8.9,
including the provisions in Section 8.9(d).
(c) Purchaser agrees that it will have no claim for indemnification
pursuant to this Agreement for a breach of (x) any representation, warranty,
covenant or agreement of Sellers arising under or relating to Environmental Law
or (y) a violation of, or liability under, Environmental Law, unless remediation
or any other action by Purchaser is required by a Governmental Authority or
other third party or if remediation or any other action by Purchaser is
otherwise required by Applicable Law.
Section 4.19. Trade Strategy and Consumer Strategy. Seller shall
execute the Trade Events Calendar and the Consumer Events Calendar without
material variation from their respective terms. On the date hereof, Seller shall
notify (in writing with a copy to Purchaser) all of its sales employees and
brokers of, and shall direct its employees and brokers to comply with, its
policy not to load customers with product and its policy that all trade
promotion funds must be used to drive consumption based programs or distribution
only. Seller shall not engage in the practice of loading or any program,
activity or other action that would reasonably be expected to result, directly
or indirectly, in a trade buy-in that is significantly in excess of normal
customer purchasing patterns consistent with past practice over the past twelve
months.
ARTICLE V
CERTAIN INCOME TAX MATTERS
Section 5.1. Tax Matters.
(a) Transfer Taxes. All excise, sales (including, without limitation,
bulk sales), use, transfer (including real property transfer or gains), stamp,
documentary, filing, recordation and other similar taxes, if any, together with
any interest, additions or penalties with respect thereto and any interest in
respect of such additions or penalties, arising out of, in connection with, or
attributable to the transactions effected pursuant to
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this Agreement (the "Transfer Taxes"), shall be borne and paid 50% by Seller and
50% by Purchaser, except with respect to Michigan real property transfer taxes
which shall be borne by Seller. Any Tax Returns that must be filed in connection
with Transfer Taxes shall be prepared and filed when due by the party primarily
or customarily responsible under the applicable local law for filing such Tax
Returns, and such party will use its reasonable efforts to provide such Tax
Returns to the other party at least 10 days prior to the date for such Tax
Returns are due to be filed (taking into account any valid extension). Except
with respect to Michigan real property transfer taxes, if Seller is required
under this Section 5.1(a) to file any such Tax Return, Seller shall notify
Purchaser in writing of the amount of the Transfer Tax shown to be due on such
Tax Return, and Purchaser shall reimburse Seller for 50% of the amount of such
Transfer Tax in immediately available funds within 10 days of receipt of such
notice. If Purchaser is required under this Section 5.1(a) to file any such Tax
Return, Purchaser shall notify Seller in writing of the amount of the Transfer
Tax shown to be due on such Tax Return, and Seller shall reimburse Purchaser for
50% of the amount of such Transfer Tax in immediately available funds within ten
days of receipt of such notice.
(b) Allocation of Purchase Price. Prior to Closing, the parties shall
use their best efforts to agree to a written schedule allocating the Purchase
Price and the Assumed Liabilities among the Acquired Assets and the Transition
Services Agreement. Each of the parties hereto shall report the federal, state,
local and other tax consequences of the purchase and sale contemplated hereby
(including the filing of Internal Revenue Service Form 8594) in a manner
consistent with such Purchase Price allocation schedule. Neither of the parties
hereto shall, nor shall it permit any of its Affiliates to, take a position
(except as required by Applicable Law) on any tax return, before any
Governmental Authority charged with the collection of any Tax, or in any
judicial proceeding, that is inconsistent with such Purchase Price allocation
schedule.
(c) Assistance and Cooperation. After the Closing Date, each of Seller
and Purchaser shall (and shall cause their respective Affiliates to):
(i) timely sign and deliver such certificates or forms as may
be necessary or appropriate to establish an exemption from (or
otherwise reduce), or file Tax Returns or other reports with respect to
Transfer Taxes;
(ii) reasonably assist the other party in preparing any Tax
Returns which such other party is responsible for preparing and filing
in accordance with this Section 5.1; and
(iii) reasonably cooperate in preparing for any audits of, or
disputes with taxing authorities regarding, any Tax Returns relating to
the Business.
Notwithstanding the foregoing or any other provision in this Agreement, neither
Purchaser nor any of its Affiliates shall have the right to receive or obtain
any information relating to Taxes of Seller, any of its Affiliates, or any of
its predecessors other than information relating solely to the Business.
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(d) Endorsement. In accordance with Section 1146(c) of the Bankruptcy
Code and subject to entry of the Sale Order, the instruments transferring the
Acquired Assets to Purchaser shall contain the following endorsement:
"This instrument has been authorized pursuant to order of the United
States Bankruptcy Court for the District of Delaware, which order
provides that it is exempt from transfer taxes, stamp taxes or similar
taxes pursuant to 11 U.S.C. Section 1146(c)."
ARTICLE VI
CONDITIONS TO CLOSING
Section 6.1. Conditions to the Obligations of Purchaser and Sellers.
The obligations of the parties hereto to effect the Closing are subject to the
satisfaction (or waiver by the parties) prior to the Closing Date of the
following conditions:
(a) No Injunctions; Orders. There shall not be in effect any writ,
Order or Applicable Law by any Governmental Authority of competent jurisdiction
that prohibits, enjoins, materially delays or interferes with the sale or
purchase of the Acquired Assets, the Business or the assumption of the Assumed
Liabilities in accordance with this Agreement or that requires Purchaser to hold
the Acquired Assets separate, restricts Purchaser's control of the Acquired
Assets or the Business or requires Purchaser to divest any asset or business in
connection with the acquisition of the Acquired Assets.
(b) Certain Pending Litigation. There shall not be pending any material
litigation brought by a Governmental Authority of competent jurisdiction seeking
to prohibit, enjoin, materially delay or interfere with the sale or purchase of
the Acquired Assets or the assumption of the Assumed Liabilities in accordance
with this Agreement or that seeks to require Purchaser to hold the Acquired
Assets separate, restrict Purchaser's control of the Acquired Assets or the
Business or require Purchaser to divest any asset or business in connection with
the acquisition of the Acquired Assets.
(c) HSR and Foreign Competition Laws. All waiting periods and review
periods under the HSR Act and any foreign antitrust or competition laws or
regulations applicable to the transactions contemplated by this Agreement shall
have expired or been earlier terminated.
(d) Security Interest. The agent for Seller's banks shall have released
its security interest in the Acquired Assets and all Liens on the Acquired
Assets, other than Permitted Liens (excluding those Permitted Liens required to
be removed by Seller pursuant to Section 4.1(r)), shall have been released.
(e) [Intentionally omitted].
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(f) Escrow Agreement. The Escrow Agent shall have duly executed and
delivered to Seller and Purchaser the Escrow Agreement.
Section 6.2. Conditions to the Obligations of Purchaser. The obligation
of Purchaser to effect the Closing is subject to the satisfaction (or waiver by
Purchaser) on the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and warranties
of Sellers contained herein shall be true and correct in all material respects
(in the case of any representation or warranty without any materiality
qualification) and in all respects (in the case of any representation or
warranty with any materiality qualification), in each case as of the date of
this Agreement and as of the Closing as if made as of the Closing, except that
the representations and warranties that are made as of a specific date need be
true and correct in all material respects (in the case of any representation or
warranty without any materiality qualification) and in all respects (in the case
of any representation or warranty with any materiality qualification) only as of
such date. Purchaser shall have received a certificate from Seller signed by an
officer thereof with respect to the foregoing.
(b) Covenants. The covenants and agreements of Sellers to be performed
on or prior to the Closing shall have been duly performed in all material
respects. Purchaser shall have received a certificate from Seller signed by an
officer thereof with respect to the foregoing.
(c) Xxxx of Sale. Seller shall have duly executed and delivered to
Purchaser the Xxxx of Sale.
(d) Deeds. Seller shall have duly executed and delivered to Purchaser
each of the Deeds together with any reasonably necessary transfer declaration or
other filings.
(e) [Intentionally omitted].
(f) Intellectual Property Instruments. Seller shall have duly executed
and delivered to Purchaser each of the Intellectual Property Instruments.
(g) Collateral Agreements. Seller shall have duly executed and
delivered to Purchaser each of the Collateral Agreements.
(h) [Intentionally omitted].
(i) Title Policies. Purchaser shall have received from a nationally
recognized title insurance company (the "Title Company") satisfactory to
Purchaser at Purchaser's expense, a fee owner's title insurance policy issued to
Purchaser with respect to each Owned Real Property in form and substance
satisfactory to Purchaser, together with endorsements reasonably requested by
Purchaser, including, without limitation, access, zoning, comprehensive and
contiguity endorsements, in an amount determined by Purchaser, insuring
Purchaser and issued as of the Closing Date by the Title Company,
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showing Purchaser to have a fee simple title to each Owned Real Property, and a
valid leasehold estate in each Leased Real Property, in each case subject only
to Permitted Liens (excluding those Liens described in Section 2.12(a)(iii)).
Seller shall have delivered to the Title Company any affidavits or indemnities
required by the Title Company in connection with the delivery of the owner's
title policies and leasehold title policies.
(j) Surveys. Purchaser shall have received, at Purchaser's expense, a
survey of each Owned Real Property, dated no earlier than the date of this
Agreement, prepared by a certified or registered surveyor reasonably acceptable
to Purchaser and the Title Company and certified to Purchaser and the Title
Company, in form and substance satisfactory to Purchaser and the Title Company,
complying with the current Minimum Standard Detail Requirements for ALTA/ACSM
Land Title Surveys and (i) setting forth an accurate description of each parcel
of Owned Real Property, (ii) locating all improvements, Liens (setting forth the
recording information of any recorded instruments), setback lines, alleys,
streets and roads, (iii) showing any encroachments upon or by any improvements
on each Owned Real Property, and (iv) showing all dedicated public streets
providing access to each Owned Real Property and the municipal address of any
improvements located on each Owned Real Property.
(k) Certificate of non-foreign status. Seller shall have duly executed
and delivered to Purchaser a certificate of non-foreign status as provided in
Treasury Regulations Section 1.1445-2(b).
(l) No Business Material Adverse Effect. No event, occurrence, fact,
condition, change, development or effect shall exist or have occurred, exist or
come to exist since the date hereof that, individually or in the aggregate, has
constituted or resulted in, or is reasonably likely to constitute or result in,
a Business Material Adverse Effect.
(m) ACV Distribution. The total points of all commodity volume ("ACV")
distribution as measured by Information Resources Inc. ("IRI") for the U.S. Food
channel total VFI Pickles and Relish (shelf stable and refrigerated) for any
Standard IRI four week period ending after execution of this Agreement and on or
prior to the Closing Date shall not be less than 2,250 total points. At the
Closing, Purchaser shall have received a certificate from Seller signed by a
duly authorized officer of Seller certifying the forgoing and that Seller has no
Knowledge that ACV distribution should be less than 2,250 total points for any
Standard IRI four week period during the twelve weeks after the Closing Date,
and such certificate shall be true and correct in all material respects.
(n) Bidding Procedures Order and Sale Order. The Bankruptcy Court shall
have entered (i) the Bidding Procedures Order in form and substance reasonably
satisfactory to Purchaser no later than 32 days after the filing of the Petition
and (ii) the Sale Order in form and substance reasonably satisfactory to
Purchaser no later than 32 days after the Bidding Procedures Order is entered by
the Bankruptcy Court. The Sale Order shall have become final and non-appealable
before the eleventh day following the
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entry of the Sale Order. The Sale Order shall contain a finding by the
Bankruptcy Court that the transactions contemplated hereby are in good faith and
otherwise satisfy the provisions of Section 363, including Section 363 (m), of
the Bankruptcy Code.
(o) Certain Third Party Consents. Notwithstanding Section 4.11 or
anything else to the contrary in this Agreement, Seller shall have obtained and
delivered to Purchaser, in form and substance reasonably satisfactory to
Purchaser, the consents of third parties, if the Bankruptcy Court does not
otherwise approve the assignment in form and substance reasonably satisfactory
to Purchaser of such Contracts to Purchaser, listed on Exhibit 6.2(o) attached
hereto and such consents shall be in full force and effect.
(p) Crop Requirements. Seller shall be required, within two days after
the Bankruptcy Court has entered the Sale Order, to demonstrate to the
reasonable satisfaction of Purchaser that Seller has committed crops consistent
with previous purchasing practices that are reasonably likely to be delivered in
an amount sufficient to meet the requirements of the Business determined by
reference to the requirements of the Business in prior years.
Section 6.3. Conditions to the Obligations of Sellers. The obligation
of Sellers to effect the Closing is subject to the satisfaction (or waiver by
Sellers) on the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and warranties
of Purchaser contained herein shall be true and correct in all material respects
(in the case of any representation or warranty without any materiality
qualification) and in all respects (in the case of any representation of
warranty with any materiality qualification), in each case as of the date of
this Agreement and as of the Closing as if made as of the Closing (except for
changes permitted or contemplated by this Agreement and except that the
representations and warranties that are made as of a specific date need be true
and correct in all material respects (in the case of any representation or
warranty without any materiality qualification) and in all respects (in the case
of any representation or warranty with any materiality qualification) only as of
such date). Seller shall have received a certificate from Purchaser signed by an
officer thereof with respect to the foregoing.
(b) Covenants. The covenants and agreements of Purchaser to be
performed on or prior to the Closing shall have been duly performed in all
material respects. Seller shall have received a certificate from Purchaser
signed by an officer thereof with respect to the foregoing.
(c) Receipt of Adjusted Purchase Price. Seller shall have received from
Purchaser the Adjusted Purchase Price (less the Escrow Amount) by wire transfer
of immediately available same day funds.
(d) Assumption Agreement. Purchaser shall have duly executed and
delivered to Seller the Assumption Agreement.
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(e) Receipt of Escrow Amount. The Escrow Agent shall have received from
Purchaser the Escrow Amount by wire transfer of immediately available same day
funds.
(f) Collateral Agreements. Purchaser shall have duly executed and
delivered to Purchaser each of the Collateral Agreements.
ARTICLE VII
TERMINATION
Section 7.1. Termination. This Agreement may be terminated at any time
prior to the Closing Date:
(a) by written agreement of Seller and Purchaser;
(b) by either Seller or Purchaser, by giving written notice of such
termination to the other party, if the Closing shall not have occurred on or
prior to April 16, 2001 (the "Termination Date") (unless the failure to
consummate the Closing by such date shall be due to the failure of the party
seeking to terminate this Agreement to have fulfilled any of its obligations
under this Agreement);
(c) by either Seller or Purchaser in the event that any Governmental
Authority shall have issued a final, non-appealable Order or ruling or taken any
other final, non-appealable action, or adopted any applicable state, federal or
foreign law, in each case permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement;
(d) by Seller, so long as any Seller is not then in breach of its
obligations under this Agreement, upon a breach of any covenant or agreement on
the part of Purchaser set forth in this Agreement, or if any representation or
warranty of Purchaser shall have been or become untrue, in each case such that
the conditions set forth in Section 6.3(a) or (b) would not be satisfied;
provided, however, that if any such breach is curable prior to the Termination
Date by Purchaser through the use of its reasonable best efforts, for so long as
Purchaser, following written notice with respect to such breach from Seller,
shall be using its reasonable best efforts to cure such breach, Seller may not
terminate this Agreement pursuant to this Section 7.1(d);
(e) by Purchaser, so long as Purchaser is not then in breach of its
obligations under this Agreement, upon a breach of any covenant or agreement on
the part of Sellers set forth in this Agreement, or if any representation or
warranty of Seller shall have been or become untrue, in each case such that the
conditions set forth in Section 6.2(a) or (b) would not be satisfied; provided,
however, that if any such breach is curable prior to the Termination Date by
Sellers through the use of their reasonable best efforts, for so long as
Sellers, following written notice with respect to such breach from Purchaser,
shall be using their reasonable best efforts to cure such breach, Purchaser may
not terminate this Agreement pursuant to this Section 7.1(e);
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(f) By Purchaser, if the Bankruptcy Court has not entered the Bidding
Procedures Order within the time frame specified in Section 6.2(n); provided,
however, that if the Bankruptcy Court has not entered the Bidding Procedures
Order within the time frame specified in Section 6.2(n), and Purchaser does not
exercise its right to terminate this Agreement pursuant to this Section 7.1(f)
within 40 days after the filing of the Petition by Seller, then Purchaser shall
be deemed to have irrevocably waived (x) its right to terminate this Agreement
pursuant to this Section 7.1(f) and (y) the condition set forth in Section
6.2(n)(i) of this Agreement;
(g) By Purchaser, if the Bankruptcy Court has not entered the Sale
Order within the time frame specified in Section 6.2(n); provided, however, that
if the Bankruptcy Court has not entered the Sale Order within the time frame
specified in Section 6.2(n), and Purchaser does not exercise its right to
terminate this Agreement pursuant to this Section 7.1(g) within 40 days after
the Bankruptcy Court enters the Bidding Procedures Order, then Purchaser shall
be deemed to have irrevocably waived (x) its right to terminate this Agreement
pursuant to this Section 7.1(g) and (y) the condition set forth in Section
6.2(n)(ii) of this Agreement;
(h) By Seller, if Seller accepts or is about to accept a Qualified Bid
at the Auction other than that of Purchaser, provided that such termination
shall be of no effect if Seller does not accept such Qualified Bid immediately
after termination hereunder;
(i) By Purchaser, if at any time the condition set forth in the first
sentence of Section 6.2(m) would not be satisfied; provided, however, with
respect to each delivery of IRI data by Seller to Purchaser (each, an "IRI
Delivery"), that if such condition is not met and Purchaser does not exercise
its right to terminate this Agreement pursuant to this Section 7.1(i) within
five Business Days of receiving such IRI Delivery from Seller, then, with
respect to each such IRI Delivery, Purchaser shall be deemed to have irrevocably
waived (x) its right to terminate this Agreement pursuant to this Section
7.1(i), and (y) the condition set forth in Section 6.2(m) of this Agreement;
(j) By Purchaser, if the Sale Order has not become final and
non-appealable within the time frame specified in the second sentence of Section
6.2(n); provided, however, that if the such condition is not met and Purchaser
does not exercise its right to terminate this Agreement pursuant to this Section
7.1(j) within 20 days after the Bankruptcy Court enters the Sale Order, then
Purchaser shall be deemed to have irrevocably waived (x) its right to terminate
this Agreement pursuant to this Section 7.1(j) and (y) the condition set forth
in the second sentence of Section 6.2(n) of this Agreement;
(k) By Purchaser, if Seller gives written notice to Purchaser that it
is unable to obtain a consent required by Section 6.2(o); provided, however,
that if Seller so notifies Purchaser and Purchaser does not exercise its right
to terminate this Agreement pursuant to this Section 7.1(k) within five Business
Days of receiving such notice from Seller, then, with respect to Seller's
obligation to obtain such consent, Purchaser shall be deemed to have irrevocably
waived (x) its right to terminate this Agreement pursuant to this Section
7.1(k), and (y) the condition set forth in Section 6.2(o); and
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(l) By Purchaser, in the event of an Auction Transaction.
Section 7.2. Effect of Termination.(a) (a) In the event of the
termination of this Agreement in accordance with Section 7.1, this Agreement
shall thereafter become void and have no effect, and no party hereto shall have
any liability to the other party hereto or their respective Affiliates,
directors, officers, employees or representatives, except for the obligations of
the parties hereto contained in this Section 7.2, Sections 4.2(d), 4.7, 4.8(d),
4.16(d), 8.1, 8.6, 8.7, 8.8 and the Confidentiality Agreement by and between
Seller and Purchaser, dated July 17, 2000 (the "Confidentiality Agreement"), and
except that nothing herein will relieve any party from liability for any willful
breach of any representation, warranty, covenant or agreement set forth in this
Agreement prior to such termination (a "Willful Breach"); it being understood
that (i) the acceptance by Sellers of a Bid other than Purchaser's and seeking
the approval of the Bankruptcy Court of a Bid other than Purchaser's in each
case in compliance with Section 4.16 and (ii) any reasonable act taken in good
faith by Sellers after consultation with Purchaser and due consideration of
Purchaser's comments and suggestions which is in violation of Section 4.1 but is
necessary to protect the Business against a Business Material Adverse Effect,
shall not constitute a Wilful Breach for purposes of this Section 7.2 only.
(b) The parties acknowledge and agree that any claim for a Wilful
Breach must be brought within 30 days after this Agreement is terminated.
(c) Purchaser acknowledges and agrees that it may assert no claim
against Sellers under this Agreement with respect to any breach of Section
4.16(d) by any Seller more than 13 months after the date of this Agreement.
(d) Sellers acknowledge and agree that no Seller may assert any claim
against Purchaser under this Agreement with respect to any breach of Section
4.2(d) more than 24 months after the termination of this Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Notices. All notices and other communications hereunder
shall be in writing and shall be effective upon receipt. Notice shall be given
(i) by personal delivery to the appropriate address as set forth below (or at
such other address for the party as shall have been previously specified in
writing to the other party), (ii) by reliable overnight courier service (with
confirmation) to the appropriate address as set forth below (or at such other
address for the party as shall have been previously specified in writing to the
other party), or (iii) by facsimile transmission (with confirmation) to the
appropriate facsimile number set forth below (or at such other facsimile number
for the party as shall have been previously specified in writing to the other
party) with follow-up copy by reliable overnight courier service that next
Business Day:
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if to Seller, to:
Vlasic Foods International Inc.
Vlasic Plaza
Six Executive Campus
Cherry Hill, New Jersey 08002-4112
Attention: General Counsel
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
if to Purchaser to:
X.X. Xxxxx Company
000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy (which shall not constitute notice) to:
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Section 8.2. Amendment; Waiver; Invalidity. Any provision of this
Agreement may be amended, superseded, cancelled, renewed or extended, and the
terms hereof may be waived, only by a written instrument signed by each of the
parties hereto, or, in the case of a waiver, by the party against whom the
waiver is to be effective. No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any waiver on the part of any party of any right, power or privilege, or any
single or partial exercise of any such right, power or privilege, preclude any
further exercise thereof or the exercise of any other such right, power or
privilege. The rights and remedies herein provided are cumulative and are not
exclusive of any rights or remedies that any party may otherwise have at law or
in equity.
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Section 8.3. Assignment; Binding Effect. Neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other party. This Agreement will be binding upon, inure
to the benefit of and be enforceable by the parties hereto and their respective
successors and permitted assigns.
Section 8.4. Entire Agreement; Disclosure Schedules. This Agreement
(including the Seller Disclosure Schedule, the Purchaser Disclosure Schedule and
all Exhibits hereto), the Collateral Agreements (when executed and delivered)
the Bidding Procedures Order, the Sales Order and the documents, agreements,
certificates and instruments referred to herein and therein contain the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersede all prior agreements and understandings, oral or written, with
respect to such matters, except for the Confidentiality Agreement, which will
remain in full force and effect for the term provided for therein, and other
than any written agreement of the parties that expressly provides that it is not
superseded by this Agreement.
Section 8.5. No Third Party Beneficiaries. Except as provided in
Section 8.9 with respect to indemnification of Indemnified Parties (as defined
in Section 8.9) hereunder, nothing in this Agreement, express or implied, is
intended to confer upon any Person other than Purchaser, Seller or their
respective successors or permitted assigns any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision contained
herein.
Section 8.6. Fees and Expenses. Except as provided in Section 4.16 with
respect to the Expense Reimbursement, whether or not this Agreement and the
transactions contemplated hereby are consummated, and except as otherwise
expressly set forth herein, each of the parties hereto shall bear its own costs
and expenses (including legal, accounting and financial advisory fees and
expenses) incurred in connection with, or in anticipation of, this Agreement and
the transactions contemplated hereby.
Section 8.7. Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future
Applicable Law or Order, and if the rights or obligations of any party hereto
under this Agreement will not be materially and adversely affected thereby, (i)
such provision will be fully severable, (ii) this Agreement will be construed
and enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof, and (iii) the remaining provisions of this Agreement
will remain in full force and effect and will not be affected by any such
illegal, invalid or unenforceable provision or by its severance herefrom.
Section 8.8. Governing Law. THE AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OR CHOICE OF LAWS OR ANY OTHER LAW THAT WOULD MAKE THE
LAWS OF ANY OTHER JURISDICTION OTHER THAN THE STATE OF DELAWARE APPLICABLE
HERETO. The parties hereby agree that, without limitation
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of any party's right to appeal any order of the Bankruptcy Court, (a) the
Bankruptcy Court shall retain exclusive jurisdiction to enforce the terms of
this Agreement and to decide any claims or disputes which may arise or result
from, or be connected with, this Agreement, any breach or default hereunder, or
the transactions contemplated herein, and (b) any and all claims, actions,
causes of action, suits and proceedings relating to the foregoing shall be filed
and maintained only in the Bankruptcy Court, and the parties hereby consent and
submit to the jurisdiction of the Bankruptcy Court.
Section 8.9. Indemnification.
(a) By Sellers. Sellers covenant and agree to defend, indemnify and
hold harmless Purchaser, its Affiliates and the officers, directors, employees,
agents, advisers and representatives of each such Person (collectively, the
"Purchaser Indemnitees") from and against, and pay or reimburse the Purchaser
Indemnitees for, any and all claims, liabilities, obligations, losses, fines,
costs, royalties, proceedings, deficiencies or damages (whether absolute,
accrued, conditional or otherwise and whether or not resulting from third party
claims), including out-of-pocket expenses and reasonable attorneys' and
accountants' fees incurred in the investigation or defense of any of the same or
in asserting any of their respective rights hereunder (collectively, "Losses"),
resulting from or arising out of:
(i) any inaccuracy of any representation or warranty made by
any Seller herein, or in any certificate delivered by an officer of any
Seller pursuant hereto (a "Seller Certificate") or in any Collateral
Agreement or in connection herewith or therewith;
(ii) any failure of any Seller to perform any covenant or
agreement hereunder or under any Collateral Agreement or fulfill any
other obligation in respect hereof or of any Collateral Agreement;
(iii) any and all Retained Liabilities or Retained Assets;
(iv) any and all Taxes (other than payroll Taxes) of any
Seller and all Affiliates thereof relating to or arising out of the
Business accruing, or with respect to any event or time period
occurring, at or prior to Closing; and
(v) any and all liabilities in respect of employees of Seller
or its Affiliates or Plans except to the extent assumed by Purchaser
pursuant to Section 4.3.
Cap on Sellers' Indemnification Obligations. Sellers' obligation to indemnify
Purchaser Indemnitees pursuant to this Agreement, any Seller Certificate or any
Collateral Agreement for breaches or inaccuracies of representations or
warranties, and for breaches or failures to perform covenants or agreements or
to fulfill any other obligations set forth in this Agreement (except for (x) the
Seller Surviving Covenants, and (y) solely to the extent expressly contemplated
by this Section 8.9(a), the Environmental Covenants (as defined in this Section
8.9(a))), in any Seller Certificate or in any Collateral Agreement, shall not
exceed the amount of funds held in the Escrow Account at the time such claims
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are made. Notwithstanding anything to the contrary contained in this Agreement,
Purchaser and Sellers acknowledge and agree (i) that the Escrow Account is the
sole source of funding for any claims for indemnification by any Purchaser
Indemnitee pursuant to this Agreement, any Seller Certificate or any Collateral
Agreement (excluding (x) the Seller Surviving Covenants, which, if sufficient
funds are not available in the Escrow Account, may, if there are claims for
Losses, be satisfied from other sources, and (y) solely to the extent expressly
contemplated by this Section 8.9(a), the Environmental Covenants) and (ii) that
once any funds have been released out of the Escrow Account to Sellers as
expressly contemplated by this Agreement, such funds shall cease to be subject
to any claims for indemnification by any Purchaser Indemnitee pursuant to this
Agreement, any Seller Certificate or any Collateral Agreement, including the
Escrow Agreement; provided that any claim for indemnification asserted by a
Purchaser Indemnitee pursuant to this Section 8.9 (x) with respect to a breach
of a Seller Surviving Covenant, shall in no way be limited or restricted by the
fact that such funds have been released from the Escrow Account to Seller and
any such claim may be satisfied from Sellers' then existing assets and (y) with
respect to a breach of an Environmental Covenant, shall be subject to the dollar
limits set forth in the next sentence but otherwise shall in no way be limited
or restricted by the fact that such funds have been released from the Escrow
Account to Seller and such claim may be satisfied from Sellers' then existing
assets. Purchaser acknowledges and agrees that with respect to any Purchaser
Indemnitee that asserts a claim for indemnification with respect to a breach of
Sections 1.4 and 8.9(a)(iii) arising under or relating to Environmental Law
(collectively, the "Environmental Covenants"), after the Expiration Date but
prior to the confirmation by the Bankruptcy Court of Seller's plan of
reorganization, if such confirmation occurs after the Expiration Date, Sellers'
obligation to indemnify all of such claims shall not exceed, in the aggregate,
the amount of funds, if any, released from the Escrow Account to Seller after
the Expiration Date pursuant to Section 4(h) of the Escrow Agreement.
(b) By Purchaser. Purchaser covenants and agrees to defend, indemnify
and hold harmless Sellers, their respective Affiliates and the officers,
directors, employees, agents, advisers and representatives of each such Person
(collectively, the "Seller Indemnitees") from and against any and all Losses
resulting from or arising out of:
(i) any inaccuracy in any representation or warranty by
Purchaser made or contained herein, in any certificate delivered by an
officer of Purchaser pursuant hereto (a "Purchaser Certificate") or in
any Collateral Agreement or in connection herewith or therewith;
(ii) any failure of Purchaser to perform any covenant or
agreement made or contained herein or any Collateral Agreement or
fulfill any other obligation in respect thereof;
(iii) the Assumed Liabilities; and
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(iv) the operation of the Business by Purchaser or Purchaser's
ownership, operation or use of the Acquired Assets following the
Closing Date, except, in the case of this clause (iv), to the extent
such Losses result from the Retained Liabilities or constitute Losses
for which Sellers are required to indemnify the Purchaser Indemnitees
under Section 8.9(a).
(c) Indemnification Procedures. In the case of any claim asserted by a
third party against a party entitled to indemnification under this Agreement
(the "Indemnified Party"), written notice shall be given by the Indemnified
Party to the party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual knowledge of any claim
as to which indemnity may be sought, and the Indemnified Party shall permit the
Indemnifying Party (at the expense of such Indemnifying Party) to assume the
defense of any claim or any litigation resulting therefrom, provided that (i)
the counsel for the Indemnifying Party who shall conduct the defense of such
claim or litigation shall be reasonably satisfactory to the Indemnified Party,
(ii) the Indemnified Party may participate in such defense at such Indemnified
Party's expense, and (iii) the omission by any Indemnified Party to give notice
as provided herein shall not relieve the Indemnifying Party of its
indemnification obligation under this Agreement except to the extent that such
omission results in a failure of actual notice to the Indemnifying Party and
such Indemnifying Party is prejudiced as a result of such failure to give
notice. Except with the prior written consent of the Indemnified Party, no
Indemnifying Party, in the defense of any such claim or litigation, shall
consent to entry of any judgment or order, interim or otherwise, or enter into
any settlement that provides for injunctive or other nonmonetary relief
affecting the Indemnified Party or that does not include as an unconditional
term thereof the giving by each claimant or plaintiff to such Indemnified Party
of a release from all liability with respect to such claim or litigation. In the
event that the Indemnified Party shall in good faith determine that the conduct
of the defense of any claim subject to indemnification hereunder or any proposed
settlement of any such claim by the Indemnifying Party might be expected to
affect adversely the Indemnified Party's Tax liability or the ability of the
Purchaser to conduct its business, or that the Indemnified Party may have
available to it one or more defenses or counterclaims that are inconsistent with
one or more of those that may be available to the Indemnifying Party in respect
of such claim or any litigation relating thereto, the Indemnified Party shall
have the right at all times to take over and assume control over the defense,
settlement, negotiations or litigation relating to any such claim at the sole
cost of the Indemnifying Party, provided that if the Indemnified Party does so
take over and assume control, the Indemnified Party shall not settle such claim
or litigation without the written consent of the Indemnifying Party, such
consent not to be unreasonably withheld. In the event that the Indemnifying
Party does not accept the defense of any matter as above provided, the
Indemnified Party shall have the full right to defend against any such claim or
demand and shall be entitled to settle or agree to pay in full such claim or
demand. In any event, the Indemnifying Party and the Indemnified Party shall
cooperate in the defense of any claim or litigation subject to this Section 8.9
and the records of each shall be available to the other with respect to such
defense.
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(d) Indemnification Limitations.
(i) No indemnification under Section 8.9(a)(i) (except with
respect to Section 2.11(d) or Section 2.11(e)) shall be required with
respect to any individual item of Loss unless the aggregate of all
Losses of the Purchaser Indemnified Parties described in Section 8.9(a)
of this Agreement shall exceed $1,000,000, in which case Sellers shall
be liable only for the Losses in excess of such amount.
(ii) No indemnification under Section 8.9(a)(i) or (a)(ii)
shall be required for Losses with respect to any special, consequential
or punitive damages arising out of the gross negligence of Seller in
satisfying its obligations under the Transition Services Agreement
unless the aggregate of all such special, consequential and punitive
damages shall exceed $500,000, in which case Sellers shall be liable
only for the special, consequential and punitive damages which
constitute Losses in excess of such amount.
(e) Remedies Exclusive; Limitations on Remedies in this Agreement and
the Collateral Agreements. The rights and remedies provided in this Section 8.9
and Section 4.3 shall be the sole and exclusive remedy for any breach of or
inaccuracy in any representation or warranty or any breach of any covenant or
agreement contained in this Agreement, in any Seller Certificate, in any
Purchaser Certificate or in any Collateral Agreement, provided that nothing
herein shall limit the rights of either party to seek and obtain injunctive
relief to specifically enforce the other party's obligations.
(f) Survival of Representations, Warranties, Covenants and Agreements.
(i) Sellers' Representations, Warranties, Covenants and
Agreements. The representations and warranties of Seller contained in
(i) Sections 2.21 and 2.22 of this Agreement shall survive the
execution and delivery of this Agreement, any examination by or on
behalf of the parties hereto and the completion of the transactions
contemplated herein, for a period ending on the date the Final Closing
Balance Sheet is finally determined in accordance with Section 1.7 and
(ii) Section 2.23 shall survive the execution and delivery of this
Agreement, any examination by or on behalf of the parties hereto and
the completion of the transactions contemplated herein, for a period
ending seven months from the Closing Date (collectively, the
"Terminating Representations"). The covenants and agreements made by
Sellers and set forth in the Escrow Agreement shall survive the Closing
and shall terminate as provided in Section 9 of the Escrow Agreement.
The covenants and agreements made by Sellers which are contained in the
Transition Services Agreement shall survive the Closing and shall
terminate with respect to a particular Service (as defined in the
Transition Services Agreement) 30 days after Seller terminates the
provision of such Service to Purchaser, provided that (i) all other
covenants and agreements made by Sellers set forth in the Transition
Services Agreement and (ii) notwithstanding anything to the contrary in
this Agreement, representations and warranties made by Sellers in or
with respect to the Transition Services Agreement shall terminate 30
days after the Transition Services Agreement terminates. The
Environmental Covenants shall survive the Closing for a period ending
on the later of (x) the Expiration Date and (y) the confirmation by the
Bankruptcy Court of Seller's plan
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of reorganization. Except for (v) the Terminating Representations, (w)
the covenants and agreements made by Sellers and set forth in the
Escrow Agreement, (x) the representations, warranties, covenants and
agreements of Seller contained in or relating to the Transition
Services Agreement, (y) the Environmental Covenants and (z) the Seller
Surviving Covenants, the representations, warranties, covenants and
agreements made by Sellers which are contained in this Agreement, in
any Seller Certificate or in the Escrow Agreement shall survive the
execution and delivery of this Agreement, any Seller Certificate or the
Escrow Agreement, as the case may be, any examination by or on behalf
of the parties hereto or thereto and the completion of the transactions
contemplated herein or therein, for a period ending on the Expiration
Date. All claims for indemnification (except with respect to the Seller
Surviving Covenants) under this Agreement, any Seller Certificate or
the Collateral Agreements must be asserted in a written notice to
Seller prior to the expiration of the relevant survival period set
forth above. So long as a Purchaser Indemnitee asserts a claim for
indemnification before the expiration of the applicable survival
period, such Purchaser Indemnitee shall be deemed to have preserved its
rights to indemnification pursuant to this Section 8.9 regardless of
when such claim is ultimately liquidated.
(ii) Purchaser's Representations, Warranties, Covenants and
Agreements. The covenants and agreements made by Purchaser and set
forth in the Escrow Agreement shall survive the Closing and shall
terminate as provided in Section 9 of the Escrow Agreement. The
covenants and agreements made by Purchaser which are contained in the
Transition Services Agreement shall survive the Closing and shall
terminate with respect to a particular Service 30 days after Seller
terminates the provision of such Service to Purchaser; provided that
(i) all other covenants and agreements made by Purchaser and set forth
in the Transition Services Agreement and (ii) notwithstanding anything
to the contrary in this Agreement, representations and warranties made
by Purchaser in or with respect to the Transition Services Agreement
shall terminate 30 days after the Transition Services Agreement
terminates; and, provided further, that the covenants and agreements
made by Purchaser and contained in Section 4(d) of the Transition
Services Agreement shall terminate one year after the Transition
Services Agreement terminates. Except for the covenants made by
Purchaser and set forth in the Escrow Agreement, the representations,
warranties, covenants and agreements made by Purchaser which are
contained in or relate to the Transition Services Agreement and the
Purchaser Surviving Covenants, the representations, warranties,
covenants and agreements made by Purchaser which are contained in this
Agreement, in any Purchaser Certificate or in the Escrow Agreement
shall survive the execution and delivery of this Agreement, such
Purchaser Certificate or the Escrow Agreement, as the case may be, any
examination by or on behalf of the parties hereto or thereto and the
completion of the transactions contemplated herein or therein, for a
period ending on the Expiration Date. All claims for indemnification
(except with respect to the Purchaser Surviving Covenants) under this
Agreement or the Collateral Agreements must be asserted in a written
notice to Purchaser prior to the expiration of the relevant survival
period set forth above.
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So long as a Seller Indemnitee asserts a claim for indemnification
before the expiration of the applicable survival period, such Seller
Indemnitee shall be deemed to have preserved its rights to
indemnification pursuant to this Section 8.9 regardless of when such
claim is ultimately liquidated.
(g) Indemnification Adjustment. The amount of any Losses shall be
reduced by any amount received by an Indemnified Party under any insurance
coverage or from any other party alleged to be responsible therefor (net of any
cost of recovery), and such Indemnified Party shall either (i) use reasonable
commercial efforts to collect any amounts available under such insurance
coverage or from such other party alleged to have responsibility or (ii) assign
to the Indemnifying Party responsible for reimbursing such Losses all of its
rights to collect under any insurance coverage or from any other party alleged
to be responsible therefor; provided, however, that such Indemnified Party shall
be restricted from assigning such rights, and such Indemnifying Party shall be
under no obligation to accept any such assignment, if such collection rights are
non-assignable or if such Indemnifying Party reasonably determines that the
assignment of such rights would materially decrease the amount of funds (net of
any cost of recovery) that such Indemnifying Party would otherwise be entitled
to receive pursuant to this Section 8.9(g) with respect to such Losses. If an
Indemnified Party receives an amount under insurance coverage or from such other
party with respect to Losses at any time subsequent to any indemnification
provided by this Section 8.9, then such Indemnified Party shall promptly
reimburse the Indemnifying Party for any payment made to the Indemnified Party
by such Indemnifying Party (net of any cost of recovery) in connection with
providing such indemnification up to such amount received by the Indemnified
Party. In addition, no Indemnified Party shall be entitled to any duplication of
reimbursement or indemnification with respect to any Losses which constitute a
breach of more than one representation, warranty, covenant or agreement
contained herein. The parties acknowledge and agree that if any Purchaser
Indemnitee or any Seller receives funds under any insurance coverage or from any
third party as contemplated by this Section 8.9(g), and at such time funds still
remain in the Escrow Account, then such Purchaser Indemnitee or such Seller
shall promptly deliver such funds (net of any cost of recovery) in an amount,
when added to the funds already held in the Escrow Account, not to exceed the
Escrow Amount (if the First Distribution has not occurred) or, if the First
Distribution has occurred, in an amount, when added to the funds already held in
the Escrow Account, not to exceed $10,000,000, in either case to the Escrow
Agent to be placed into the Escrow Account.
(h) Escrow Agent Notices.
(i) Purchaser and Seller agree that if Purchaser, or another
Purchaser Indemnitee, submits a claim for indemnification pursuant to
this Section 8.9 that Seller does not dispute by delivering written
notice to Purchaser within 20 calendar days of the date it receives
written notice of such claim, Purchaser and Seller shall promptly
prepare and deliver a written notice to the Escrow Agent, in accordance
with the terms and conditions of the Escrow Agreement, which states the
identity of the appropriate Purchaser Indemnitee and the amount of
Losses
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suffered by such Purchaser Indemnitee that are subject to
indemnification pursuant to this Section 8.9.
(ii) Purchaser and Seller agree that if Seller disputes any
matter with respect to a claim for indemnification pursuant to this
Section 8.9, whether or not such claim is based on a third party claim,
then Purchaser and Seller shall, once there has been a Final
Determination (as defined in the Escrow Agreement) of such claim,
promptly prepare and deliver a written notice to the Escrow Agent, in
accordance with the terms and conditions of the Escrow Agreement, which
states the identity of the appropriate Purchaser Indemnitee and the
amount of Losses, if any, suffered by such Purchaser Indemnitee that
are subject to indemnification pursuant to this Section 8.9.
(i) Seller Surviving Covenants.
(A) The covenants and agreements made by Sellers and set forth in
Sections 4.3(a)(ii), 4.3(a)(iii), 4.3(f), 4.3(g), 4.14, 8.1, 8.2, 8.3, 8.4, 8.5,
8.8, 8.9(a)(iv), 8.9(a)(v), the portion of Section 8.9(a) under the heading "Cap
on Sellers' Indemnification Obligations," 8.9(c), 8.9(e), 8.9(f), 8.9(g),
8.9(h), this Section 8.9(i), 8.11, 8.12 and 8.13, and Article V of this
Agreement shall survive the execution and delivery of this Agreement, any
examination by or on behalf of the parties hereto, the completion of the
transactions contemplated herein and indefinitely thereafter, and shall be
deemed to be "Seller Surviving Covenants" for purposes of this Agreement. In
addition, for purposes of this Agreement, the following covenants and agreements
made by Seller shall be deemed to be "Seller Surviving Covenants" and shall
survive the execution and delivery of this Agreement, any examination by or on
behalf of the parties hereto, the completion of the transactions contemplated
herein and indefinitely thereafter, except to the extent described below:
(i) the covenants and agreements made by Sellers and set forth
in Section 1.4, except with respect to the Environmental Covenants
which survive in accordance with the terms set forth in Sections 8.9(a)
and (f)(i) (each to the extent it relates to Environmental Covenants);
(ii) the covenants and agreements made by Sellers and set
forth in Section 4.6, but only to the extent that they relate to
actions or failures to act that occur after the Expiration Date;
provided, however, that it is understood and agreed by Purchaser and
Sellers that any claim for indemnification for Losses by any Purchaser
Indemnitee pursuant to Section 8.9 with respect to breaches of Section
4.6 with respect to actions or failures to act by Sellers that occur
prior to the Expiration Date must be asserted prior to the Expiration
Date;
(iii) the covenants and agreements made by Seller and set
forth in Section 4.9; provided, however, that it is understood and
agreed by Purchaser and Sellers that no claim for indemnification for
Losses by any Purchaser Indemnitee pursuant to Section 8.9 with respect
to breaches of Section 4.9 may be asserted more than 45 days after the
date that Seller delivers to Purchaser the notice
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contemplated by Section 4.9 (the "Seller Post-Delivery Date"), whether
or not Purchaser elects to obtain some or all of the records subject to
such notice; and provided further, that it is understood and agreed by
Purchaser and Sellers that any claim for indemnification for Losses by
any Purchaser Indemnitee pursuant to Section 8.9 with respect to
breaches of Section 4.9 with respect to actions or failures to act by
Sellers that occur prior to the Seller Post-Delivery Date must be
asserted prior to the Seller Post-Delivery Date;
(iv) the covenants and agreements made by Seller and set forth
in Section 4.10, but only to the extent that they relate to actions or
failures to act that occur after the Expiration Date; provided,
however, that it is understood and agreed by Purchaser and Sellers that
no claim for indemnification for Losses by any Purchaser Indemnitee
pursuant to Section 8.9 with respect to breaches of Section 4.10 may be
asserted more than 25 months after the Closing Date; and provided,
further, that it is understood and agreed by Purchaser and Sellers that
any claim for indemnification for Losses by any Purchaser Indemnitee
pursuant to Section 8.9 with respect to breaches of Section 4.10 with
respect to actions or failures to act by Seller that occur prior to the
Expiration Date must be asserted prior to the Expiration Date; and
(v) the covenants and agreements made by Sellers and set forth
in Section 8.9(a)(iii), except with respect to the Environmental
Covenants which survive in accordance with the terms set forth in
Sections 8.9(a) and (f)(i) (each to the extent it relates to
Environmental Covenants).
(j) Purchaser Surviving Covenants.
(A) The covenants and agreements made by Purchaser and set
forth in Sections 1.3, 4.3(a)(ii), 4.3(a)(iii), 4.3(b), 4.3(d), 4.3(e), 4.3(f),
4.3(g), 4.3(h), 4.4, 4.18, 8.1, 8.2, 8.3, 8.4, 8.5, 8.8, the portion of Section
8.9(a) under the heading "Cap on Sellers' Indemnification Obligations",
8.9(b)(iii), 8.9(b)(iv), 8.9(c), 8.9(e), 8.9(f), 8.9(g), 8.9(h), this 8.9(j),
8.11 and 8.13, and Article V of this Agreement shall survive the execution and
delivery of this Agreement, any examination by or on behalf of the parties
hereto, the completion of the transactions contemplated herein and indefinitely
thereafter, and shall be deemed to be "Purchaser Surviving Covenants" for
purposes of this Agreement. In addition, for purposes of this Agreement, the
following covenants and agreements made by Purchaser shall be deemed to be
"Purchaser Surviving Covenants" and shall survive the execution and delivery of
this Agreement, any examination by or on behalf of the parties hereto, the
completion of the transactions contemplated herein and indefinitely thereafter,
except to the extent described below:
(i) the covenants and agreements made by Purchaser and set
forth in Section 4.6, but only to the extent that they relate to
actions or failures to act that occur after the Expiration Date;
provided, that it is understood and agreed by Purchaser and Sellers
that any claim for indemnification for Losses by any Seller Indemnitee
pursuant to Section 8.9 with respect to breaches of Section 4.6 with
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respect to actions or failures to act by Purchaser that occur prior to
the Expiration Date must be asserted prior to the Expiration Date;
(ii) the covenants and agreements made by Purchaser and set
forth in Section 4.9; provided, however, that it is understood and
agreed by Purchaser and Sellers that no claim for indemnification for
Losses by any Seller Indemnitee pursuant to Section 8.9 with respect to
breaches of Section 4.9 may be asserted more than 45 days after the
date that Purchaser delivers to Seller the notice contemplated by
Section 4.9 (the "Purchaser Post-Delivery Date"), whether or not Seller
elects to obtain some or all of the records subject to such notice; and
provided further, that it is understood and agreed by Purchaser and
Sellers that any claim for indemnification for Losses by any Seller
Indemnitee pursuant to Section 8.9 with respect to breaches of Section
4.9 with respect to actions or failures to act by Purchaser that occur
prior to the Purchaser Post-Delivery Date must be asserted prior to the
Purchaser Post-Delivery Date;
(iii) the covenants and agreements made by Purchaser and set
forth in Section 4.10, but only to the extent that they relate to
actions or failures to act that occur after the Expiration Date;
provided, however, that it is understood and agreed by Purchaser and
Sellers that no claim for indemnification for Losses by any Seller
Indemnitee pursuant to Section 8.9 with respect to breaches of Section
4.10 may be asserted more than 19 months after the Closing Date; and
provided, further, that it is understood and agreed by Purchaser and
Sellers that any claim for indemnification for Losses by any Seller
Indemnitee pursuant to Section 8.9 with respect to breaches of Section
4.10 with respect to actions or failures to act by Purchaser that occur
prior to the Expiration Date must be asserted prior to the Expiration
Date; and
(iv) the covenants and agreements made by Purchaser and set
forth in Section 4.14, but only to the extent that they relate to
actions or failures to act that occur after the Expiration Date;
provided, however, that it is understood and agreed by Purchaser and
Sellers that no claim for indemnification for Losses by any Seller
Indemnitee pursuant to Section 8.9 with respect to breaches of Section
4.14 may be asserted more than 19 months after the Closing Date; and
provided, further, that it is understood and agreed by Purchaser and
Sellers that any claim for indemnification for Losses by any Seller
Indemnitee pursuant to Section 8.9 with respect to breaches of Section
4.14 with respect to actions or failures to act by Purchaser that occur
prior to the Expiration Date must be asserted prior to the Expiration
Date.
Section 8.10. Counterparts. This Agreement may be executed by the
parties hereto in one or more separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
shall together constitute one and the same. Each counterpart may consist of a
number of copies hereof each signed by less than all, but together signed by
all, of the parties hereto.
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Section 8.11. Certain Definitions. As used in this Agreement:
(a) the term "Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under common
control with, such Person at any time during the period for which the
determination of affiliation is being made;
(b) the term "Applicable Law" means any domestic or foreign federal,
state or local statute, law (including common law), ordinance, rule,
administrative interpretation, regulation or Order applicable to the parties
hereto;
(c) the term "Institutional and Food Service Industry" means schools,
hospitals, restaurants, delis and other formats, either free-standing or
contained within a Retail Industry outlet, where food is purchased in a form
which does not require further preparation, for on-premises serving and
consumption or "takeout" consumption in transit or at home, as well as the
wholesalers and distributors who sell to the above entities;
(d) the term "Lien" means any mortgage, pledge, hypothecation, claim,
security interest, encumbrance, lease, sublease, license, occupancy agreement,
adverse claim or interest, easement, covenant, encroachment, title defect, title
retention agreement, voting trust agreement, equity, option, lien, right of
first refusal, charge or other restrictions or limitations of any nature
whatsoever, including but not limited to such as may arise under any Contracts;
(e) the term "Person" means an individual, a corporation, a limited
liability company, a partnership, an association, a trust or other entity or
organization;
(f) the term "Retail Industry" means stores and other outlets primarily
engaged in retail sales of food products to consumers for off-premises
preparation and consumption; and
(g) the term "Subsidiary" means a Person as to which a designated
Person owns directly or indirectly more than 50% of the voting equity.
Section 8.12. Sellers' Obligations. Sellers agree that their
obligations hereunder shall be joint and several.
Section 8.13. Interpretation.
(a) The heading references herein and the table of contents hereto are
inserted for convenience of reference only, do not constitute a part of this
Agreement and shall in no way be construed to define, explain, modify, amplify,
or add to the interpretation, construction or meaning of any provision of, or
scope or intent of, this Agreement nor in any way be deemed to limit or affect
any of the provisions hereof. All references to "Section," "Sections," "Article"
or "Articles" refer to the corresponding Section, Sections, Article or Articles
of this Agreement unless specifically noted otherwise.
(b) 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
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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.
(c) Notwithstanding anything to the contrary contained in this
Agreement, the Seller Disclosure Schedule or the Purchaser Disclosure Schedule,
any information disclosed in one section of the Seller Disclosure Schedule or
the Purchaser Disclosure Schedule, as the case may be, shall be deemed to be
disclosed in all sections of the Seller Disclosure Schedule or the Purchaser
Disclosure Schedule, as the case may be, to which it would reasonably be deemed
to be pertinent. Certain information set forth in the Seller Disclosure Schedule
or the Purchaser Disclosure Schedule, as the case may be, is included solely for
informational purposes and may not be required to be disclosed pursuant to this
Agreement, and the disclosure of any information shall not be deemed to
constitute an acknowledgment that such information is required to be disclosed
in connection with the representations and warranties made by Seller or
Purchaser, as the case may be, in this Agreement or that it is material, nor
shall such information be deemed to establish a standard of materiality.
(d) The words "hereof," "herein," "hereto" and "hereunder" and words of
similar import, when used in this Agreement, shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.
(e) The terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.
(f) The terms "dollars" and "$" shall mean United States dollars,
unless otherwise indicated.
(g) The term "control" shall mean, as applied to any Person, the
possession directly or indirectly of the power to direct or cause the direction
of the management of such Person through the ownership of voting securities or
otherwise and the terms "controlling" and "controlled" have the correlative
meanings.
(h) Whenever the words "include," "includes," or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation" unless the context requires otherwise.
(i) The term "each Seller" shall mean each of Seller, VFB and each
other Subsidiary of Seller transferring any Acquired Assets to Purchaser
hereunder, and the term "any Seller" shall mean any of Seller, VFB or any other
Subsidiary of Seller transferring any Acquired Assets to Purchaser hereunder.
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IN WITNESS WHEREOF, the parties have executed or caused this Agreement
to be executed as of the date first written above.
VLASIC FOODS INTERNATIONAL INC.
By: ________________________________
Name:
Title:
VF BRANDS, INC.
By: ________________________________
Name:
Title:
X.X. XXXXX COMPANY
By: ________________________________
Name:
Title:
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TABLE OF CONTENTS
Page
ARTICLE I
SALE OF ASSETS
Section 1.1. Acquired Assets...................................................2
Section 1.2. Retained Assets...................................................4
Section 1.3. Assumed Liabilities...............................................5
Section 1.4. Retained Liabilities..............................................6
Section 1.5. Transfer of Assets and Assumption of Assumed Liabilities..........6
Section 1.6. Purchase Price....................................................7
Section 1.7. Working Capital Adjustment........................................7
Section 1.8. Time and Place of Closing........................................10
Section 1.9. Deliveries by Seller.............................................11
Section 1.10. Deliveries by Purchaser.........................................11
Section 1.11. Post-Closing Arrangements.......................................12
Section 1.12. Escrow Agreement................................................12
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Section 2.1. Corporate Existence and Power....................................13
Section 2.2. Authority of Seller; Binding Effect..............................13
Section 2.3. Governmental Authorization.......................................14
Section 2.4. Non-Contravention................................................15
Section 2.5. Financial Statements.............................................15
Section 2.6. Absence of Undisclosed Liabilities...............................16
Section 2.7. Absence of Certain Changes.......................................16
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Section 2.8. Contracts........................................................16
Section 2.9. Litigation.......................................................18
Section 2.10. Compliance with Applicable Laws.................................19
Section 2.11. Environmental Compliance........................................19
Section 2.12. Real Property; Title to Acquired Assets.........................21
Section 2.13. Intellectual Property...........................................23
Section 2.14. Employee Benefit Plans; ERISA...................................24
Section 2.15. Labor Relations and Employment..................................25
Section 2.16. Taxes...........................................................26
Section 2.17. Brokerage and Financial Advisers................................26
Section 2.18. Customers; Suppliers............................................26
Section 2.19. Inventory.......................................................27
Section 2.20. Insurance.......................................................27
Section 2.21. Receivables.....................................................27
Section 2.22. Trade Spending..................................................28
Section 2.23. Information Technology..........................................28
Section 2.24. Assets Necessary to the Business................................29
Section 2.25. No Other Representations........................................29
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 3.1. Corporate Existence and Power....................................29
Section 3.2. Authority........................................................29
Section 3.3. Governmental Authorization.......................................30
Section 3.4. Non-Contravention................................................30
Section 3.5. Compliance with Applicable Laws..................................30
Section 3.6. Litigation.......................................................31
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Section 3.7. Brokerage and Financial Advisers.................................31
Section 3.8. Availability of Funds............................................31
Section 3.9. No Other Representations.........................................31
ARTICLE IV
COVENANTS OF THE PARTIES
Section 4.1. Conduct of Business..............................................31
Section 4.2. Reasonable Best Efforts..........................................33
Section 4.3. Employee Matters.................................................34
Section 4.4. Seller's Trademarks..............................................38
Section 4.5. Further Assurances...............................................38
Section 4.6. Post-Closing Cooperation.........................................38
Section 4.7. Announcement.....................................................39
Section 4.8. Access to Information............................................39
Section 4.9. Maintenance of Books and Records.................................40
Section 4.10. Non-Solicitation of Employees...................................41
Section 4.11. Transfers Not Effected as of Closing............................42
Section 4.12. Bulk Sales Laws.................................................42
Section 4.13. Collateral Agreements...........................................42
Section 4.14. Trademark Matters...............................................42
Section 4.15. Submission for Court Approval...................................44
Section 4.16. Bidding Procedures..............................................44
Section 4.17. Accounts Receivable.............................................47
Section 4.18. Environmental Matters...........................................48
Section 4.19. Trade Strategy and Consumer Strategy............................49
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ARTICLE V
CERTAIN INCOME TAX MATTERS
Section 5.1. Tax Matters......................................................49
ARTICLE VI
CONDITIONS TO CLOSING
Section 6.1. Conditions to the Obligations of Purchaser and Sellers...........51
Section 6.2. Conditions to the Obligations of Purchaser.......................52
Section 6.3. Conditions to the Obligations of Sellers.........................54
ARTICLE VII
TERMINATION
Section 7.1. Termination......................................................55
Section 7.2. Effect of Termination............................................57
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Notices..........................................................57
Section 8.2. Amendment; Waiver; Invalidity....................................57
Section 8.3. Assignment; Binding Effect.......................................59
Section 8.4. Entire Agreement; Disclosure Schedules...........................59
Section 8.5. No Third Party Beneficiaries.....................................59
Section 8.6. Fees and Expenses................................................59
Section 8.7. Invalid Provisions...............................................59
Section 8.8. Governing Law....................................................59
Section 8.9. Indemnification..................................................60
Section 8.10. Counterparts....................................................68
Section 8.11. Certain Definitions.............................................69
Section 8.12. Sellers' Obligations............................................69
Section 8.13. Interpretation..................................................69
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INDEX OF DEFINED TERMS
Page
Accounts Receivable............................................................3
ACM...........................................................................21
Acquired Assets............................................................2, 21
ACV...........................................................................55
Additional Employees..........................................................36
Adjusted Purchase Price........................................................7
Adjustment Amount.............................................................49
Adjustment Date...............................................................49
Administrative Agent..........................................................48
Affected Employees............................................................36
Affiliate.....................................................................71
Agreement......................................................................1
Alternative Transaction.......................................................48
Applicable Law................................................................71
Assumed Liabilities............................................................5
Assumption Agreement...........................................................7
Auction.......................................................................48
Auction Transaction...........................................................48
Auditor........................................................................9
Bankruptcy Case................................................................1
Bankruptcy Code................................................................1
Bankruptcy Court...............................................................1
Bid...........................................................................47
Bid Deadline..................................................................47
Bidding Procedures............................................................46
Bidding Procedures Order......................................................46
Xxxx of Sale...................................................................6
Break-Up Fee..................................................................49
Business.......................................................................1
Business Day..................................................................11
Business Material Adverse Effect..............................................14
Closing.......................................................................11
Closing Balance Sheet..........................................................7
Closing Date..................................................................11
Closing Net Working Capital Amount.............................................8
Code..........................................................................26
Collateral Agreements.........................................................44
Confidentiality Agreement.....................................................59
Consumer Events Calendar......................................................29
Contractor....................................................................41
Contracts......................................................................3
Deeds..........................................................................7
Definitive Sale Documentation.................................................47
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Determination Date.............................................................9
dollars.......................................................................73
Environmental Covenants.......................................................64
Environmental Laws............................................................21
ERISA.........................................................................25
ERISA Affiliate...............................................................25
Escrow Account................................................................13
Escrow Agent..................................................................12
Escrow Agreement..............................................................13
Escrow Amount.................................................................13
Estimated Net Working Capital..................................................7
Excluded Information..........................................................29
Expense Reimbursement.........................................................49
Expiration Date...............................................................13
Final Accounts Receivable.....................................................49
Final Closing Balance Sheet....................................................9
Final Net Working Capital Amount...............................................9
Financial Statements..........................................................16
First Distribution............................................................13
GAAP...........................................................................8
Governmental Authority........................................................15
Hazardous Substances..........................................................21
Headquarters Employee.........................................................43
HSR Act.......................................................................15
Indemnified Party.............................................................64
Indemnifying Party............................................................64
Independent Database..........................................................42
Institutional and Food Service Industry.......................................71
Intellectual Property..........................................................3
Intellectual Property Instruments..............................................7
Interest Rate..................................................................9
Inventory......................................................................2
IP License Agreements.........................................................24
IRI Delivery..................................................................58
IRS...........................................................................25
Knowledge of Seller...........................................................19
Leased Real Property..........................................................22
Licensees.....................................................................44
Lien..........................................................................72
Losses........................................................................63
Material Contracts............................................................17
Net Working Capital............................................................8
Order.........................................................................15
Owned Real Property...........................................................22
Patents........................................................................2
Permit........................................................................15
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Permitted Liens...............................................................21
Person........................................................................72
Petition.......................................................................1
Pickles Business...............................................................1
Plan..........................................................................25
Plant Employees...............................................................36
Principal Amount...............................................................9
Promotion and Price Data......................................................41
Purchase Price.................................................................7
Purchaser......................................................................1
Purchaser Certificate.........................................................64
Purchaser Disclosure Schedule.................................................30
Purchaser Indemnitees.........................................................62
Purchaser Post-Delivery Date..................................................70
Purchaser Receivables Notice..................................................49
Purchaser Representatives.....................................................36
Purchaser Surviving Covenants.................................................70
Purchaser's Accountant.........................................................8
Purchaser's Defined Benefit Plan..............................................38
Qualified Bid.................................................................47
Qualified Bidder..............................................................47
Real Property.................................................................22
Real Property Laws............................................................23
Receivables Notice............................................................49
Reference Balance Sheet.......................................................16
Regulatory Authorizations.....................................................35
Retail Industry...............................................................72
Retained Assets................................................................4
Retained Liabilities...........................................................6
Sale..........................................................................46
Sale Hearing..................................................................46
Sale Order....................................................................14
Sauce Business.................................................................1
Seller.........................................................................1
Seller Certificate............................................................63
Seller Disclosure Schedule....................................................13
Seller Indemnitees............................................................64
Seller Post-Delivery Date.....................................................69
Seller Surviving Covenants....................................................69
Sellers........................................................................1
Seller's Accountant............................................................7
Seller's Defined Benefit Plans................................................38
Seller's Defined Contribution Plans...........................................37
Seller's Trademarks...........................................................40
Subsequent Monthly Financial Statements.......................................41
Subsidiary....................................................................72
iii
80
Tax...........................................................................27
Tax Return....................................................................27
Taxes.........................................................................27
Terminating Representations...................................................66
Termination Date..............................................................57
Title Company.................................................................55
Trade Events Calendar.........................................................29
Trademarks.....................................................................2
Transfer Taxes................................................................52
Transferred Employees.........................................................37
Transition Services Agreement.................................................44
Transitional License..........................................................45
Transitional Sublicense.......................................................45
Vested Transferred Employees..................................................39
VFB............................................................................1
Vlasic Marks..................................................................44
WARN..........................................................................39
WARN Obligations..............................................................39
Willful Breach................................................................59
Working Capital Shortfall......................................................9
iv
