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