Exhibit 10.12
STOCK PURCHASE AGREEMENT
AMONG
PF MANAGEMENT, INC.,
THE PF MANAGEMENT, INC. SHAREHOLDERS,
XXXXX X. XXXXX (AS SHAREHOLDERS' AGENT)
AND
PIERRE HOLDING CORP. (BUYER)
MAY 11, 2004
STOCK PURCHASE AGREEMENT
TABLE OF CONTENTS
1. PURCHASE AND SALE OF SHARES........................................... 1
2. PURCHASE PRICE - PAYMENT.............................................. 1
2.1 Purchase Price.................................................. 1
2.2 Preliminary Purchase Price...................................... 2
2.3 Certain Closing Deliveries...................................... 2
2.4 Payment of Purchase Price Adjustment............................ 2
2.5 Determination of Final Purchase Price........................... 3
3. JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF THE
SHAREHOLDERS.......................................................... 5
3.1 Shareholder Authority, Validity, Ownership...................... 5
3.2 PFMI Organization, Ownership, Liabilities....................... 6
3.3 Company Organization, Qualification, Subsidiaries,
Investments, Etc................................................ 7
3.4 Capital Stock................................................... 8
3.5 Non-Contravention............................................... 9
3.6 Reports and Financial Statements; No Undisclosed
Liabilities..................................................... 9
3.7 Absence of Material Differences................................. 11
3.8 Employees....................................................... 12
3.9 Employee Benefit Plans.......................................... 13
3.10 Assets and Facilities........................................... 15
3.11 Licenses and Permits............................................ 15
3.12 Litigation...................................................... 15
3.13 Compliance with Laws............................................ 16
3.14 Environmental................................................... 16
3.15 Intellectual Property........................................... 17
3.16 Title to Real and Personal Property; Leasehold Interests........ 18
3.17 Material Contracts.............................................. 19
3.18 Insurance....................................................... 20
3.19 Product Liability............................................... 21
3.20 Affiliate Transactions.......................................... 21
3.21 Customers....................................................... 21
3.22 Suppliers....................................................... 22
3.23 Bank Accounts................................................... 22
3.24 Brokerage....................................................... 22
3.25 Limitation of Representations and Warranties.................... 22
4. REPRESENTATIONS AND WARRANTIES OF BUYER............................... 22
4.1 Organization and Power.......................................... 22
4.2 Authority....................................................... 23
4.3 No Brokers or Finders........................................... 23
4.4 Compliance...................................................... 23
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4.5 Litigation...................................................... 23
4.6 Approvals....................................................... 23
4.7 Financing....................................................... 24
4.8 Investment Intent............................................... 24
4.9 No Knowledge of Breach.......................................... 24
4.10 No Reliance..................................................... 24
4.11 Access to Information........................................... 25
5. COVENANTS............................................................. 25
5.1 HSR Act Filings................................................. 25
5.2 Access to Information and Records............................... 25
5.3 Conduct of Business Pending the Closing......................... 25
5.4 Negative Covenants.............................................. 27
5.5 Consents........................................................ 28
5.6 Satisfaction of Conditions Precedent............................ 28
5.7 Employees....................................................... 29
5.8 Books, Records and Information.................................. 29
5.9 Obligation to Update............................................ 30
5.10 Indemnification and Insurance................................... 31
5.11 Other Agreement................................................. 31
5.12 Tax Matters..................................................... 31
5.13 Exclusivity..................................................... 31
5.14 Non-Competition................................................. 32
5.15 Non-Solicitation................................................ 33
5.16 Confidentiality................................................. 33
5.17 Offering Materials.............................................. 34
6. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS........................... 34
6.1 Representations and Warranties True on the Closing Date......... 34
6.2 Compliance With Agreement....................................... 35
6.3 No Litigation................................................... 35
6.4 Third Party Consents and Approvals.............................. 35
6.5 Governmental Approvals.......................................... 35
6.6 Material Adverse Effect......................................... 35
6.7 Certain Payoffs................................................. 36
6.8 Opinion of Counsel.............................................. 36
6.9 Affiliated Transactions; Shareholders Agreement................. 36
6.10 FIRPTA.......................................................... 36
6.11 Financing....................................................... 36
6.12 Audited Financial Statements.................................... 36
6.13 280G Payments................................................... 37
6.14 Tender Offer. .................................................. 37
6.15 Closing Deliveries.............................................. 37
7. CONDITIONS PRECEDENT TO THE SHAREHOLDERS' OBLIGATIONS................. 37
7.1 Representations and Warranties True on the Closing Date......... 37
7.2 Compliance With Agreement....................................... 38
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7.3 No Litigation................................................... 38
7.4 Governmental Consents........................................... 38
7.5 Closing Deliveries.............................................. 38
8. INDEMNIFICATION....................................................... 38
8.1 By Shareholders................................................. 38
8.2 By Buyer........................................................ 39
8.3 Manner of Payment............................................... 40
8.4 Indemnification of Third-Party Claims........................... 40
8.5 Tax Effect...................................................... 41
8.6 Insurance Effect................................................ 42
8.7 Limitations on Indemnification.................................. 42
8.8 Exclusive Remedy................................................ 44
8.9 Limitations on Claims by Shareholders........................... 44
9. CLOSING............................................................... 45
9.1 Documents to be Delivered by Company and Shareholder............ 45
9.2 Documents to be Delivered by Buyer.............................. 46
10. TERMINATION........................................................... 46
10.1 Termination Without Breach...................................... 46
10.2 Termination for Breach.......................................... 47
10.3 Effect of Termination........................................... 47
11. MISCELLANEOUS......................................................... 48
11.1 Further Assurance............................................... 48
11.2 Disclosures and Announcements................................... 48
11.3 Assignment; Parties in Interest................................. 48
11.4 Law Governing Agreement; Forum.................................. 48
11.5 WAIVER OF JURY TRIAL............................................ 49
11.6 Amendment and Modification...................................... 49
11.7 Notice.......................................................... 49
11.8 Shareholders' Agent............................................. 50
11.9 Expenses........................................................ 51
11.10 Specific Performance............................................ 52
11.11 Entire Agreement................................................ 52
11.12 Counterparts.................................................... 52
11.13 Headings........................................................ 52
11.14 Glossary of Terms............................................... 52
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EXHIBITS
EXHIBIT A Voting Trust Agreement
EXHIBIT B Escrow Agreement
EXHIBIT C Earn-Out Warrant
EXHIBIT D Debt Financing Commitment Letter
EXHIBIT E [Intentionally Omitted]
EXHIBIT F Equity Commitment Letter
EXHIBIT G Opinion of Xxxxx & Lardner LLP
EXHIBIT H Tax Sharing Agreement
EXHIBIT I Confidentiality Agreement
EXHIBIT J Shareholders Agent Agreement
EXHIBIT K Asset Distribution Letter Agreement
SCHEDULES
Schedule 2.1 Average Working Capital
Schedule 3.1(c) Ownership
Schedule 3.1(e) Brokerage
Schedule 3.3(e) Subsidiaries
Schedule 3.5 Non-Contravention
Schedule 3.6(e) Company Liabilities
Schedule 3.6(f) Liabilities
Schedule 3.7 Absence of Material Differences
Schedule 3.8 Employees
Schedule 3.9 Employee Benefit Plans
Schedule 3.9(g) ERISA Non-Contravention
Schedule 3.11(a) Licenses and Permits - No Defaults
Schedule 3.11(b) Licenses and Permits
Schedule 3.12 Litigation
Schedule 3.13(a) Compliance with Laws - Exceptions
Schedule 3.13(b) Compliance with Laws - Exceptions
Schedule 3.14(a) Environmental
Schedule 3.14(b) Environmental
Schedule 3.14(c) Environmental
Schedule 3.14(d) Environmental
Schedule 3.14(e) Environmental
Schedule 3.14(f) Environmental
Schedule 3.15 Intellectual Property
Schedule 3.16(a) Owned Real Property
Schedule 3.16(b) Leased Real Property
Schedule 3.17 Material Contracts
Schedule 3.18 Insurance
Schedule 3.19 Product Liability
Schedule 3.20 Affiliate Transactions
Schedule 3.21 Customers
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Schedule 3.22 Suppliers
Schedule 3.23 Bank Accounts
Schedule 3.24 Brokerage
Schedule 5.4(j) Distribution Transactions
Schedule 6.4 Third Party Approvals
Schedule 9.1(e) Resignations
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement") dated May 11, 2004 among
Pierre Holding Corp., a Delaware corporation ("Buyer"), Xxxxx X. Xxxxxxxxxx,
Xx., Xxxxx X. Xxxxx, Xxxxx X. Xxxxxxxxx and Xxxxx X. Xxxxx, as Trustee under
that certain Voting Trust Agreement for the shareholder participants thereof
identified on Exhibit A hereto (each a "Shareholder" and collectively the
"Shareholders"), PF Management, Inc., a North Carolina Corporation ("PFMI"), and
Xxxxx X. Xxxxx, as designated agent on behalf of the Shareholders (the
"Shareholders' Agent").
RECITALS
A. The Shareholders collectively own all of the issued and
outstanding shares of capital stock (the "Shares") of PFMI.
B. PFMI owns all of the issued and outstanding capital stock of
Pierre Foods, Inc., a North Carolina corporation (the "Company").
C. Buyer desires to purchase the Shares from the Shareholders, and
the Shareholders desire to sell the Shares to Buyer, upon the terms and
conditions herein set forth.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions hereinafter
set forth, and intending to be legally bound hereby, the parties hereto agree as
follows.
1. PURCHASE AND SALE OF SHARES
Subject to the terms and conditions of this Agreement, on the
Closing Date (an index of the defined terms used herein being set forth in
Section 11.14), the Shareholders shall sell to Buyer, and Buyer shall purchase
from the Shareholders, all of the Shares, free and clear of all Liens.
2. PURCHASE PRICE - PAYMENT
2.1 Purchase Price.
The purchase price for the Shares (the "Purchase Price") shall be an
amount equal to (i) Four Hundred Two Million Dollars ($402,000,000) (the "Cash
Portion"); plus (ii) the amount, if any, by which the Closing Working Capital as
shown on the Closing Balance Sheet is greater than the Average Working Capital
Amount; minus (iii) the Closing Indebtedness Amount; minus (iv) the Executive
Bonus Payments; minus (v) the Xxxxx Fee; minus (vi) Shareholder Transaction
Expenses; minus (vii) the Non-Compete Payments; minus (viii) the Xxxxxxxx Fee;
minus (ix) the amount, if any, by which the Closing Working Capital as shown on
the Closing Balance Sheet is less than the Average Working Capital Amount;
provided that, if at the end of any fiscal quarter during the fiscal year ending
March 5, 2005, the EBITDA of the Company for the trailing four fiscal quarters
then ended is $56,000,000 or greater, the Cash Portion shall be increased by
$13,000,000 (the "Cash Increase"), to $415,000,000, and Buyer
shall promptly pay such amount by wire transfer of immediately available funds
to an account designated in writing to Buyer by Shareholders' Agent. The Cash
Increase shall be allocated 10% as an increase in the Executive Bonus Payments
(subject to required withholding taxes) and 90% as an increase in the Purchase
Price. For purposes of the proviso to this Section 2.1, if the Company or any
Subsidiary acquires any Person after the Closing Date, such other Person and the
results of its operations shall be disregarded and not combined with the results
of operations of the Company and any Subsidiary in calculating EBITDA hereunder.
2.2 Preliminary Purchase Price.
For purposes of this Agreement, the "Preliminary Purchase Price"
shall be equal to the Purchase Price as calculated in accordance with Section
2.1 above and as estimated by the Shareholders' Agent on the basis of a
projected consolidated balance sheet for the Company and its Subsidiaries as of
the close of business on the Closing Date (the "Estimated Closing Balance
Sheet"), prepared in good faith by the Shareholders' Agent and delivered to
Buyer not less than five (5) days prior to the Closing, which Estimated Closing
Balance Sheet shall be reasonably acceptable to Buyer. The Preliminary Purchase
Price shall not include any amount which may become payable by Buyer pursuant to
the proviso in Section 2.1 above (unless such amount is achieved during the
first quarter of the fiscal year ending March 5, 2005).
2.3 Certain Closing Deliveries.
Subject to the conditions set forth in this Agreement, at the
Closing, Buyer shall make the following payments:
2.3.(a) on behalf of the Shareholders and Executives, Buyer shall
deposit 5% of the sum of the Preliminary Purchase Price and the amount set
forth in item (iv) in Section 2.1 as estimated under Section 2.2 (the
"Escrowed Amount") with the Escrow Agent to be held in an escrow account
(the "Escrow Account") and released by the Escrow Agent in accordance with
the terms and conditions of this Agreement and of the Escrow Agreement
substantially in the form attached hereto as Exhibit B (the "Escrow
Agreement") (subject to such administrative changes as may be required to
be made by the Escrow Agent);
2.3.(b) on behalf of PFMI and the Company, Buyer shall pay the
amounts owed by PFMI, the Company and its Subsidiaries pursuant to the
Payoff Letters delivered to Buyer pursuant to Section 6.7 as set forth in
such Payoff Letters, which amounts shall represent the Closing
Indebtedness Amount and the Shareholder Transaction Expenses;
2.3.(c) on behalf of the Company, Buyer shall pay the Xxxxx Fee;
2.3.(d) on behalf of the Company, Buyer shall pay the Non-Compete
Payments;
2.3.(e) on behalf of the Company, Buyer shall pay to Shareholders'
Agent on behalf of each Executive such Executive's Executive Bonus
Payment, less (i) the amount of any required withholding taxes subject to
such payments, (ii) such Executive's Rollover Amount (if any), and (iii)
such Executive's pro rata share of 10% of the
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Escrowed Amount, to not more than four accounts which have been designated
by the Shareholders' Agent not less than (2) business days prior to the
Closing Date; and
2.3.(f) Buyer shall pay an amount equal to the Preliminary Purchase
Price less 90% of the Escrowed Amount to an account which has been
designated by the Shareholders' Agent not less than (2) business days
prior to the Closing Date.
2.4 Payment of Purchase Price Adjustment.
On or before the fifth business day following the final
determination of the Purchase Price in accordance with Section 2.5 below, either
(i) the Shareholders shall pay to Buyer the amount, if any, by which the
Preliminary Purchase Price exceeds the Purchase Price, together with simple
interest on the amount being paid from the Closing Date to the date of the
payment at a rate per annum equal to 5.0%; or (ii) Buyer shall pay to
Shareholders' Agent the amount, if any, by which the Purchase Price exceeds the
Preliminary Purchase Price, together with simple interest on the amount being
paid from the Closing Date to the date of payment at a rate per annum equal to
5.0% (either of which being a "Purchase Price Adjustment"). In addition, if the
Preliminary Purchase Price is greater than the Purchase Price, Buyer shall have
the right, but shall not be obligated, to obtain payment of the difference out
of the Escrow Account pursuant to the terms and conditions of this Agreement and
the Escrow Agreement.
2.4.(a) Method of Payment. All payments under Section 2.3 and this
Section 2.4 shall be made in U.S. Dollars by wire transfer of immediately
available funds to an account designated by the recipient not less than 48
hours prior to the time for payment specified herein.
2.4.(b) Shareholder Indemnification. The Shareholders jointly and
severally agree to indemnify, defend and hold harmless the Buyer
Indemnified Parties from any Losses (as defined in Section 8.1) arising in
connection with any claims by any Shareholder or Executive that such
Person did not receive such Person's Executive Bonus Payment or such
Person's allocable portion of the Purchase Price to which such Person was
entitled pursuant to this Agreement and the Escrow Agreement; provided
that Buyer has made the payments required under Section 2.3 and the
required payment of the Cash Increase, if any.
2.5 Determination of Final Purchase Price.
2.5.(a) Closing Working Capital. The "Closing Working Capital" shall
mean (i) the sum of all assets of the Company and its Subsidiaries on a
consolidated basis which would, in accordance with GAAP, be classified on
a consolidated balance sheet of the Company and its Subsidiaries as
current assets (excluding Cash), minus (ii) the sum of all liabilities of
the Company and its Subsidiaries on a consolidated basis which would, in
accordance with GAAP, be classified on a consolidated balance sheet of the
Company and its Subsidiaries as current liabilities (excluding accrued
Income Taxes, Income Tax refunds and any other Income Tax assets and the
Closing Indebtedness Amount), in each case determined as of the close of
business on the Closing Date. The Closing Working Capital shall be
determined in accordance with GAAP from the books and records of the
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Company and its Subsidiaries using the same accounting principles,
policies, practices and procedures theretofore followed by the Company in
the preparation of the Audited Financial Statements and in the calculation
of the Average Working Capital Amount as reflected on Schedule 2.1.
2.5.(b) Purchase Price Adjustment.
(i) Not later than 90 days after the Closing Date, Buyer shall
deliver to Shareholders' Agent (A) an unaudited consolidated balance
sheet of the Company and its Subsidiaries as of the close of
business on the Closing Date (the "Closing Balance Sheet"), and (B)
a statement setting forth in reasonable detail its calculation of
Closing Working Capital, the Closing Indebtedness Amount and the
Purchase Price and the other components thereof. The Closing Balance
Sheet shall be prepared in accordance with GAAP consistently applied
and shall include all accounting entries and adjustments required in
a year-end closing of the books as of the close of business on the
Closing Date. Buyer's calculation of Closing Working Capital, the
Closing Indebtedness Amount and the Purchase Price shall be based on
the Closing Balance Sheet.
(ii) The Closing Balance Sheet and Buyer's determination of
the Purchase Price shall become final and binding upon the parties
30 days after Shareholders' Agent's receipt thereof unless
Shareholders' Agent or a firm of independent accountants engaged by
Shareholders' Agent (the "Shareholders' Accountants") object prior
to such date (an "Objection"). Such an Objection shall be made in
writing to Buyer, shall set forth a specific description of the
basis of the Objection (including Shareholders' Agent's calculation
of the Purchase Price) and the items in dispute and shall only
include disagreements based upon mathematical errors or based upon
the Purchase Price not being calculated in accordance with Sections
2.1, 2.5.(a) and Schedule 2.1. Shareholders' Agent will be deemed to
accept any items not specifically disputed in the Objection.
(iii) In the event Buyer and Shareholders' Agent are unable to
resolve the Objection within thirty days thereafter, the Objection
shall be resolved by Pricewaterhouse Coopers LLP (the "Neutral
Accounting Firm"). Buyer shall promptly forward a copy of the
Closing Balance Sheet and calculation of the Purchase Price
delivered pursuant to Section 2.5.(b)(i), and Shareholders' Agent
shall promptly forward a copy of the Objection delivered pursuant to
Section 2.5.(b)(ii), to the Neutral Accounting Firm. The Neutral
Accounting Firm, acting as experts in accounting and not
arbitrators, shall determine on a basis consistent with the
requirements of this Section 2.5, and only with respect to the
specific accounting related differences properly submitted, the
Closing Working Capital, Closing Indebtedness Amount and the
Purchase Price. The Neutral Accounting Firm's determination will be
conclusive and binding on all parties. Determination by the Neutral
Accounting Firm shall be evidenced by a written report delivered to
the parties addressing the items in dispute. The Neutral Accounting
Firm shall be instructed to use reasonable efforts to perform its
services within thirty days of submission of the Objection to it
and, in any case, as soon as practicable after
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such submission. The fees and expenses for the services of the
Neutral Accounting Firm shall be paid by Buyer and Shareholders'
Agent as follows:
Shareholders' Agent shall pay a percentage of such fees and expenses
equal to A/(A+B), and Buyer shall pay a percentage of such fees and
expenses equal to B/(A+B), where A is equal to the absolute value of
the difference (in dollars) between the Purchase Price as finally
determined by the Neutral Accounting Firm and the Purchase Price
proposed by Shareholders' Agent as reflected in the Objection
prepared and delivered by Shareholders' Agent in accordance with
Section 2.5(b)(ii), and where B is equal to the absolute value of
the difference (in dollars) between the Purchase Price as finally
determined by the Neutral Accounting Firm and the Purchase Price as
reflected in the report prepared and delivered by Buyer in
accordance with Section 2.5(b)(i).
(iv) Buyer agrees to permit Shareholders' Agent, the
Shareholders' Accountants and their respective representatives,
during normal business hours, to have reasonable access to, and to
examine and make copies of, all books and records of Company,
including but not limited to the books, records, schedules, work
papers and audit programs of Buyer and Buyer's independent
accountants ("Buyer's Accountants"), related to the preparation of
the Closing Balance Sheet and Buyer's determination of the Purchase
Price and components thereof; provided that such information shall
remain subject to the confidentiality obligations set forth in
Section 5.16 herein.
3. JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
As a material inducement to Buyer to enter into this Agreement, each
of the Shareholders, jointly and severally, makes the following representations
and warranties to Buyer. "Knowledge", as used herein with respect to the
Shareholders means the actual knowledge or awareness of any of the Shareholders
or the actual knowledge or awareness after reasonable inquiry of any Executive
where "reasonable inquiry" means that such Executive has made inquiries
regarding the substance of the representations to Xxxx Xxxxx, Xxx Xxxxxx, Xxx
Xxxxxx, Xxxx Xxxxxx and Xxx Xxxxx.
3.1 Shareholder Authority, Validity, Ownership.
3.1.(a) Each Shareholder has full power, legal capacity, right and
authority to enter into, execute and deliver this Agreement, and the
Escrow Agreement, the Shareholders Agent Agreement, the Tax Sharing and
Indemnification Agreement and all other agreements identified herein and
delivered in connection herewith (collectively, the "Ancillary
Agreements") to which such Shareholder is a party, and to carry out the
transactions contemplated hereby and thereby and to perform his
obligations hereunder and thereunder.
3.1.(b) This Agreement and the Ancillary Agreements have been duly
and validly executed and delivered by the Shareholders and the
Shareholders' Agent and are legal,
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valid and binding obligations of each Shareholder and the Shareholders'
Agent, enforceable against each of them in accordance with their
respective terms, except as such may be limited by bankruptcy, insolvency,
reorganization, or other similar Laws affecting creditors' rights
generally, and by general equitable principles.
3.1.(c) Each Shareholder holds of record and owns beneficially the
Shares set forth opposite his name on Schedule 3.1(c) attached hereto. The
delivery to Buyer of such Shares at Closing pursuant to this Agreement
will transfer to Buyer good and valid title to such Shares, free and clear
of all liens, restrictions on transfer (other than any restrictions under
the Securities Act of 1933, as amended, and applicable state securities
laws), mortgages, security interests, pledges, charges, claims, equities,
reservations, options, warrants, rights, calls, commitments, adverse
claims or other encumbrances of any kind (collectively, "Liens"). No
Shareholder is a party to any option, warrant, right, contract, call, put
or other agreement or commitment providing for the disposition or
acquisition of any capital stock of PFMI (other than this Agreement).
Except for the Voting Trust Agreement, no Shareholder is a party to any
voting trust, proxy or other agreement or understanding with respect to
the voting of any capital stock of PFMI.
3.1.(d) Neither the execution and the delivery of this Agreement,
the Ancillary Agreements and the other documents contemplated hereby and
thereby to which the Shareholders and the Shareholders' Agent are a party,
nor the consummation of the transactions contemplated hereby and thereby,
shall (a) conflict with, result in a breach of any of the provisions of,
(b) constitute a default under, (c) result in the violation of, (d) give
any third party the right to terminate or to accelerate any obligation
under, (e) result in the creation of any Lien upon the Shares owned by
such Shareholder, or (f) require any authorization, consent, approval,
execution or other action by or notice to any court or other governmental
body, under the provisions of any indenture, mortgage, lease, loan
agreement or other contract, agreement or instrument to which any
Shareholder or the Shareholders' Agent is bound or affected, or any
statute, regulation, rule, Order or other restriction of any government,
governmental or administrative agency or court to which any Shareholder or
the Shareholders' Agent is subject. No notice to, filing with or
authorization, consent or approval of any government or governmental or
administrative agency by the Shareholders or the Shareholders' Agent is
necessary for the consummation of the transactions contemplated by this
Agreement, the Ancillary Agreements and the other documents contemplated
hereby to which the Shareholders and the Shareholders' Agent are a party,
except such filings and notices as may be required under the HSR Act.
3.1.(e) Except as set forth on Schedule 3.1(e), there are no claims
for brokerage commissions, finders' fees or similar compensation in
connection with the transactions contemplated by this Agreement based on
any arrangement or agreement made by or on behalf of any Shareholder.
3.1.(f) There are no actions, suits, proceedings or orders pending
or, to Shareholders' Knowledge, threatened against or affecting
Shareholders at law or in equity, or before or by any federal, state,
municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, which would
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adversely affect Shareholders' performance under this Agreement and the
Ancillary Agreements or the consummation of the transactions contemplated
hereby or thereby.
3.1.(g) Each Shareholder understands the term "accredited investor"
as used in Regulation D promulgated under the Securities Act of 1933 and
represents and warrants to Buyer that he or it is an "accredited investor"
as defined therein.
3.2 PFMI Organization, Ownership, Liabilities.
3.2.(a) PFMI is a corporation duly organized, validly existing and
in good standing under the Laws of the State of North Carolina and has the
requisite corporate power and authority to conduct its business as
conducted on the date hereof and as of the Closing Date. PFMI is duly
qualified to do business, and is in good standing, in each jurisdiction
where the character of the properties owned or leased by it, or the nature
of its activities, is such that qualification to do business in that
jurisdiction is required by law, except for jurisdictions in which the
failure to be so qualified has not had and is not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect.
3.2.(b) The authorized capital stock of PFMI consists of 100,000
shares of common stock, no par value (the "PFMI Common Stock"). Each share
of PFMI Common Stock is validly issued and outstanding. All such
outstanding shares of PFMI Common Stock are fully paid and nonassessable,
are not subject to, nor were they issued in violation of, any preemptive
rights or rights of first refusal, and are owned of record and
beneficially by the respective Shareholders as set forth on Schedule
3.1(c), free and clear of all Liens. The respective Shareholders have
owned all issued and outstanding shares of PFMI Common Stock since the
dates set forth on Schedule 3.1(c). No shares of PFMI Common Stock are
reserved for issuance, nor are there outstanding any options, warrants,
puts, calls, rights to subscribe, convertible securities or other rights
(including, without limitation, preemptive rights or stock appreciation
rights), agreements or commitments to issue, dispose of or acquire shares
of PFMI Common Stock (other than this Agreement). There are no outstanding
or authorized stock appreciation, phantom stock or similar rights with
respect to PFMI. Except for the Voting Trust Agreement and the
Shareholders Agreement, there are no voting trusts, proxies or any other
agreements or understandings with respect to the voting of the capital
stock of PFMI. PFMI is not subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of its
capital stock. PFMI has not violated any applicable federal or state
securities laws in connection with the offer, sale or issuance of any of
its capital stock; provided that the foregoing representation shall not
apply with respect to the offer and sale of the Shares contemplated by
this Agreement.
3.2.(c) PFMI owns all of the issued and outstanding capital stock of
the Company. PFMI has no assets other than the outstanding capital stock
of the Company.
3.3 Company Organization, Qualification, Subsidiaries, Investments,
Etc.
3.3.(a) Each of the Company and its Subsidiaries is duly organized
or formed, validly existing and in good standing under the Laws of the
State of North Carolina and
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has the requisite corporate or limited liability company power and
authority to carry on its respective businesses as now being conducted.
3.3.(b) Each of the Company and the Subsidiaries is duly qualified
to do business, and is in good standing, in each jurisdiction where the
character of the properties owned or leased by it, or the nature of its
activities, is such that qualification to do business in that jurisdiction
is required by law, except for jurisdictions in which the failure to be so
qualified has not had and is not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect.
3.3.(c) The Company has made available to Buyer true and accurate
copies of the charter and bylaws of the Company and PFMI and the
organizational documents of all of the Subsidiaries reflecting all
amendments made thereto at any time prior to the date of this Agreement.
3.3.(d) None of PFMI, the Company or any of the Subsidiaries is in
violation of any of the provisions of its charter, bylaws or other
organizational documents.
3.3.(e) Schedule 3.3(e) sets forth the identity, jurisdiction of
organization, foreign qualifications and outstanding equity capitalization
of each of the Subsidiaries.
3.3.(f) Except for the entities set forth on Schedule 3.3(e) (the
"Subsidiaries"), none of PFMI, the Company or any Subsidiary owns (of
record or beneficially) or holds any shares of stock or any other security
or interest in any other Person or any rights to acquire any such stock or
other security or interest. Each of the Company and PFMI owns (of record
and beneficially) and has valid title to all of the outstanding capital
stock of its respective Subsidiaries, free and clear of all Liens.
3.3.(g) No limited liability company interests or other equity
interest in any Subsidiary, any securities convertible into limited
liability company interests or other equity interests of any Subsidiary,
or any other rights to acquire limited liability company interests or
other equity interests of any Subsidiary is or may become required to be
issued, sold or transferred by reason of any option, warrant, put, call,
subscription or other agreement or right relating to the equity of the
Subsidiary. There is no contract, arrangement or understanding by which
any Subsidiary is bound to issue any of its limited liability company
interests or any other equity interest or any option, warrant or other
right relating thereto or by which the Company is or may be bound to sell
or transfer any part of the equity interest in any Subsidiary. There is no
contract, arrangement or understanding relating to the right of the
Company to vote, transfer or otherwise dispose of any of the equity
interest in any Subsidiary. All of the outstanding limited liability
company interests of each Subsidiary are duly authorized and validly
issued, were not issued in violation of any law or any charter or other
provision regarding pre-emptive, anti-dilution or similar rights of member
and is owned free and clear of all Liens. No Subsidiary is subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire
any of its limited liability company interests or any of its equity
interests.
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3.3.(h) The board of directors of PFMI has unanimously, on the terms
and conditions set forth herein, approved this Agreement and the
transactions contemplated hereby.
3.4 Capital Stock.
The authorized capital stock of the Company consists of 100,000
shares of common stock, no par value (the "Company Common Stock"). Each share of
the Company Common Stock is validly issued and outstanding. All such outstanding
shares of Company Common Stock are validly owned (beneficially and of record) by
PFMI, fully paid and nonassessable, free and clear of all Liens (other than
Liens securing Indebtedness, which Liens shall be discharged at or prior to
Closing) and are not subject to, nor were they issued in violation of, any
preemptive rights or rights of first refusal or similar rights. No shares of the
Company Common Stock are reserved for issuance, nor are there outstanding any
options, warrants, calls, puts, rights to subscribe, convertible securities or
other rights (including, without limitation, preemptive rights or stock
appreciation rights), agreements or commitments to issue, dispose of or acquire
shares of the Company Common Stock. There are no outstanding or authorized stock
appreciation, phantom stock or similar rights with respect to the Company.
Except for the Shareholders Agreement, there are no voting trusts, proxies or
any other agreements or understandings with respect to the voting of the capital
stock of the Company. The Company is not subject to any obligation (contingent
or otherwise) to repurchase or otherwise acquire or retire any shares of its
capital stock. The Company has not violated any applicable federal or state
securities laws in connection with the offer, sale or issuance of any of its
capital stock.
3.5 Non-Contravention.
Except as disclosed in Schedule 3.5, the execution, delivery and
performance of this Agreement and the Ancillary Agreements and the consummation
of the transactions contemplated hereby and thereby by PFMI, the Company, the
Subsidiaries and the Shareholders do not and will not: (a) result in a breach of
any provision of the charter, bylaws or other organizational documents of the
Company, any of the Subsidiaries or PFMI; (b) violate any Order of any court or
other authority having jurisdiction over the Company, any of the Subsidiaries or
PFMI, or any of their properties, or cause the suspension or revocation of any
authorization, consent, approval or license presently in effect that affects or
binds the Company, any of the Subsidiaries or PFMI or any of their material
properties; (c) result in a breach of or default, or give a third party the
right to accelerate, terminate or suspend any obligations, under any agreement
or instrument to which PFMI, the Company or any of the Subsidiaries is a party
or by which any of them or any of their material properties is bound or
affected; (d) require the authorization, consent, approval, permit or license of
any Person, any notice to be given to, filing to be made with or other action to
be taken with or by any Person (other than filings and actions to be made and
taken under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended
(such act, together with the rules and regulations promulgated thereunder, being
the "HSR Act")); (e) result in the creation of any Lien upon the Shares or the
material assets of PFMI, the Company or any Subsidiary; or (f) constitute
grounds for the loss or suspension of any material permit, license or other
authorization used by PFMI, the Company or any of the Subsidiaries.
-9-
3.6 Reports and Financial Statements; No Undisclosed Liabilities.
3.6.(a) PFMI has made available to Buyer each of the following:
(i) the Company's Annual Report on Form 10-K filed with the
SEC on March 9, 2004 for its fiscal year ended March 1, 2003 (the
"Annual Report");
(ii) the Company's Quarterly Reports on Form 10-Q, each filed
with the SEC on March 9, 2004, for its fiscal quarters ended May 31,
2003, August 30, 2003 and November 29, 2003 (the "Quarterly
Reports");
(iii) the Company's consolidated audited financial statements
for its fiscal year ended March 1, 2003, included in the Annual
Report, together with its audited financial statements for its
fiscal year ended March 2, 2002 (collectively, the "Audited
Financial Statements");
(iv) PFMI's unaudited consolidated financial statements for
its fiscal years ended March 2, 2002, March 1, 2003 and March 6,
2004 (the "PFMI Unaudited Financial Statements"); and
(v) the Company's unaudited consolidated financial statements
for its fiscal year ended March 6, 2004 (the "Company Unaudited
Financial Statements", and together with the PFMI Unaudited
Financial Statements, the "Unaudited Financial Statements").
3.6.(b) To the Knowledge of the Shareholders, each of the Annual
Report and Quarterly Reports did not, at the time it was filed with the
SEC, and all such documents taken together do not, contain an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made or are made, respectively, not misleading. The
financial statements contained in the Annual Report and in the Quarterly
Reports were prepared in accordance with GAAP from the books and records
of the Company and its consolidated Subsidiaries, except in the case of
the unaudited interim financial statements contained in the Quarterly
Reports, the absence of footnotes and subject to customary year end
adjustments for recurring accruals.
3.6.(c) The Audited Financial Statements were prepared in accordance
with GAAP and fairly and accurately reflect the financial condition and
results of operations of the Company and its consolidated Subsidiaries at
the dates and for the periods indicated.
3.6.(d) The Unaudited Financial Statements were prepared from the
books and records of PFMI and its consolidated Subsidiaries and the
Company and its consolidated Subsidiaries, as applicable, and fairly and
accurately reflect in all material respects the financial condition and
results of the operations of PFMI and its consolidated Subsidiaries and
the Company and its consolidated Subsidiaries, as applicable, at the dates
and for the periods indicated.
-10-
3.6.(e) When delivered pursuant to Section 6.12, the Recent Audited
Financial Statements will have been prepared in accordance with GAAP and
will fairly and accurately reflect in all material respects the financial
condition and results of operations of the Company and its consolidated
Subsidiaries and PFMI and its consolidated subsidiaries, as applicable, at
the dates and for the periods indicated.
3.6.(f) None of PFMI, the Company or any Subsidiary has any material
liability or obligation (whether absolute, accrued, contingent,
unliquidated or otherwise, whether or not known to Shareholders, whether
due or to become due and regardless of when or by whom asserted) other
than those liabilities or obligations (i) reflected in the Company's
audited financial statements for the fiscal year ended March 1, 2003
included in the Annual Report (including the footnotes thereto), (ii)
arising under contracts or commitments described on Schedule 3.17 or under
contracts and commitments entered into in the ordinary course of business
which are not required to be disclosed thereon due to specified dollar
thresholds (but not liabilities for breaches thereof occurring on or prior
to the Closing Date), (iii) arising out of the matters reflected on
Schedule 3.12, (iv) reflected in the PFMI Unaudited Financial Statements
for its fiscal year ended March 6, 2004 or the Company Unaudited Financial
Statements for its fiscal year ended March 6, 2004, (v) incurred after
March 6, 2004 in the ordinary course of business consistent with past
practices of the Company and its Subsidiaries (none of which is a
liability for breach of contract, tort, infringement, claim, lawsuit or
breach of warranty), or (vi) set forth in Schedule 3.6(f).
3.6.(g) The Company has made all required filings with the SEC and
the form and content of all such filings complied in all material respects
with the rules and regulations of the SEC.
3.7 Absence of Material Differences.
Since November 29, 2003, there has been no Material Adverse Change.
Without limiting the generality of the foregoing, except as disclosed in
Schedule 3.7, since November 29, 2003, PFMI, the Company and the Subsidiaries
have conducted their respective businesses in the ordinary course consistent
with past practices, and without limiting the generality of the foregoing since
that date there has been no:
3.7.(a) (i) disposition of any material items of real or personal
property (other than sales of inventory in the ordinary course of
business) by PFMI, the Company or any Subsidiary; or (ii) capital
investment in, any loan to, or any acquisition of the securities or assets
of, any other Person (or series of related capital investments, loans, or
acquisitions);
3.7.(b) change in the accounting methods or practices (including
assumptions underlying estimates of reserves for inventory and accounts
receivable and accruals for liabilities) of PFMI (provided, that PFMI is
currently in the process of adopting GAAP standards for the preparation of
its financial statements), the Company or any of the Subsidiaries which
has had a material effect on the financial results reported by PFMI, the
Company or the Subsidiaries;
-11-
3.7.(c) satisfaction or discharge of any material claim, Lien or
liability (whether accrued, contingent or otherwise and whether due or to
become due) of PFMI, the Company or any of the Subsidiaries outside the
ordinary course of business and consistent with past practice;
3.7.(d) sale, lease, mortgage, encumbrance or other disposal of or
grant of any interest in, or attachment of any Lien upon, any of the
material assets or properties of PFMI, the Company or any of the
Subsidiaries, except for (i) sales, leases, encumbrances and other
dispositions and grants in the ordinary course of business and consistent
with past practice and (ii) Liens for taxes not yet due (provided,
however, that adequate accruals, consistent with GAAP, are maintained for
all such Liens for taxes not yet due) and Liens not material in amount or
effect that do not impair the use of the asset or property subject to such
Lien;
3.7.(e) declaration or set asides for dividends, distributions or
redemptions of securities of PFMI, the Company or any of the Subsidiaries;
any split, combination or reclassification of any of the equity interests
or other securities thereof or agreement or commitment to make any
exchange for or redemption of any such equity interests or other
securities (whether payable in cash, stock or property);
3.7.(f) material damage, destruction, or loss (whether or not
covered by insurance) to the tangible assets of PFMI, the Company or any
Subsidiary;
3.7.(g) (i) adoption of, entry into or amendment of any Benefit
Plan, including any bonus, profit sharing, compensation, stock option,
warrant, pension, retirement, deferred compensation, employment,
severance, termination, change in control or other employee benefit plan,
agreement, trust fund or arrangement for the benefit or welfare of any
officer, director, employee or consultant, (ii) agreement to any increase
in the compensation payable or to become payable to, or any increase in
the contractual term of employment of, any officer, director or consultant
or salaried employee (other than in the ordinary course of business and
consistent with past practice) or (iii) payment of any benefit not
required by any Benefit Plan or other plan or agreement;
3.7.(h) incurrence, assumption or guarantee of any indebtedness for
borrowed money;
3.7.(i) issuance of, or agreement to issue, any equity interests in
PFMI, the Company or in any of the Subsidiaries, or options, warrants or
other rights of any kind to acquire any such equity interests, whether by
purchase or conversion or exchange of other equity interests or other
securities;
3.7.(j) amendment to or restatement of any of the organizational
documents of PFMI, the Company or any of the Subsidiaries;
3.7.(k) delay or postponement of the payment of accounts payable and
other liabilities of PFMI, the Company or any Subsidiary outside the
ordinary course of business; or
-12-
3.7.(l) agreement, commitment or understanding, whether in writing
or otherwise, with respect to any of the matters referred to in
subsections (a) through (n) of this Section 3.7.
3.8 Employees.
Except as disclosed in Schedule 3.8, none of PFMI, the Company or
any of the Subsidiaries is bound by any express or implied contract or agreement
to employ, directly or as a consultant or otherwise, any individual for any
specified period of time or until any specific age. No employee of PFMI, the
Company or any Subsidiary is represented by any labor organization. To the
Knowledge of the Shareholders, there are no proposals by employees of PFMI, the
Company or any Subsidiary for organizing activities or collective bargaining
arrangements or any organized labor slowdown, work interruption or work stoppage
by employees. To Shareholders' Knowledge, except for Xxxxxx Xxxxxxx and the
North Carolina Employees, no key employee and no group of employees has any
plans to terminate his or her employment with such entity (including upon
consummation of the transactions contemplated hereby). Except as set forth on
Schedule 3.13(a), PFMI, the Company and its Subsidiaries have complied in all
material respects with all applicable laws relating to the employment of labor,
including, without limitation, provisions thereof relating to wages, hours,
equal opportunity, collective bargaining and the payment of social security and
other taxes. Except as set forth on Schedule 3.8, there are no material claims,
actions, proceedings or investigations pending or, to Shareholders' Knowledge,
threatened against PFMI, the Company or any Subsidiary with respect to or by any
employee or former employee of PFMI, the Company or any Subsidiary. None of
PFMI, the Company or any Subsidiary has experienced any strikes, collective
bargaining disputes, material labor grievances or material unfair labor
practices claims within the last three (3) years prior to the date hereof.
3.9 Employee Benefit Plans.
3.9.(a) The Company has made available to Buyer, except for the
items described in the side letter agreement, dated the date hereof by and
between Buyer and Shareholders' Agent on behalf of the Shareholders (the
"Benefits Side Letter Agreement"), true and accurate copies of all
pension, retirement, profit-sharing, deferred compensation, retention,
change-in-control, severance pay, vacation, bonus and other incentive
plans, all other written employee programs, arrangements and agreements,
all medical, vision, dental and other health plans, all life insurance
plans and all other employee benefit plans and fringe benefit plans,
including, without limitation, "employee benefit plans" as that term is
defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended (such act, together with the rules and regulations
thereunder, being "ERISA"), currently or previously adopted, maintained
by, sponsored in whole or in part by or contributed to by PFMI, the
Company or any Subsidiary for the benefit of employees, retirees,
dependents, spouses, directors, independent contractors and other
beneficiaries of PFMI, the Company and the Subsidiaries (as used in this
Section 3.9, collectively, "employees") and under which employees are or
were eligible to participate (collectively, "Benefit Plans"); provided
that the Company has not made available to Buyer those insurance policies
set forth on Part A of Schedule 3.9 maintained by PFMI and covering the
Shareholders, all of which are to be retained by the
-13-
Shareholders pursuant to the Asset Distribution Letter Agreement (the
"Shareholder Insurance Policies"). All of the Benefit Plans (other than
the items described in the Benefits Side Letter Agreement) are listed on
Part B of Schedule 3.9. Each Benefit Plan may be amended or terminated at
any time after the Closing Date.
3.9.(b) None of PFMI, the Company or any Subsidiary maintains or is
required to contribute to or has any liability with respect to any plan,
fund (including, without limitation, any superannuation fund) or other
similar program established or maintained outside the United States of
America, which fund or similar program provides or results in retirement
income, a deferral of income in contemplation of retirement, payments to
be made upon termination of employment, and which plan is not subject to
ERISA or the Internal Revenue Code of 1986 (the "Code").
3.9.(c) No Benefit Plans (other than qualified retirement plans and
the items described in the Benefits Side Letter Agreement) provide any
benefits or coverage to any employee following retirement or termination
of service, except as required under Section 4980B of the Code.
3.9.(d) Each Benefit Plan and any related trust, insurance contract
or fund has been maintained, funded and administered in compliance with
its respective terms and with ERISA, the Code and all other state, federal
and local Laws applicable thereto in all material respects, and no action,
suit, proceeding, hearing, investigation with respect to the
administration or investment of assets of any Benefit Plan (other than
routine claims for benefits) is pending or, to the Knowledge of the
Shareholders, threatened.
3.9.(e) None of the Benefit Plans is or was a multiemployer plan
(within the meaning of Section 3(37)(A) of ERISA) or an "employee pension
benefit plan" (as such term is defined in Section 3(2) of ERISA) that is
subject to Section 302 of ERISA, Title IV of ERISA or Section 412 of the
Code. No asset of PFMI, the Company or any Subsidiary is subject to any
Lien under ERISA or the Code, and none of PFMI, the Company or any
Subsidiary has incurred any liability under Title IV of ERISA or to the
Pension Benefit Guaranty Corporation.
3.9.(f) Each Benefit Plan that is intended to be qualified within
the meaning of Section 401(a) of the Code has received a GUST
determination from the Internal Revenue Service (the "IRS") that such
Benefit Plan is qualified under Section 401(a) of the Code, and nothing
has occurred since the date of such determination that could adversely
affect the qualification of such Benefit Plan.
3.9.(g) Except as disclosed in Schedule 3.9(g), neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (A) result in any payment
(including, without limitation, severance, unemployment compensation,
golden parachute or otherwise) becoming due to any employee from PFMI, the
Company or any of the Subsidiaries (otherwise than pursuant to the health
coverage continuation requirements of Code Section 4980B or Part 6 of
Title I of ERISA, (B) increase any benefits otherwise payable under any
Benefit Plan or (C) result in any acceleration in the time of payment or
vesting of any such benefit.
-14-
3.9.(h) Neither the Company, PFMI nor any other "disqualified
person" (within the meaning of Section 4975 of the Code) or "party in
interest" (within the meaning of Section 3(14) of ERISA) has taken any
action with respect to any of the Benefit Plans which could subject any
such Benefit Plan (or its related trust) or PFMI or the Company or any
Subsidiary, or any officer, director or employee of any of the foregoing,
to any penalty or tax under Section 502(i) of ERISA or Section 4975 of the
Code.
3.9.(i) None of PFMI, the Company or the Subsidiaries has any
liability (potential or otherwise) with respect to any "employee benefit
plan" (as defined in Section 3(3) of ERISA) solely by reason of being
treated as a single employer under Section 414 of the Code with any other
entity.
3.9.(j) With respect to each Benefit Plan, the Company has made
available to Buyer true, complete and correct copies of (to the extent
applicable) (i) all documents pursuant to which the Benefit Plan is
maintained, funded and administered, (ii) the most recent annual report
(Form 5500 series) filed with the IRS (with applicable attachments), (iii)
the most recent financial statements, (iv) the most recent summary plan
description provided to participants, and (v) the most recent
determination letter received from the IRS.
3.9.(k) With respect to each Benefit Plan (other than with respect
to the items described in the Benefits Side Letter Agreement), all
required or recommended (in accordance with historical practices)
payments, premiums, contributions, reimbursements or accruals for all
periods (or partial periods) ending prior to or as of the Closing Date
shall have been made or properly accrued on the Audited Financial
Statements. None of the Benefit Plans has any unfunded liabilities which
are not reflected on the Audited Financial Statements.
3.10 Assets and Facilities.
The food processing facilities, fixtures, improvements, equipment
and other tangible property owned or leased by PFMI, the Company and the
Subsidiaries or otherwise used by them in connection with the operation of their
respective businesses (the "Facilities and Equipment") are in operating
condition and repair (reasonable wear and tear excepted) adequate for the uses
to which they are being put. To Shareholders' Knowledge, there are no material
structural deficiencies affecting any of the Facilities and Equipment and there
are no facts or conditions affecting any of the Facilities and Equipment which
would, individually or in the aggregate, interfere in any material respect with
the use or occupancy of the Facilities and Equipment or any portion thereof in
the operation of the business of PFMI, the Company or the Subsidiaries. Except
as described in Schedule 3.10, PFMI, the Company or Subsidiary (as the case may
be) has good and marketable title to the Facilities and Equipment, free and
clear of all Liens, except Permitted Liens. The assets and properties (whether
real or personal, tangible or intangible) owned or leased by PFMI, the Company
or any Subsidiary constitute all of the assets and properties necessary to
operate the business of PFMI, the Company and the Subsidiaries as currently
conducted.
-15-
3.11 Licenses and Permits.
The Company and the Subsidiaries hold all of the material licenses,
permits, certificates, accreditations, grants of inspection, registrations and
other franchises and authorizations of foreign, federal, state and local
governmental agencies, including without limitation the United States Food and
Drug Administration (the "FDA"), the United States Department of Agriculture
(the "USDA") and similar state agencies, required for the conduct of their
businesses and are not in default under any such license, permit or franchise,
except as set forth in Schedule 3.11(a). Schedule 3.11(b) sets forth a list of
all USDA grants of inspection and FDA registrations of PFMI, the Company and the
Subsidiaries.
3.12 Litigation.
Except as described in Schedule 3.12: (i) there is no action, suit,
claim, proceeding or investigation pending against PFMI, the Company or any of
the Subsidiaries or affecting the Shares; (ii) to the Knowledge of the
Shareholders, no action, suit, claim, proceeding or investigation against PFMI,
the Company or any of the Subsidiaries or affecting the Shares is threatened;
(iii) there have been no such actions, suits, proceedings, claims or
investigations pending or, to Shareholders' Knowledge, threatened within the
last three years against PFMI, the Company or any Subsidiary or affecting the
Shares where the costs associated with any such action, suit, proceeding, claim,
order or investigation (including settlement payments, judgment awards and legal
fees and expenses) exceeded $250,000; and (iv) none of PFMI, the Company or any
Subsidiary has any material actions, suits or claims pending against any other
Person, in the case of clauses (i), (ii), (iii) and (iv), at law or in equity,
or before or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign. None
of PFMI, the Company, any Subsidiary or the Shares is subject to any outstanding
Order directed at PFMI, the Company, any Subsidiary or the Shares (as
distinguished from Orders of general applicability).
3.13 Compliance with Laws.
3.13.(a) Except as described in Schedule 3.13(a), each of PFMI, the
Company and the Subsidiaries comply, and have complied during the three
years prior to the date hereof, in all material respects with all Laws,
and no written notices have been received by, and no written claims have
been filed against, PFMI, the Company or any Subsidiary alleging a
violation of any such Laws. Except for orders of the SEC regarding the
effectiveness of registration statements for the Company Notes, none of
PFMI, the Company and the Subsidiaries, or any of their respective
material properties, are subject to any judgment, order, decree, writ,
ruling, charge or injunction (collectively, "Orders") issued by any court
or governmental or administrative body or agency, including without
limitation the FDA, USDA and the United States Federal Trade Commission
(the "FTC"), and directed at PFMI, the Company or a Subsidiary (as
distinguished from Orders of general applicability).
3.13.(b) Except as described in Schedule 3.13(b), PFMI, the Company
and the Subsidiaries, and their manufacturing facilities and processes and
all Foods, packaging, and food contact substances used in or with all
Foods, comply, and have complied during
-16-
the three years prior to the date hereof, in all material respects with
all applicable USDA, FDA, FTC, other federal agency and any relevant state
agency regulations related to the regulation of Foods, packaging, and food
contact substances. Except as described in Schedule 3.13(b), during the
three years prior to the date hereof and as of the date hereof, PFMI, the
Company and the Subsidiaries have secured a written guarantee from their
material third party ingredient and raw material suppliers adequate to
assure that the ingredients and/or raw materials purchased from these
suppliers complies in all material respects with all applicable USDA, FDA,
FTC, other federal agency and any relevant state agency regulations.
Except as described in Schedule 3.13(b), during the three years prior to
the date hereof and as of the date hereof, PFMI, the Company and the
Subsidiaries have conducted investigations, audits, and/or on-going
monitoring of third party co-packers, labelers, or distributors of the
Food and, based on such activities, PFMI, the Company and the Subsidiaries
are not aware of any information to indicate that such third party
co-packers, labelers, or distributors have not materially complied with
and are not in material compliance with all applicable USDA, FDA, FTC,
other federal agency and any relevant state agency regulations that
pertain to the Food co-packed, labeled, or distributed by those entities
including but not limited to FDA's current Good Manufacturing Practices
regulations.
3.13.(c) PFMI has furnished to Buyer (i) all written USDA
Noncompliance Records and inspectional observations, FDA inspectional
observations and warning letters, and written notices from the FTC,
received by Shareholders, PFMI, the Company or any Subsidiary during the
last three (3) years from the USDA, FDA, FTC, or other similar federal
agencies or state authorities relating to legal or regulatory
non-compliance, (ii) PFMI's and/or the Company's or any Subsidiary's
written response to such items identified in clause (i) which have been
submitted to such regulatory agency or authority (except for such
responses which are immaterial), and (iii) any further written
correspondence from such regulatory agency or authority related to the
items identified in clause (i).
3.14 Environmental.
3.14.(a) Except as set forth on Schedule 3.14(a), no amounts of
Hazardous Materials have been spilled, discharged, released, pumped,
disposed of or allowed to escape or migrate into (each, a "Release") the
environment or on or to any real property (including the soil and
subsurface thereof) owned or leased by PFMI, the Company or any of the
Subsidiaries in such a manner as to give rise to any material liability
under any Environmental Law.
3.14.(b) Except as set forth on Schedule 3.14(b) PFMI, the Company
and the Subsidiaries have obtained and complied, and are in compliance, in
all material respects with, all material permits or authorizations
required under Environmental Laws to operate their facilities, assets and
business; and PFMI, the Company and the Subsidiaries (and their respective
predecessors) comply, and have complied in all material respects with all
Environmental Laws.
-17-
3.14.(c) Except as set forth on Schedule 3.14(c), no claim or legal
or administrative proceeding is pending or, to Shareholders' Knowledge,
threatened and, to the Knowledge of the Shareholders, there is no
investigation pending or threatened, with respect to (A) the presence or
alleged presence of any Release or threatened Release of Hazardous
Materials or (B) any material violation or alleged violation of, or any
material liability or alleged liability under, any Environmental Laws, in
either case relating to (a) any real property currently or formerly owned
or leased by PFMI, the Company or any of the Subsidiaries (or any of their
respective predecessors) or (b) any of their operations thereon.
3.14.(d) Except as set forth on Schedule 3.14(d), none of the
following exists at any property or facility currently owned or operated
by PFMI, the Company or any of the Subsidiaries: (1) underground storage
tanks; (2) asbestos-containing material in any form or condition; (3)
materials or equipment containing polychlorinated biphenyls or
ozone-depleting substances; or (4) landfills, surface impoundments, or
disposal areas.
3.14.(e) Except as set forth on Schedule 3.14(e), none of PFMI, the
Company or any of the Subsidiaries, or any of their respective
predecessors have treated, stored, disposed of, arranged for or permitted
the disposal of, transported, handled, manufactured, marketed, exposed any
persons to or released any Hazardous Materials, or owned or operated any
property or facility so as to give rise to any material liabilities under
any Environmental Laws for fines or penalties, for personal injury,
nuisance, property damage or damage to natural resources, or for related
costs of environmental investigation or cleanup.
3.14.(f) Except as set forth on Schedule 3.14(f), none of PFMI, the
Company or any of the Subsidiaries have, either expressly or by operation
of law, assumed or undertaken any liability of any other Person relating
to Environmental Laws, including without limitation any obligation for
corrective or remedial action.
3.14.(g) All written environmental audits, reports and other
material environmental documents relating to the past or current
properties, facilities or operations of PFMI, the Company, any of the
Subsidiaries, or their respective predecessors, which are in their
possession or under their reasonable control, have been made available to
Buyer.
3.15 Intellectual Property.
PFMI, the Company and the Subsidiaries own and possess all right,
title and interest in and to all of the Intellectual Property set forth on
Schedule 3.15 and own and possess all right, title and interest in and to, or
have a license to use pursuant to a written license agreement listed on Schedule
3.17, all other Intellectual Property that is used in the conduct of the
businesses of PFMI, the Company and the Subsidiaries as currently conducted
(collectively, "Company Intellectual Property"). Schedule 3.15 lists all of the
following that are owned by PFMI, the Company or one of the Subsidiaries: (a)
patented or registered Intellectual Property
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and pending patent applications or applications for registrations of other
Intellectual Property; and (b) material unregistered trademarks, material
unregistered service marks, trade names, corporate names and Internet domain
names. Except as described in Schedule 3.15, the Company Intellectual Property
is not subject to any Liens, except Permitted Liens. Except as described in
Schedule 3.15, (x) the operation of PFMI's, the Company's and the Subsidiaries'
businesses have not, do not and will not, as currently conducted, infringe or
misappropriate any Intellectual Property of any other Person, (y) there are no
facts that indicate a likelihood of the foregoing, and (z) none of PFMI, the
Company or any of the Subsidiaries have received any written notice regarding
any of the foregoing (including, without limitation, any offers to license any
Intellectual Property from another Person) during the three year period prior to
the date hereof. To the Knowledge of the Shareholders, no Person is infringing
upon or misappropriating any Company Intellectual Property, except as stated in
Schedule 3.15. Except as set forth in Schedule 3.15, PFMI, the Company and the
Subsidiaries have taken commercially reasonable action to maintain and protect
all material Company Intellectual Property. Immediately subsequent to the
Closing, the Company Intellectual Property will be owned by or available for use
by PFMI, the Company and the Subsidiaries on terms and conditions identical to
those under which PFMI, the Company and the Subsidiaries owned or used the
Company Intellectual Property immediately prior to the Closing. To the Knowledge
of the Shareholders, all of the registered or issued Company Intellectual
Property and all material unregistered trademarks, material unregistered service
marks, trade names, corporate names and Internet domain names listed on Schedule
3.15 is valid and enforceable, and none of the Company Intellectual Property has
been misused. Except as stated in Schedule 3.15, no claim by any third party
contesting the validity, enforceability, use or ownership of any Company
Intellectual Property is pending nor, to the Knowledge of the Shareholders, are
there grounds for same.
3.16 Title to Real and Personal Property; Leasehold Interests.
3.16.(a) Owned Real Property. Schedule 3.16(a) sets forth the
address and description of each Owned Real Property. With respect to each
Owned Real Property: (i) except as set forth in Schedule 3.16(a), PFMI,
the Company or Subsidiary (as the case may be) has good and marketable
indefeasible fee simple title to such Owned Real Property, free and clear
of all Liens, except Permitted Liens, (ii) except as set forth in Schedule
3.16(a), PFMI, the Company or Subsidiary has not leased or otherwise
granted to any Person the right to use or occupy such Owned Real Property
or any portion thereof; (iii) other than the right of Buyer pursuant to
this Agreement, 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. None of PFMI, the Company or any
Subsidiary is a party to any agreement or option to purchase any real
property or interest therein.
3.16.(b) Leased Real Property. Schedule 3.16(b) sets forth the
address of each Leased Real Property, and a true and complete list of all
Leases for each such Leased Real Property. The Company has made available
to Buyer a true and complete copy of each such Lease document. Except as
set forth in Schedule 3.16(b), with respect to each of the Leases: (i)
such Lease is legal, valid, binding, enforceable and in full force and
effect; (ii) the sale of the Shares to Buyer pursuant to this Agreement
does not require the consent of any other party to such Lease, will not
result in a breach of or default
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under such Lease, or otherwise cause such Lease to cease to be legal,
valid, binding, enforceable and in full force and effect on identical
terms following the Closing; (iii) PFMI's, the Company's or Subsidiary's
possession and quiet enjoyment of the Leased Real Property under such
Lease has not been disturbed, and to the Shareholders' Knowledge, there
are no disputes with respect to such Lease; (iv) none of PFMI, the Company
or Subsidiary nor any other party to the Lease is in breach or default
under such Lease in any material respect, and no event has occurred or
circumstance exists which, with the delivery of notice, the passage of
time or both, would constitute such a breach or default, or permit the
termination, modification or acceleration of rent under such Lease; (v)
the other party to such Lease is not an affiliate of, and otherwise does
not have any economic interest in, PFMI, the Company or any Subsidiary;
(viii) none of PFMI, the Company or Subsidiary has subleased, licensed or
otherwise granted any Person the right to use or occupy such Leased Real
Property or any portion thereof; and (ix) none of PFMI, the Company or
Subsidiary has collaterally assigned or granted any other security
interest in such Lease or any interest therein.
3.16.(c) Availability of Utility Services. All water, oil, gas,
electrical, steam, compressed air, telecommunications, sewer, storm and
waste water systems and other utility services or systems for the Real
Property have been installed and are operational and sufficient for the
operation of PFMI's, the Company's or Subsidiary's business thereon, as
applicable, and all hook-up fees or other similar fees or charges have
been paid in full.
3.16.(d) Condemnation and Litigation. None of PFMI, the Company or
any Subsidiary has received written notice of any pending condemnation,
expropriation or other proceeding in eminent domain affecting any Real
Property or any portion thereof or interest therein. There are no
outstanding Orders and none of PFMI, the Company or any Subsidiary has
received written notice of any pending claims, litigation, administrative
actions or similar proceedings, in either instance relating to the
ownership, lease, use or occupancy of the Real Property or any portion
thereof.
3.17 Material Contracts.
Except as listed in Schedule 3.17, none of PFMI, the Company or any
of its Subsidiaries is a party to, or bound by, any written or legally binding
oral: (i) contract, agreement or commitment that (A) has a duration of twelve
months or more or (B) requires either party thereto to pay, to the other,
$250,000 or more annually; (ii) distribution, marketing, dealer, representative
or sales agency agreement, contract or commitment; (iii) lease under which PFMI,
the Company or any of the Subsidiaries is the lessor or permits any third party
to hold or operate any property, real or personal, owned or controlled by PFMI,
the Company or any Subsidiary; (iv) note, debenture, bond, equipment trust
agreement, letter of credit agreement, loan agreement or other contract or
commitment for the borrowing or lending of money or agreement or arrangement for
a line of credit or guarantee, pledge or undertaking of the indebtedness of any
other Person or other Indebtedness (except for certain immaterial items which in
the aggregate do not exceed One Hundred Thousand Dollars ($100,000)); (v)
agreement relating to the ownership of or investments in any Person (including
investments in joint ventures and minority equity investments); (vi) agreement
under which PFMI, the Company or any Subsidiary is a
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lessee of or holds or operates any personal property owned by any other
Person for which the annual rental exceeds $100,000; (vii) agreement
relating to the licensing of Intellectual Property by PFMI, the Company or
any Subsidiary to another Person or by any Person to PFMI, the Company or
any Subsidiary or any other agreement affecting PFMI's, the Company's or
any Subsidiary's ability to use or disclose any Company Intellectual
Property (other than licenses of off-the-shelf software for an aggregate
purchase price of less than $10,000), and all other agreements affecting
PFMI's, the Company's or any Subsidiary's ability to use or disclose any
Intellectual Property; (viii) nondisclosure or confidentiality agreement,
except for agreements entered into during the past ninety (90) days with
other potential bidders in connection with the possible sale of the Shares
and other agreements entered into in the ordinary course of business; (ix)
contracts with any labor union or any bonus, pension, profit sharing,
retirement or any other form of deferred compensation plan or any stock
purchase, stock option or similar plan or practice, whether formal or
informal, or any severance agreement or arrangement; (x) agreements for
the employment of any individual on a full time, part-time, consulting, or
other basis providing annual compensation in excess of $100,000; (xi)
agreement, contract or commitment whereby it has agreed to indemnify any
other Person, except for contracts with its customers entered into in the
ordinary course of business; or (xii) agreement, contract or commitment
limiting or restraining PFMI, the Company, a Subsidiary, an Affiliate of
any of them or an employee (other than noncompetition agreements between
an employee and the Company) of any of them or any of their businesses or
successors from engaging or competing in any manner or in any business.
With respect to each agreement required to be listed in Schedule 3.17, (a)
none of PFMI, the Company or the Subsidiaries are in breach or default in
any material respect (nor, to the Knowledge of the Shareholders, is any
counterparty thereto in material breach or default of such agreement or
has any event occurred which, with notice or lapse of time, would
constitute a material breach or default, or permit termination,
modification, or acceleration under the agreement) under any such
agreement; (b) PFMI, the Company and the Subsidiaries have performed in
all material respects all of their respective obligations required to be
performed by them to date under all such agreements, (c) the agreement is
legal, valid, binding, enforceable, and in full force and effect, except
as such may be limited by bankruptcy, insolvency, reorganization, or other
similar Laws affecting creditors' rights generally, and by general
equitable principles; (d) the agreement will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms
immediately following the consummation of the transactions contemplated by
this Agreement, provided that any consents necessary to undertake such
transactions are obtained prior thereto, except as such may be limited by
bankruptcy, insolvency, reorganization, or other similar Laws affecting
creditors' rights generally, and by general equitable principles; and (e)
to Shareholders' Knowledge, no other party has repudiated any provision of
the agreement.
3.18 Insurance.
Copies of all insurance policies covering PFMI, the Company and the
Subsidiaries and their owned and leased properties and employees have been made
available to Buyer. Schedule 3.18 identifies each such insurance policy. All
premiums due prior to the date hereof under such policies have been paid, there
are no retroactive premiums with respect to such policies and no written notice
of cancellation or termination has been received by PFMI, the Company or its
Subsidiaries with respect to such insurance policies. PFMI, the Company and the
Subsidiaries have complied in all material respects with the provisions of such
policies, the
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policies are in full force and effect and shall be in full force and effect as
of the Closing and none of PFMI, the Company or any of the Subsidiaries has
received any written notice of cancellation or non-renewal thereof. Except as
set forth on Schedule 3.18, none of PFMI, the Company or any of its Subsidiaries
have any self-insurance or co-insurance programs, and the reserves set forth on
the consolidated balance sheet of the Company and its Subsidiaries as of
November 29, 2003 are adequate (and the reserves to be set forth on the Closing
Balance Sheet will be adequate) to cover all anticipated liabilities with
respect to any such self-insurance or co-insurance programs. None of the rights
under PFMI's, the Company's and its Subsidiaries' insurance policies for
pre-Closing occurrences will be affected by the transactions contemplated by
this Agreement.
3.19 Product Liability.
Except as described in Schedule 3.19, no claims related to the manufacture, sale
or supply of the Company's or any Subsidiary's products (other than xxxxxxx'x
compensation or claims by federal or state regulatory agencies arising in
connection with environmental matters) are pending or, to the Knowledge of the
Shareholders, threatened against the Company or any of the Subsidiaries, and
except for claims arising in the ordinary course of business which have not,
individually or in the aggregate, resulted in any material liability, there have
been no such claims within the past three (3) years. Except as described in
Schedule 3.19, there have been no recalls of products manufactured and/or
distributed by the Company for any reason within the three (3) years prior to
the date hereof. The Company maintains customer complaint files, records of any
potential defects in any Food, and records of investigations and other steps
taken in response to complaints and/or information relating to potential
defects.
3.20 Affiliate Transactions.
Except as set forth on Schedule 3.20, no officer, director,
shareholder or Affiliate of PFMI, the Company or any of its Subsidiaries or any
individual related by blood, marriage or adoption to any such individual or any
entity in which any such Person or individual owns any beneficial interest, is
currently a party to any contract or agreement with PFMI, the Company or any of
its Subsidiaries or has any interest in any property, asset or right used by
PFMI, the Company or any of its Subsidiaries or necessary for their respective
businesses. Schedule 3.20 describes all intercompany or affiliated services
currently provided to or on behalf of PFMI, the Company or any Subsidiary by
Shareholders or their Affiliates and to or on behalf of Shareholders and such
Affiliates by PFMI, the Company or any Subsidiary and all intercompany
transactions or agreements among PFMI, the Company or any Subsidiary and
Shareholders or their Affiliates.
3.21 Customers.
Schedule 3.21 lists the Company's top twenty (20) customers based on
gross sales during the trailing twelve month period ended March 6, 2004. Except
as set forth on Schedule 3.21, no customer required to be identified on Schedule
3.21 has notified any Shareholder or, to Shareholders' Knowledge, notified any
officer or managerial level employee of PFMI, the Company or any of its
Subsidiaries in writing that it intends to reduce its volume of goods or
services ordered during the twelve (12) month period ending March 6, 2005 by
more than ten percent (10%) from purchases made during the twelve (12) month
period ended March 6, 2004.
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No such customer has terminated, or has notified any Shareholder, PFMI, the
Company or any of its Subsidiaries that it intends to terminate its business
relationship with the Company or such Subsidiary.
3.22 Suppliers.
Schedule 3.22 lists the Company's top twenty (20) suppliers based on
gross purchases during the trailing twelve month period ended March 6, 2004.
Except as set forth on Schedule 3.22, there are no suppliers of products or
services to PFMI, the Company or any Subsidiary that are material to their
respective businesses with respect to which practical alternative sources of
supply are not generally available on comparable terms and conditions in the
marketplace. No supplier listed on Schedule 3.22 has notified any Shareholder
or, to Shareholders' Knowledge, notified any officer or managerial level
employee of PFMI, the Company or any of its Subsidiaries in writing that it
intends to terminate its business relationship with the Company or such
Subsidiary and the Shareholders do not have Knowledge of any material dispute
with any material supplier of products or services to the Company or its
Subsidiaries.
3.23 Bank Accounts.
Schedule 3.23 lists all of the bank accounts, safe deposit boxes and
lock boxes used by PFMI, the Company and the Subsidiaries (designating each
authorized signatory). None of PFMI, the Company or any Subsidiary has granted a
power of attorney to any Person which has not been terminated.
3.24 Brokerage.
Except as set forth on Schedule 3.24, there are no claims for
brokerage commissions, finders' fees or similar compensation in connection with
the transactions contemplated by this Agreement based on any arrangement or
agreement made by or on behalf of PFMI, the Company or any Subsidiary.
3.25 Limitation of Representations and Warranties.
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY STATED IN
THIS ARTICLE 3, IN THE SCHEDULES AND IN THE CERTIFICATES AND OTHER INSTRUMENTS
DELIVERED IN CONNECTION HEREWITH, THE SHAREHOLDERS MAKE NO REPRESENTATIONS OR
WARRANTIES, WRITTEN OR ORAL, STATUTORY, EXPRESS OR IMPLIED, TO THE BUYER OR ANY
OTHER PERSON CONCERNING PFMI, THE SHAREHOLDERS, THE SHARES OR THE BUSINESS,
ASSETS OR LIABILITIES OF THE COMPANY OR THE SUBSIDIARIES.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
As a material inducement to Shareholders to enter into this
Agreement, Buyer makes the following representations and warranties to the
Shareholders.
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4.1 Organization and Power.
4.1.(a) Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware.
4.1.(b) Power. Buyer has all requisite corporate power to enter into
this Agreement and the other documents and instruments to be executed and
delivered by Buyer and to carry out the transactions contemplated hereby
and thereby.
4.2 Authority.
The execution and delivery of this Agreement and the other documents
and instruments to be executed and delivered by Buyer pursuant hereto and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by the board of directors of Buyer. No other action or proceeding on
the part of Buyer or its shareholders is necessary to authorize this Agreement
or the other documents and instruments to be executed and delivered by Buyer
pursuant hereto or the consummation of the transactions contemplated hereby and
thereby. This Agreement constitutes and, when executed and delivered, the
Ancillary Agreements to be executed and delivered by Buyer pursuant hereto will
constitute, valid and binding agreements of Buyer, enforceable in accordance
with their respective terms, except as may be limited by Laws affecting
creditors' rights generally and by general equitable principles.
4.3 No Brokers or Finders.
Neither Buyer nor any of its directors, officers, employees or
agents has retained, employed or used any broker or finder in connection with
the transactions provided for herein or in connection with the negotiation
thereof.
4.4 Compliance.
The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby, upon satisfaction of the conditions set
forth in Articles 6 and 7 hereof, will not: (a) result in the breach of any of
the terms or conditions of, or constitute a default under or violate, as the
case may be, the charter or bylaws of Buyer, or any agreement, lease, mortgage,
note, bond, indenture, license or other document or undertaking, oral or
written, to which the Buyer or any of its subsidiaries or Affiliates is bound,
or by which any of its or their properties or assets may be bound; or (b)
violate any rule, regulation, writ, injunction, order or decree of any court,
administrative agency or governmental body.
4.5 Litigation.
There are no actions, suits, proceedings or investigations pending
or threatened against Buyer that question the validity of this Agreement or of
any action taken or to be taken in connection herewith by Buyer or the
consummation of the transactions contemplated herein by Buyer.
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4.6 Approvals.
Except for filings and approvals under the HSR Act, all consents,
approvals, authorizations and orders (corporate, governmental or otherwise)
necessary for the due authorization, execution and delivery by Buyer of this
Agreement and the consummation of the transactions contemplated hereby have been
obtained or will be obtained prior to the Closing Date.
4.7 Financing.
Buyer has received, accepted and agreed to a commitment letter from
Bank of America Securities, LLC and Wachovia Securities (the "Debt Financing
Commitment Letter"), committing such entities to provide debt financing for the
transactions contemplated by this Agreement to Buyer in an aggregate amount of
$275,000,000, subject to the terms and conditions set forth therein (such debt
financing, the "Debt Financing"). A true and complete copy of the executed Debt
Financing Commitment Letter is attached hereto as Exhibit D, and a copy of an
executed equity commitment letter from Madison Dearborn Capital Partners IV,
L.P. is attached hereto as Exhibit F. If the Debt Financing is obtained on
substantially the same terms as described in the term sheets attached to the
Debt Financing Commitment Letter, then the Buyer will have, as of the Closing,
sufficient funds to consummate the transactions contemplated by this Agreement,
including payment of the Purchase Price and the amounts set forth in Section
2.3. As of the date hereof, Buyer does not have knowledge of any conditions set
forth in the Debt Financing Commitment Letter or the term sheets attached
thereto which will not be able to be satisfied.
4.8 Investment Intent.
The Shares are being acquired by Buyer for investment and not with a
view to resale.
4.9 No Knowledge of Breach.
Buyer has no knowledge of any breach by the Shareholders of any
representation, warranty or covenant made in this Agreement based upon
information contained in any written report or memorandum prepared by any of
Buyer's attorneys, accountants or consultants and delivered to Buyer or in any
written report or memorandum prepared internally by Madison Dearborn Capital
Partners or any of its principals or associates. In addition, Buyer has no
knowledge of a breach of the representation in the first sentence of Section 3.7
based upon the disclosures set forth in Schedule 3.7.
4.10 No Reliance.
In connection with its decision to purchase the Shares, Buyer, for
itself and on behalf of its Affiliates and related parties, acknowledges,
understands and agrees that: (a) Buyer is a sophisticated party with such
knowledge and experience in business and financial matters as to be capable of
evaluating the merits and risks of purchasing the Shares and consummating the
transactions contemplated hereby; (b) Buyer is not relying upon any
forward-looking projections, forecasts, budgets, financial data or other
forward-looking information (written or oral) with
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respect to the Shares or the business or prospects of the Company prepared by or
furnished to Buyer by or on behalf of any Shareholder, PFMI, the Company or any
Subsidiary ("Forward-Looking Data"); (c) Buyer recognizes that significant
uncertainties are inherent in Forward-Looking Data and that the Shareholders
have not made any representations or warranties, express or implied, relating to
any Forward-Looking Data; and (d) Buyer assumes full and exclusive
responsibility for evaluating the adequacy and accuracy of any Forward-Looking
Data.
4.11 Access to Information.
Buyer has had an opportunity to discuss, with the management of
PFMI, the Company and the Subsidiaries, the management and financial affairs of
PFMI, the Company and the Subsidiaries and to review in detail the records of
the business and operations of PFMI, the Company and the Subsidiaries provided
to Buyer. Buyer has had an opportunity to ask questions and receive answers from
PFMI and the Company regarding the Company, PFMI and the Subsidiaries.
5. COVENANTS
5.1 HSR Act Filings.
To the extent such filings have not been completed prior to the
execution of this Agreement, each party shall, in cooperation with the other
parties, file or cause to be filed any reports or notifications that may be
required to be filed by such party under the HSR Act with the Federal Trade
Commission and the Antitrust Division of the Department of Justice and shall
furnish to the other parties all such information in its possession as may be
necessary for the completion of the reports or notifications to be filed by such
other parties. Before initiating any communication, written or oral, with the
Federal Trade Commission, the Antitrust Division of the Department of Justice or
any other governmental agency or authority or members of their respective staffs
with respect to this Agreement or the transactions contemplated hereby, each
party agrees to consult with the other parties hereto. Buyer shall be
responsible for the payment of all filing or other fees applicable to the
Notification and Report Form filed pursuant to the HSR Act.
5.2 Access to Information and Records.
During the period prior to the Closing, PFMI shall, and shall cause
the Company and the Subsidiaries to, give Buyer, its counsel, accountants and
other representatives, as well as counsel and representatives of Buyer's
lenders, access during regular business hours to business, financial, legal,
regulatory, tax, compensation and other data and information concerning PFMI,
the Company and its Subsidiaries and to the Company's and its Subsidiaries'
directors, officers, employees, agents, representatives, customers and suppliers
for the purposes of such meetings and communications as Buyer reasonably
desires; provided that such access does not interfere with the conduct of the
business of PFMI, the Company and the Subsidiaries and provided further that
Buyer coordinates such access with the Company's Chief Financial Officer and
that Buyer shall not contact customers or vendors of the Company or any
Subsidiary without the prior consent of the Shareholders' Agent, which consent
shall not be withheld or delayed without good reason.
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5.3 Conduct of Business Pending the Closing.
From the date hereof until the Closing, except as otherwise approved
in writing by Buyer, PFMI and the Shareholders covenant as follows, and the
Shareholders shall cause each of the following to occur:
5.3.(a) Ordinary Course of Business. PFMI, the Company and the
Subsidiaries will carry on their business in the ordinary course
consistent with past practices and will not make or institute any material
changes in their methods of purchase, sale, management, accounting or
operation, including (i) collecting accounts receivable, paying accounts
payable and managing inventory in the ordinary course of business
consistent with past practice, (ii) maintaining its respective books,
accounts and records in accordance with past custom and practice as used
in the preparation of the Audited Financial Statements; provided, that
PFMI is currently in the process of adopting GAAP standards for the
preparation of its financial statements, (iii) maintaining in full force
and effect the existence of, and use commercially reasonable efforts to
protect, all material Intellectual Property of PFMI, the Company and the
Subsidiaries, and (iv) complying in all material respects with all
requirements of law and all contractual obligations applicable to PFMI,
the Company and the Subsidiaries and paying all applicable Taxes as and
when such become due and payable.
5.3.(b) Maintain Organization. PFMI, the Company and the
Subsidiaries will take such action as may be necessary to maintain,
preserve and renew their existence, rights and franchises and will use
commercially reasonable efforts to preserve their respective business
organizations intact, to keep available their present officers and
employees and to preserve their present business relationships with
suppliers, customers and others.
5.3.(c) Maintenance of Insurance. PFMI, the Company and the
Subsidiaries shall maintain all of the insurance coverage in effect as of
the date hereof with respect to the business and properties of PFMI, the
Company and the Subsidiaries.
5.3.(d) Maintenance of Property. PFMI, the Company and the
Subsidiaries shall use, operate, maintain and repair all of their
respective material personal property in sufficient operating condition
and repair (ordinary wear and tear excepted), maintain inventory, supplies
and spare parts at customary operating levels consistent with past
practices, replace in accordance with past practice any inoperable, worn
out or obsolete material assets with assets of comparable quality and, in
the event of a casualty, loss or damage to any of the material assets of
PFMI, the Company or the Subsidiaries prior to the Closing Date, either
repair or replace such assets with substantially similar assets.
5.3.(e) Maintenance of Real Property. PFMI, the Company or
Subsidiary (as the case may be) shall maintain the Real Property,
including all of the Facilities and Equipment, in substantially the same
condition as of the date of this Agreement, ordinary wear and tear
excepted, and shall not demolish or remove any of the existing Facilities
and Equipment, or erect new material improvements on the Real Property or
any portion thereof, without the prior written consent of Buyer.
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5.3.(f) Taxes. The Acquired Group shall take all actions necessary
to comply with all applicable Tax laws, including filing all material Tax
Returns on or before the date on which such Returns are due (including
permitted extensions), and paying all Taxes due and owing on or before the
date on which such Taxes are due to the relevant Taxing Authority. Without
the prior written consent of Buyer, the Acquired Group shall not make or
change any election, change an annual accounting period, adopt or change
any accounting method (other than the adoption of GAAP standards for the
preparation of PFMI's financial statements), file any amended Tax Return,
enter into any closing agreement, settle any Tax claim or assessment
relating to the Acquired Group, surrender any right to claim a refund of
Taxes, consent to any extension or waiver of the limitation period
applicable to any Tax claim or assessment relating to the Acquired Group,
or take any other similar action relating to the filing of any material
Tax Return or the payment of any Tax, if such election, adoption, change,
amendment, agreement, settlement, surrender, consent or other action would
have the effect of increasing the Tax liability of the Acquired Group for
any period ending after the Closing Date or decreasing any Tax attribute
of the Acquired Group existing on the Closing Date.
5.3.(g) Title Insurance and Surveys. The Company shall use its
commercially reasonable efforts to assist Buyer in obtaining title
commitments, title policies and surveys in connection with Buyer's
financing, including without limitation, executing such affidavits and
undertakings as may be necessary to issue the title policies and all
endorsements thereto requested by Buyer or its lender (including, extended
coverage, creditor's rights endorsement, and a non-imputation
endorsement), and removing from title any liens or encumbrances which are
not Permitted Liens.
5.4 Negative Covenants.
Except as otherwise expressly provided herein or as expressly
consented to in writing by Buyer, prior to the Closing Date, none of PFMI, the
Company or any Subsidiary shall, and the Shareholders shall not permit PFMI, the
Company or any Subsidiary to:
5.4.(a) (1) adopt, enter into or materially amend any Benefit Plan,
including any bonus, profit sharing, compensation, stock option, warrant,
pension, retirement, deferred compensation, employment, severance,
termination, change in control or other employee benefit plan, agreement,
trust fund or arrangement for the benefit or welfare of any officer,
director, employee or consultant, (2) agree to any increase in the
compensation payable or to become payable to, or any increase in the
contractual term of employment of, any officer, director or consultant or
(other than in the ordinary course of business and consistent with past
practice) salaried employee or (3) pay any material benefit not required
by any Benefit Plan or other plan or agreement;
5.4.(b) sell, lease, license or otherwise dispose of any interest in
any of the material assets of PFMI, the Company or any Subsidiary, other
than sales of inventory in the ordinary course of business consistent with
past practice or as otherwise expressly permitted pursuant to this
Agreement, or permit, allow or suffer any of the material assets of PFMI,
the Company or any Subsidiary to be subjected to any Lien, other than any
Lien
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which exists as of the date of this Agreement (all of which shall be
released, satisfied or otherwise discharged as of the Closing Date, other
than the Permitted Liens);
5.4.(c) except with respect to capital expenditures in connection
with the retrofit of Line 7 at the Company's manufacturing facility in
Cincinnati, Ohio which capital expenditures shall not exceed $1,700,000,
make capital expenditures in excess of $500,000 in the aggregate for any
single item or project;
5.4.(d) do or omit to take any action, or permit any omission to
act, that would cause a material breach or default under, or the
termination, modification or amendment of, any contract or agreement
listed on Schedule 3.17 or any government license, permit or other
authorization;
5.4.(e) amend their charters or bylaws;
5.4.(f) sell, assign or otherwise transfer or attempt to sell,
assign or otherwise transfer any of the Shares or any other capital stock
or equity securities, except to Buyer pursuant hereto; and PFMI shall
refuse to accept any certificates for Shares to be transferred or
otherwise to allow such sale, assignment or transfer to occur upon its
books;
5.4.(g) enter into any new, or amend any existing, material
contracts, agreements or commitments, including purchases of raw materials
or supplies and sale of goods or services (real, personal, or mixed,
tangible or intangible), except contracts, commitments, purchases or sales
that are in the ordinary course of business and consistent with past
practice;
5.4.(h) amend, modify, extend, renew or terminate any Lease, or
enter into any new lease, sublease, license or other agreement for the use
or occupancy of any real property requiring rental and other payments in
excess of $250,000 annually;
5.4.(i) take or omit to take any action which would be
reasonably anticipated to have a Material Adverse Effect;
5.4.(j) except as set forth on Schedule 5.4(j), enter into any
transaction with or distribute any assets or property to any of its
officers, directors, partners, stockholders or Affiliates; or
5.4.(k) authorize or enter into an agreement to take any
actions prohibited by this Section 5.4.
5.5 Consents.
Each of the Shareholders will use their commercially reasonable
efforts prior to Closing to obtain or to cause PFMI, the Company and the
Subsidiaries to obtain, all third-party and governmental consents necessary for
consummation of the transactions contemplated hereby.
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5.6 Satisfaction of Conditions Precedent.
5.6.(a) By All Parties. Each of the Shareholders and Buyer shall use
their commercially reasonable efforts to cause the fulfillment at the
earliest practicable date of all of the conditions to each other party's
obligations to consummate the transactions contemplated by this Agreement.
5.6.(b) By the Shareholders' Agent. The Shareholders' Agent shall
(i) use his commercially reasonable efforts to cause all conditions
precedent to the Shareholders' obligations hereunder to be satisfied to
the extent satisfaction of such conditions is within their control and
(ii) not take any action or omit to take any action within his reasonable
control to the extent that such action or omission might result in the
breach of any term or condition of this Agreement or in any representation
or warranty by the Shareholders in this Agreement being incorrect as of
the Closing Date.
5.6.(c) By Buyer. Without limiting the generality of Section 5.6(a),
in the event Buyer is unable to secure the Debt Financing from the lenders
issuing the Debt Financing Commitment Letter, Buyer shall use commercially
reasonable efforts to secure alternative sources of financing, provided
that such financing is available on substantially similar terms as set
forth in the Debt Financing Commitment Letter.
5.6.(d) Antitrust Requirements. The parties shall use their
commercially reasonable efforts to resolve such objections, if any, as may
be asserted by any antitrust authority with respect to the transactions
contemplated hereby; provided, however, that, notwithstanding any other
provision of this Agreement, neither the Company nor any of its Affiliates
shall be required to divest any of their respective businesses, product
lines or assets, or to take or agree to take any other action or agree to
any limitation that could reasonably be expected to have a material
adverse effect on the business, assets, condition (financial or
otherwise), results of operations or prospects of the Company or any such
Affiliate or that the Company or such Affiliate considers inconsistent
with its business plans.
5.7 Employees.
Benefits; Crediting of Service. Buyer shall provide, or cause the
Company and the Subsidiaries to provide, for at least twelve months after the
Closing Date, to all employees of the Company and the Subsidiaries in connection
with their service as employees of Buyer, the Company or a Subsidiary after the
Closing, employee benefits that are on the whole substantially similar to those
provided to the employees immediately prior to the Closing Date, including,
without limitation, group health plan benefits comparable to the group health
plan benefits available to the employees immediately prior to the Closing Date.
Buyer shall grant and shall continue to credit, or cause the Company and the
Subsidiaries to credit, and continue to credit, to all employees under all of
its employee benefit plans in which employees are or will be eligible to
participate, all service with the Company and the Subsidiaries credited to them
and to be credited to them in respect of employee benefits for all purposes
under such plans.
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5.8 Books, Records and Information.
5.8.(a) Inspection of Documents. The Buyer agrees that all
documents delivered to the Buyer by or for the Shareholders' Agent
pursuant to this Agreement and all documents of Company and the
Subsidiaries shall after the Closing be open for inspection by
Shareholders' Agent after prior written notice at any time during
regular business hours for reasonable and necessary purposes related to
the preparation of tax returns or financial reports until such time as
documents are destroyed or possession thereof is given to the other
party as provided for in Section 5.8(b) hereof and that the
Shareholders' Agent may during such period at its expense make such
copies thereof as it reasonably requests; provided that such documents
and information shall remain subject to the confidentiality provisions
of Section 5.16 hereof.
5.8.(b) Destruction of Documents. Without limiting the
generality of Section 5.8(a) hereof, for the period ending beginning on
the Closing Date and ending on the sixth anniversary of the Closing
Date, neither the Buyer nor the Shareholders' Agent shall destroy or
give up possession of any item referred to in Section 5.8(a) hereof
without first offering in writing to the other (or, in the case of the
Company or a Subsidiary, to the Shareholders' Agent), the opportunity
for a period of not less than 15 business days after the date such
written offer is delivered, at the other's (or the Shareholders'
Agent's) expense (but without any other payment), to obtain any such
items. Thereafter, each party shall be free to dispose of any such
items as such party deems fit.
5.8.(c) Access to Employees. For a period of three years
following the Closing, the Buyer shall use reasonable efforts to afford
the Shareholders' Agent access, upon reasonable advance notice and
during normal business hours, to employees of the Company as the
Shareholders' Agent may reasonably request for proper corporate
purposes, including, without limitation, the defense of legal
proceedings and the preparation of corporate Tax Returns; provided that
such access does not unreasonably interfere with the operation of the
business, in which case Buyer and Shareholders' Agent shall agree on an
alternative time which does not cause such interference. Such access
may include interviews or attendance at depositions or legal
proceedings. All out-of-pocket expenses reasonably incurred by the
Buyer in connection with this Section 5.8(c) shall be paid or promptly
reimbursed by the Shareholders; such reimbursement shall include the
cost on a pro rata basis of the salary or wages and benefits of the
employee involved to the extent the time involved for any particular
employee is in excess of five business days per calendar year.
5.9 Obligation to Update.
The Shareholders shall have an obligation to notify Buyer in
writing after the date hereof and prior to Closing (the "Update Period") with
respect to any matter discovered during the Update Period which would have been
required to be set forth or described in the Schedules. The Shareholders' Agent
shall have the right to amend the Schedules with respect to any such matter by
addition, deletion or revision at any time up to five days prior to the Closing;
provided, however, such updates, amendments or modifications shall only modify
the Schedules for
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purposes of determining whether there has been a breach of a representation and
warranty contained herein for which Buyer may seek post-Closing indemnification
pursuant to Section 8.1 hereof and shall not modify the Schedules to this
Agreement for purposes of determining whether Buyer's obligations to consummate
the transactions contemplated hereby are satisfied pursuant to Article 6.
5.10 Indemnification and Insurance.
5.10.(a) Buyer agrees that all rights to exculpation and
indemnification for acts or omissions occurring prior to the Closing
Date now existing in favor of the current or former directors or
officers of the Company (the "Directors and Officers") as provided in
its charter or bylaws, in each case as in effect at the date hereof,
shall survive the Closing and shall continue in full force and effect
in accordance with their terms without amendment thereof. For three
years after the Closing Date, Buyer shall exculpate and indemnify the
Directors and Officers to the same extent as such Indemnified Parties
are entitled to exculpation and indemnification pursuant to the
immediately preceding sentence.
5.10.(b) For two years after the Closing Date, Buyer shall
maintain in full force and effect the Company's current (or, in
substitution therefor, reasonably equivalent) directors' and officers'
liability insurance (to the extent such insurance is available at
premium rates not to exceed 150% of the premium rate which the Company
is paying on the date hereof) covering those persons who are covered by
the Company's directors' and officers' liability insurance policy at
the date hereof; provided that if such insurance is only available at
rates which exceed 150% of the rate which the Company is paying on the
date hereof, Shareholders may, at their option, agree to pay any
additional premium amounts over such amount to cause the Company to
maintain such insurance.
5.11 Other Agreement.
Immediately prior to Closing, the Company shall make all asset
distributions contemplated by that certain letter agreement, dated and executed
as of the date hereof, among the Company, PFMI, Xxxxx X. Xxxxx and Xxxxx X.
Xxxxxxxxxx, Xx. (the "Asset Distribution Letter Agreement"), a copy of which is
attached hereto as Exhibit K.
5.12 Tax Matters.
To the extent any amount due and owing under (i) the Xxxxx
Fee, (ii) the Executive Bonus Payments, (iii) the Asset Distribution Letter
Agreement, or (iv) any other payment may be deemed an "excess parachute payment"
within the meaning of Code Section 280G (or any corresponding provision of
state, local or foreign law), prior to the Closing the Acquired Group shall hold
a shareholder vote in compliance with the shareholder approval requirements of
Code Section 280G(b)(5)(B) and Treasury Regulation Section 1.280G-1 Q & A 7 with
respect to such amount.
5.13 Exclusivity.
5.13.(a) Each of the Shareholders, PFMI, the Company and the
Subsidiaries agrees that, commencing on the date of this Agreement and
until the earlier
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of the Closing or the date on which this Agreement has been terminated
by its terms (the "Exclusivity Period"), Buyer shall have the exclusive
right to consummate the transactions contemplated by this Agreement.
5.13.(b) Without limiting the generality of the foregoing,
each of the Shareholders, PFMI, the Company and the Subsidiaries agrees
that, unless this Agreement is terminated by its terms, none of PFMI,
the Company, any Subsidiary or any Shareholder shall (and none of PFMI,
the Company, any Subsidiary or any Shareholder shall cause or permit
any Affiliate, agent or representative or any other Person acting on
their behalf to), directly or indirectly, through any officer,
director, shareholder, partner, Affiliate, employee, agent, investment
banker, attorney, accountant or other representative or otherwise, (a)
solicit, initiate or encourage the submission of any proposal or offer
(an "Acquisition Proposal") from any Person (including any of its
officers, directors, partners, shareholders, Affiliates, employees,
agents and other representatives) relating to any liquidation,
dissolution, recapitalization of, merger or consolidation with or into,
or acquisition or purchase of all or any portion of the capital stock
of, or any material asset of (other than sales of inventory in the
ordinary course of business), or all or substantially all of the assets
of, or any capital stock or other equity security of, any of PFMI, the
Company or any of its Subsidiaries or any other similar transactions or
business combination involving any of PFMI, the Company or any of its
Subsidiaries (other than the transactions contemplated by the Asset
Distribution Letter Agreement), or (b) participate in any discussions
or negotiations regarding, or furnish to any other Person any
information with respect to, or otherwise cooperate in any way with, or
assist or participate in, facilitate or encourage any effort or attempt
by any other Person to do or seek to do any of the foregoing.
5.13.(c) Each of the Shareholders, PFMI, the Company and the
Subsidiaries represents that it has suspended (and has caused its
officers, directors, shareholders, partners, Affiliates, employees,
agents, investment bankers, attorneys, accountants or other
representatives to suspend), and shall cease for the duration of the
Exclusivity Period, all contacts, discussions and negotiations with
third parties (other than Buyer and its Affiliates, agents and
representatives) regarding any Acquisition Proposal. Each of the
Shareholders, PFMI, the Company and the Subsidiaries shall promptly
notify Buyer if any such Acquisition Proposal, or any inquiry or
contact with any Person with respect thereto (including any Person with
whom any Shareholder, PFMI or the Company or any Subsidiary has already
had such discussions), is made and shall provide reasonable detail
regarding the nature of such proposal, inquiry or contact and such
Shareholder's, PFMI's or the Company's or any Subsidiaries' response
thereto.
5.14 Non-Competition.
In consideration of the mutual covenants provided for herein
to Shareholders at the Closing, during the period beginning on the Closing Date
and ending on the fifth anniversary of the Closing Date (the "Non-Compete
Period"), each of the Shareholders shall not, directly or indirectly through
such Shareholder's Affiliates or otherwise, engage (whether as an owner,
operator, manager, employee, officer, director, consultant, advisor,
representative or otherwise) in any business involved in producing and
distributing packaged, fully cooked food products to
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the foodservice, home meal replacement and retail markets (the "Competitive
Business") in any geographic area in which PFMI, the Company or such Subsidiary
conducts the Competitive Business or has current written plans to conduct the
Competitive Business as of the Closing Date; provided that ownership of less
than 5% of the outstanding stock of any publicly-traded corporation shall not be
deemed to be engaging solely by reason thereof in any of its business; provided
further, that neither Xxxxx X. Xxxxxxxxxx, Xx.'s ownership and management of
Hoggs, LLC (ham curing) nor Xxxxx X. Xxxxxxxxxx, Xx.'s and Xxxxx X. Xxxxxxxxx'x
ownership and management of restaurants shall be deemed a Competitive Business.
Each Shareholder expressly acknowledges and agrees that each and every
restriction imposed by this Section 5.14 is reasonable with respect to subject
matter, time period and geographical area. If, at the time of enforcement of
this Section 5.14 or Section 5.15 of this Agreement, a court holds that the
restrictions stated herein are unreasonable under circumstances then existing,
the parties hereto agree that the maximum period, scope or geographical area
reasonable under such circumstances shall be substituted for the stated period,
scope or area and that the court shall be allowed to revise the restrictions
contained herein to cover the maximum period, scope and area permitted by law.
5.15 Non-Solicitation.
Each Shareholder agrees that, during the period beginning on
the Closing Date and ending on the third anniversary of the Closing Date, such
Shareholder shall not, directly or indirectly through its Affiliates or
otherwise (i) hire or solicit for hire any current employee of PFMI, the Company
or its Subsidiaries, or any Person that was an employee of PFMI, the Company or
any of its Subsidiaries at any time within six (6) months prior to the Closing
Date, (ii) induce or attempt to induce any such employee or former employee to
leave the employ of PFMI, the Company or its Subsidiaries or Affiliates, or
(iii) in any way interfere with the relationship between PFMI, the Company and
any of its subsidiaries or Affiliates and any such employee or former employee;
provided that, the provisions of this first sentence shall not apply with
respect to the hiring of the North Carolina Employees, or the hiring of Xxxxxx
X. Xxxxxxx ("Xxxxxxx") upon the expiration of the term of employment under the
employment agreement to be entered into by and between the Company and Xxxxxxx
on the Closing Date. Each Shareholder further agrees that, during the
Non-Compete Period, such Shareholder shall not, directly or indirectly through
its Affiliates or otherwise, in any manner take or cause to be taken any action
which is designed or intended, or would be reasonably anticipated to have the
effect of discouraging customers, suppliers, referral sources, governmental
agencies, insurance companies, lessors, consultants, advisors and other business
associates from maintaining the same business relationships with PFMI, the
Company and its Subsidiaries after the Closing Date as were maintained with
PFMI, the Company and its Subsidiaries prior to the Closing Date (including,
without limitation, making any negative or disparaging statements or
communications regarding Buyer, PFMI, the Company or any Subsidiary).
5.16 Confidentiality.
After the Closing, each Shareholder agrees not to disclose or
use at any time any Confidential Information. In the event Shareholders are
required by law to disclose any Confidential Information, Shareholders shall
promptly notify Buyer in writing, which notification shall include the nature of
the legal requirement and the extent of the required
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disclosure, and Shareholders shall cooperate with Buyer to preserve the
confidentiality of such information consistent with applicable law; provided
that Buyer shall reimburse Shareholders for any out-of-pocket expenses incurred
by Shareholders in cooperating with Buyer hereunder.
5.17 Offering Materials.
5.17.(a) During the period commencing on the date hereof and
ending on the Closing Date, the Shareholders' Agent shall provide Buyer
and its representatives with monthly financial statements for PFMI, the
Company and its Subsidiaries.
5.17.(b) PFMI shall provide, and shall cause the Company and
its Subsidiaries to provide, all reasonable cooperation and assistance
in connection with the arrangement of the Debt Financing, including
facilitating customary due diligence, participation in meetings and
providing certificates, documents and financial reports as may be
reasonably requested by Buyer.
5.17.(c) PFMI shall, and shall cause the Company and its
Subsidiaries to, use commercially reasonable efforts to cooperate with
and assist, and shall use commercially reasonable efforts to cause the
independent accountants for the Company and its Subsidiaries, to
cooperate and assist, Buyer in preparing such information packages and
offering materials as the parties to the Debt Financing Commitment
Letter may reasonably request (collectively, the "Offering Materials")
for use in connection with the offering and/or syndications of debt
securities, loan participations and other matters contemplated by the
Debt Financing Commitment Letter (the "Offerings"), including, without
limitation, (i) making senior management and other representatives of
the Company and its Subsidiaries available (at mutually agreeable
times) to participate in meetings with prospective investors,
participating in "road shows" in connection with any such Offerings and
participating in meetings with rating agencies and causing the present
and former independent accountants for PFMI, the Company and its
Subsidiaries to participate in drafting sessions related to the
preparation of the Offering Materials and making work papers available
to Buyer, the underwriters and their respective representatives;
provided that, Buyer shall reimburse the Company for all out-of-pocket
travel expenses of its senior management and the reasonable fees and
expenses of attorneys and financial advisors to the Company in
connection with participation in such "road shows" and other meetings
or otherwise incurred in connection with the Offerings; (ii) delivering
"comfort letters" in customary form in connection with any Offering;
(iii) delivering consents to the inclusion of financial statements
required in connection with any Offering registered under the
Securities Act; and (iv) providing such information and assistance as
the parties to such Debt Financing Commitment Letter may reasonably
request in connection therewith.
5.18 Delivery of Financial Statements by Buyer.
In connection with determining the eligibility of the
Shareholders for any Earn-Out Warrants, Buyer shall deliver to Shareholders
Agent copies of the Company's audited financial statements for the fiscal years
ended March 5, 2005 and March 4, 2006, respectively, promptly following receipt
thereof from the Company's independent accountants; provided,
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however, in the event the Company has not (i) entered into a binding agreement
with Burger King Corporation and/or one of its authorized purchasing
cooperatives with a duration of not less than one (1) year prior to March 5,
2005 or (ii) sold at least ten million pounds of meat product to Burger King
Corporation and/or one of its authorized purchasing cooperatives during the
period beginning on the Closing Date and ending March 5, 2005, Buyer shall not
be required to deliver to Shareholders' Agent copies of the Company's audited
financial statements for the fiscal year ended March 4, 2006. In addition, in
connection with determining whether the Cash Increase becomes payable, Buyer
shall deliver to Shareholders' Agent copies of the Company's unaudited financial
statements for each of the fiscal quarters for the fiscal year ended March 5,
2005 promptly following the completion thereof by the Company. In the event that
the accounting standards used in the preparation of the annual audited financial
statements and the quarterly unaudited financial statements being delivered to
Shareholders' Agent pursuant to this Section 5.18 differ from those used in the
preparation of the Company's audited financial statements for the fiscal year
ended March 6, 2004 being delivered to Buyer under Section 6.12 herein, Buyer
shall provide Shareholders' Agent with a supplement identifying any such change
in accounting standards. Shareholders' Agent agrees that the financial
statements being delivered pursuant to this Section 5.18 shall constitute
Confidential Information and shall therefore be subject to the confidentiality
provisions of Section 5.16.
6. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
Each and every obligation of Buyer to be performed on the
Closing Date shall be subject to the satisfaction as of the Closing of each of
the following conditions:
6.1 Representations and Warranties True on the Closing Date.
Each of the representations and warranties made by the
Shareholders in this Agreement and the Tax Sharing Agreement which are not
qualified as to materiality shall be true and correct in all material respects
and each of the representations and warranties of the Shareholders which are
qualified as to materiality shall be true and correct in all respects, in each
case when made and at and as of the Closing Date as though such representations
and warranties were made or given on and as of the Closing Date, except for any
changes consented to in writing by Buyer.
6.2 Compliance With Agreement.
The Shareholders shall have in all material respects performed
and complied with all of their covenants, agreements and obligations under this
Agreement and the Tax Sharing Agreement that are to be performed or complied
with by them prior to or on the Closing Date.
6.3 No Litigation.
No suit, action or other proceeding, or other Order (including
a temporary restraining order) or final judgment, order or decree relating
thereto, of any state or federal court or other governmental agency in which it
is sought to obtain damages or other relief (including recission), or which
prevents or restrains the consummation of the transactions which are the subject
of this Agreement or prohibits Buyer's ownership of the Shares, or that has had,
or would reasonably be expected to have, a Material Adverse Effect, shall be
pending or threatened; no
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investigation that would result in any such suit, action or proceeding shall be
pending or threatened and no such judgment, order or decree has been entered and
not subsequently dismissed with prejudice.
6.4 Third Party Consents and Approvals.
All approvals, consents, licenses and waivers from
third-parties that are required to effect the transactions contemplated hereby
(including any consents required under any Lease), that are required for the
transfer of the Shares to Buyer or that are required in order to prevent a
breach of or a default under or a termination or modification of or any right of
acceleration of any obligations under any contract which is listed on Schedule
6.4 attached hereto and prepared by Buyer shall have been received, all on terms
reasonably satisfactory to Buyer and originals or copies of executed
counterparts thereof shall have been made available for inspection by Buyer
prior to the Closing ("Third Party Approvals").
6.5 Governmental Approvals.
All governmental filings, authorizations and approvals that
are required for the transfer of the Shares to Buyer and the consummation of the
transactions contemplated hereby shall have been duly made and obtained on terms
reasonably satisfactory to Buyer, and all applicable waiting periods (and any
extensions thereof) under the HSR Act shall have expired or been terminated.
("Governmental Approvals").
6.6 Material Adverse Effect.
From the date hereof to the Closing Date, there shall have
been no change, event or development that has had, or would reasonably be
expected to have, a Material Adverse Effect.
6.7 Certain Payoffs.
Shareholders shall have delivered to Buyer (i) payoff letters
with respect to all Indebtedness covered by clauses (i) and (ii) of the
definition of Indebtedness in Section 11.14 hereof which is outstanding as of
the Closing, including all indebtedness secured by the Owned Real Property, and
releases of any and all Liens securing such Indebtedness and Liens listed on
Schedule 6.7 shall have been obtained, all on terms reasonably satisfactory to
Buyer and (ii) payoff letters covering all Shareholder Transaction Expenses, in
form and substance reasonably satisfactory to Buyer (collectively, "Payoff
Letters").
6.8 Opinion of Counsel.
Buyer shall have received an opinion, dated the Closing Date,
of Xxxxx & Xxxxxxx LLP, counsel to the Company and the Shareholders, in the form
of Exhibit G hereto, and on which Buyer's lenders in connection with the
financing of the transactions contemplated by this Agreement shall be entitled
to rely.
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6.9 Affiliated Transactions; Shareholders Agreement.
The transactions, agreements and arrangements set forth in
Schedule 3.20, the Existing Executive Agreements and the Shareholders Agreement,
shall each have been terminated prior to the Closing, on terms and conditions
reasonably satisfactory to Buyer.
6.10 FIRPTA.
Each Shareholder shall deliver to Buyer a non-foreign
affidavit dated as of the Closing Date, sworn under penalty of perjury and in
form or substance required under the Treasury Regulations issued pursuant to
Code Section 1445 stating that such Person is not a "foreign person" as defined
in Code Section 1445 so that Buyer is exempt from withholding any portion of the
Purchase Price thereunder (the "FIRPTA Affidavit").
6.11 Financing.
Buyer and its subsidiaries shall have received the necessary
financing in order to consummate the transactions contemplated by this Agreement
on terms and conditions substantially similar to those set forth in the term
sheets attached to the Debt Financing Commitment Letter.
6.12 Audited Financial Statements.
Buyer shall have received (i) the audited consolidated
financial statements of the Company and its Subsidiaries for the fiscal year
ended March 6, 2004 and (ii) the audited consolidated financial statements of
PFMI for its fiscal years ended March 2, 2002, March 1, 2003 and March 6, 2004
(collectively, the statements in clauses (i) and (ii) shall be referred to
herein as the "Recent Audited Financial Statements"), and shall have been given
access to the audit work papers (and the Company's outside accountants) related
to the Recent Audited Financial Statements, and such Recent Audited Financial
Statements shall be in form and substance reasonably satisfactory to Buyer;
provided that this condition shall be deemed satisfied and shall terminate at
the close of business on the sixth business day following Buyer's receipt of
such audited financial statements and access to work papers and accountants
unless Buyer provides written notice to the Shareholders' Agent of the failure
of this condition prior to such time; provided further that this condition shall
be deemed satisfied if the Recent Audited Financial Statements do not deviate
materially from the Company Unaudited Financial Statements in the case of the
financial statements delivered pursuant to clause (i) (other than with respect
to an increase in income taxes payable in an amount not to exceed $800,000, an
increase in the provision for income taxes in an amount not to exceed $800,000
and a decrease in the amount of stockholder's equity in an amount not to exceed
$4 million), and do not deviate materially from the PFMI Unaudited Financial
Statements in the case of the financial statements delivered pursuant to clause
(ii) (other than with respect to deviations arising from the conversion of
financial statements prepared on a cash basis to financial statements prepared
in accordance with GAAP and adjustments related to the preparation of the
consolidated tax provision for the fiscal year ended March 6, 2004).
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6.13 280G Payments.
There shall have been no payments that PFMI, the Company or
any Subsidiary, Buyer or any of their Affiliates has made or is or may be
required to make as a result of the transactions contemplated hereby that was,
is, or will be an "excess parachute payment" within the meaning of Code Section
280G.
6.14 Tender Offer.
Buyer or a wholly-owned subsidiary of Buyer shall have
received affirmative tenders and acceptances of payments for not less than a
majority of the aggregate principal amount of each issue of the outstanding
Company Notes pursuant to its tender offer for the outstanding Company Notes and
in connection therewith shall have received all necessary consents from such
majority to amend the terms and conditions of each indenture governing the
Company Notes to permit the financing contemplated under the Commitment Letters
and the sale of the Shares to Buyer. If the foregoing is not achieved, Buyer
shall use commercially reasonable efforts to find an alternate means by which to
satisfy the obligation of the Company under the Company Notes, including but not
limited to obtaining a bridge loan or assuming the Company Notes; provided that
such alternative means are available on terms and conditions consistent with the
terms set forth in the Debt Financing Commitment Letter.
6.15 Earn-Out Warrants.
The Earn-Out Warrants, the form of which is attached hereto as
Exhibit C, shall have been executed by the Shareholders and delivered to Buyer
at Closing.
6.16 Closing Deliveries.
Buyer shall have received from the Shareholders and the
Shareholders' Agent all of the instruments, documents and considerations
described in Section 9.1; the form and substance of all such deliveries shall be
reasonably satisfactory to Buyer; and the Shareholders' Agent and Escrow Agent
shall have executed and delivered the Escrow Agreement.
7. CONDITIONS PRECEDENT TO THE SHAREHOLDERS' OBLIGATIONS
Each and every obligation of the Shareholders to be performed
on the Closing Date shall be subject to the satisfaction prior to or at the
Closing of the following conditions:
7.1 Representations and Warranties True on the Closing Date.
Each of the representations and warranties made by Buyer in
this Agreement shall be true and correct in all material respects when made and
shall be true and correct in all material respects at and as of the Closing Date
as though such representations and warranties were made or given on and as of
the Closing Date.
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7.2 Compliance With Agreement.
Buyer shall have in all material respects performed and
complied with all of Buyer's agreements and obligations under this Agreement
which are to be performed or complied with by Buyer prior to or on the Closing
Date.
7.3 No Litigation.
No suit, action or other proceeding, or preliminary or
permanent injunction or other order (including a temporary restraining order) or
final judgment, order or decree relating thereto, of any state or federal court
or other governmental agency in which it is sought to obtain damages or other
relief (including recission), or which prevents or restrains the consummation of
the transactions which are the subject of this Agreement or prohibits the
Buyer's ownership of the Shares, or that has had, or would reasonably be
expected to have, a Material Adverse Effect, shall be pending or threatened; no
investigation that would result in any such suit, action or proceeding shall be
pending nor threatened and no such judgment, order or decree has been entered
and not subsequently dismissed with prejudice.
7.4 Governmental Consents.
All governmental filings, authorizations and approvals that
are required for the consummation of the transactions contemplated hereby shall
have been duly made and obtained on terms reasonably satisfactory to
Shareholders, and all applicable waiting periods (and any extensions thereof)
under the HSR Act shall have expired or been terminated.
7.5 Earn-Out Warrants.
The Earn-Out Warrants, the form of which is attached hereto as
Exhibit C, shall have been executed by Buyer and delivered to the Shareholders
at Closing.
7.6 Closing Deliveries.
The Shareholders shall have received from Buyer all of the
instruments, documents and considerations described in Section 9.2, and the form
and substance of all such deliveries shall be reasonably satisfactory in all
material respects to Shareholders' Agent.
8. INDEMNIFICATION
8.1 By Shareholders.
Subject to the terms and conditions of this Article 8, the
Shareholders hereby agree to indemnify, defend and hold harmless Buyer and its
Affiliates, stockholders, officers, directors, employees, agents,
representatives, successors and permitted assigns (collectively, the "Buyer
Indemnitees") from and against all Losses asserted against, resulting to,
imposed upon, or incurred by any such Buyer Indemnitee, directly or indirectly,
by reason of, arising out of or resulting from:
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8.1.(a) the inaccuracy or breach of any representation or
warranty of Shareholders contained in or made pursuant to this
Agreement, any Schedule hereto (after giving effect to updates to the
Schedules pursuant to Section 5.9) or any certificate delivered by the
Shareholders to Buyer with respect hereto or thereto in connection with
the Closing;
8.1.(b) the nonfulfillment or breach of any covenant of
Shareholders or PFMI contained in this Agreement or any Schedule
hereto, including any payment due by the Shareholders after final
determination of a Purchase Price Adjustment pursuant to Article 2;
8.1.(c) any claim for payment of fees and/or expenses as a
broker or finder in connection with the origin, negotiation or
execution of this Agreement or the consummation of the transactions
contemplated hereby based upon any alleged agreement, arrangement or
understanding between the claimant and PFMI, the Company, any
Subsidiary or any Shareholder or any of their agents or
representatives;
8.1.(d) PF Distribution, LLC, a North Carolina limited
liability company, PF Purchasing, LLC, a North Carolina limited
liability company, Columbia Hill Aviation, or the business, operations
or winding up of any of such entities;
8.1.(e) the ownership, operation, use or transfer of any
assets, properties or rights to be distributed pursuant to the Asset
Distribution Letter Agreement or any obligation or liability related
thereto, or arising in connection with the transactions contemplated by
the Asset Distribution Letter Agreement; or
8.1.(f) the litigation matters referred to in items 2, 3 and 4
under part (i) of Schedule 3.12;
8.1.(g) any claim made or payment required in respect of the
unredeemed stock of PFMI from the management buyout transaction on July
26, 2002;
8.1.(h) the lease guaranty agreements for the Prime Sirloin
restaurant leases as referenced in item 9 on Schedule 3.17(iv), or any
obligation or liability related thereto or arising thereunder;
8.1.(i) the engagement letter, dated as of December 13, 2001,
by and between PFMI and Xxxxxxx X. Xxxxx & Sons, LLC, and any
obligations or liabilities thereunder including, without limitation,
any claim for fees or other compensation thereunder arising out of or
related to the transactions contemplated by this Agreement including
the tender offer and redemption of the Company Notes;
8.1.(j) the matters described in the Benefits Side Letter
Agreement, or any obligation or liability related thereto;
8.1.(k) Claremont Restaurant Group LLC, Fresh Foods Sales,
LLC, Mom `N' Pop's Country Ham, LLC and Bennet's Restaurant, or the
business, operations, disposition or winding up of any of such
entities; or
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8.1.(l) the judgment lien in favor of AT&T against WSMP, Inc.
As used in this Article 8, the term "Losses" shall include (i)
all debts, liabilities and obligations; (ii) all losses, damages, judgments,
awards, settlements, costs and expenses (including, without limitation, interest
(including prejudgment interest in any litigated matter), penalties, court costs
and reasonable legal and expert witness fees and expenses); and (iii) all
demands, claims, suits, actions, costs of investigation, causes of action,
proceedings and assessments, whether or not ultimately determined to be valid.
The Shareholders' indemnification obligations pursuant to this
Article 8 shall be joint and several, except with respect to the Shareholders'
indemnification obligations under Section 8.1(b) for breaches of the
Shareholders' post-Closing covenants in Sections 5.14, 5.15 and 5.16, which
indemnification obligations shall be several, and not joint.
8.2 By Buyer.
Subject to the terms and conditions of this Article 8, Buyer
hereby agrees to indemnify, defend and hold harmless the Shareholders and their
respective heirs, beneficiaries and permitted assigns (collectively, the
"Shareholder Indemnitees") from and against all Losses asserted against,
resulting to, imposed upon or incurred by any of them, directly or indirectly,
by reason of or resulting from:
8.2.(a) the inaccuracy or breach of any representation or
warranty of Buyer contained in or made pursuant to this Agreement, any
Schedule hereto or any certificate delivered by Buyer to the
Shareholders with respect hereto or thereto in connection with the
Closing;
8.2.(b) the nonfulfillment or breach of any covenant of Buyer
contained in this Agreement, including any payment due by Buyer after
final determination of a Purchase Price Adjustment pursuant to Article
2; or
8.2.(c) any claim for payment of fees and/or expenses as a
broker or finder in connection with the origin, negotiation or
execution of this Agreement or the consummation of the transactions
contemplated hereby based upon any alleged agreement, arrangement or
understanding between the claimant and Buyer or any of its agents or
representatives.
8.3 Manner of Payment.
Except as otherwise provided herein, any indemnification of
the Buyer Indemnitees or Shareholder Indemnitees pursuant to this Article 8
shall be effected by wire transfer of immediately available funds from the
Shareholders or Buyer, as the case may be, to an account(s) designated by the
applicable Buyer Indemnitee or Shareholder Indemnitee, within ten (10) days
after the determination thereof. Any amounts owing from the Shareholders
pursuant to this Article 8 for breaches of representations and warranties of the
Shareholders shall first be made to the extent possible from the Escrowed Amount
and thereafter shall be made directly by the Shareholders in accordance with the
terms of this Section 8.3.
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8.4 Indemnification of Third-Party Claims.
The obligations and liabilities of any party to indemnify any
other party under this Article 8 with respect to actions, lawsuits or other
claims brought by third-parties shall be subject to the following terms and
conditions:
8.4.(a) Notice and Defense. The party or parties entitled to
be indemnified under this Article 8 (whether one or more, the
"Indemnified Party") will give the party from whom indemnification is
sought (the "Indemnifying Party") prompt written notice after receiving
written notice of any action, lawsuit, proceeding, investigation or
other claim against it (if by a third party) or discovering the
liability, obligation or facts giving rise to such claim for
indemnification, and the Indemnifying Party shall be entitled to
participate in the defense of such action, lawsuit, proceeding,
investigation or other claim giving rise to an Indemnified Party's
claim for indemnification at such Indemnifying Party's expense, and at
its option (subject to the limitations set forth below) shall be
entitled to appoint a recognized and reputable counsel reasonably
acceptable to the Indemnified Party to be the lead counsel in
connection with such defense; provided, that prior to the Indemnifying
Party assuming control of such defense, it shall first verify to the
Indemnified Party in writing that such Indemnifying Party shall be
fully responsible (with no reservation of any rights) for all
liabilities and obligations relating to such claim for indemnification
and that it shall provide full indemnification (whether or not
otherwise required hereunder) to the Indemnified Party with respect to
such action, lawsuit, proceeding, investigation or other claim giving
rise to such claim for indemnification hereunder; provided further, the
Indemnifying Party shall not be entitled to assume control of such
defense and shall pay the fees and expenses of counsel retained by the
Indemnified Party if (i) the claim for indemnification relates to or
arises in connection with any criminal proceeding, action, indictment,
allegation or investigation; (ii) the claim seeks an injunction or
equitable relief against the Indemnified Party; (iii) there is a
reasonably probability that a claim may materially and adversely affect
the Indemnified Party other than as a result of money damages or other
money payments, or (iv) the claim involves environmental matters in
which case the Indemnified Party shall have sole control and management
authority over the resolution of such claim (including hiring legal
counsel and environmental consultants, conducting environmental
investigations and cleanups, negotiating with governmental agencies and
third parties and defending or settling claims and actions). Failure to
give prompt notice shall not affect the Indemnifying Party's duty or
obligations under this Article 8, except to the extent (and only to the
extent that) such failure shall have caused the damages for which the
Indemnifying Party is obligated to be greater than such damages would
have been had the Indemnified Party given the Indemnifying Party prompt
notice hereunder. So long as the Indemnifying Party is defending any
such action actively and in good faith, the Indemnified Party shall not
settle such action. The Indemnified Party shall make available to the
Indemnifying Party or its representatives all records and other
materials required by them and in the possession or under the control
of the Indemnified Party, for the use of the Indemnifying Party and its
representatives in defending any such action, and shall in other
respects give reasonable cooperation in such defense.
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8.4.(b) Failure to Defend. If the Indemnifying Party, promptly
after receiving notice of any claim, demand or action brought by a
third-party, fails to defend such action actively and in good faith,
the Indemnified Party will (upon further written notice) have the right
to undertake the defense, compromise or settlement of such action or
consent to the entry of a judgment with respect to such action, on
behalf of and for the account and risk of the Indemnifying Party, and
the Indemnifying Party shall thereafter have no right to challenge the
Indemnified Party's defense, compromise, settlement or consent to
judgment therein, except on the grounds of gross negligence committed
by the Indemnified Party's counsel.
8.4.(c) Indemnified Party's Rights. Anything in this Section
8.4 to the contrary notwithstanding, the Indemnifying Party shall not,
without the written consent of the Indemnified Party, settle or
compromise any action or consent to the entry of any judgment which
does not include as an unconditional term thereof the giving by the
claimant or the plaintiff to the Indemnified Party of a full and
unconditional release from all liability and obligation in respect of
such action without any payment by the Indemnified Party.
8.5 Tax Effect.
Payments made pursuant to the indemnification obligation of an
Indemnifying Party shall be paid by the Indemnifying Party without reduction for
any Tax benefits available to the Indemnified Party. However, to the extent that
the Indemnified Party recognizes Tax benefits as a result of an Indemnified
claim, the Indemnified Party shall pay the amount of such Tax benefits (but not
in excess of the indemnification payment actually received from the Indemnifying
Party with respect to such Indemnified claim) to the Indemnifying Party. For
this purpose, the amount of a Tax benefit in a given taxable year with respect
to an indemnified claim shall be equal to the excess, if any of (A) the tax
liability of the Indemnified Party through the end of such taxable year,
calculated by excluding any Tax items attributable to the indemnified claim from
all taxable years, over (B) the tax liability of the Indemnified Party through
the end of such taxable year, calculated by taking into account any Tax items
attributable to the indemnified claim for all taxable years (to the extent
permitted by relevant Tax law and treating such Tax items as the last items
claimed for any taxable year). All indemnification payments made under this
Agreement shall be treated as adjustments to the Purchase Price for federal
income tax purposes. If any indemnity payment made hereunder is subject to any
Tax, the Indemnifying Party shall indemnify the Indemnified Party for such Tax
(including any Tax imposed on payments made pursuant to this sentence). To the
extent a Tax benefit repaid to an Indemnifying Party by an Indemnified Party is
later denied or reduced by a Taxing Authority, the Indemnifying Party shall
restore such Tax benefit amount to the Indemnified Party, and the Indemnifying
Party shall indemnify the Indemnified Party for any resulting Tax costs.
8.6 Insurance Effect.
To the extent that any Losses that are subject to
indemnification pursuant to this Article 8 are covered by insurance paid for by
PFMI or the Company prior to the Closing, Buyer shall use commercially
reasonable efforts to obtain the maximum recovery under such insurance; provided
that Buyer shall nevertheless be entitled to bring a claim for indemnification
against
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Shareholders under this Article 8 in respect of such Losses and the time
limitations set forth in Section 8.7 hereof for bringing a claim of
indemnification under this Agreement shall be tolled during the pendency of such
insurance claim. If the Indemnified Party, within twelve months following the
receipt of any indemnity payments pursuant to this Article 8 for any Losses, (i)
obtains any insurance recovery from third-party insurance provided for such
Losses or (ii) obtains any recovery from any other third party for such Losses,
then such Indemnified Party shall promptly pay over to the Indemnifying Party
the amount of the net cash proceeds received by such Indemnified Party for such
Losses, up to the amount of the indemnity payments made by the Indemnifying
Party for such Losses.
8.7 Limitations on Indemnification.
8.7.(a) Time Limitation. The representations and warranties in
this Agreement and the Schedules hereto or in any writing delivered by
Buyer, on the one hand, or the Shareholders, on the other hand, to the
other party in connection with this Agreement (including the
certificate required to be delivered by the Shareholders pursuant to
Section 9.1(b) and the certificate required to be delivered by Buyer
pursuant to Section 9.2(b)) shall survive the Closing until the later
of (i) the date which is twelve (12) months following the Closing Date
and (ii) the date which is sixty (60) days following the date on which
the Company completes its audit for the fiscal year ending March 5,
2005 (the "General Survival Period"). Notwithstanding the foregoing or
any other provision of this Agreement:
(i) The representations and warranties in Section
3.14 (Environmental), and in the certificate required to be
delivered by Shareholders pursuant to Section 9.1(b) with
respect to Section 3.14, shall terminate on the third
anniversary of the Closing Date;
(ii) The representations and warranties in Sections
3.1(a), (b), (c) and (e) (Shareholder Authority, Validity,
Ownership), the first sentence of Section 3.2(a), Sections
3.2(b) and (c) (PFMI Organization, Ownership, Liabilities),
Sections 3.3(a), (e) (except with respect to foreign
qualifications), (f) and (g) (Company Organization,
Qualification, Subsidiaries, Investments, etc.), Section 3.4
(Capital Stock), Section 3.24 (Brokerage), Section 4.1
(Organization and Power), Section 4.2 (Authority) and Section
4.3 (No Brokers or Finders), and in the certificate required
to be delivered by Shareholders pursuant to Section 9.1(b)
with respect to Sections 3.1(a), 3.1(b), 3.1(c), 3.1(e), the
first sentence of 3.2(a), 3.2(b), 3.2(c), 3.3(a), 3.3(e)
(except with respect to foreign qualifications), 3.3(f),
3.3(g), 3.4, 3.24, and in the certificate required to be
delivered by Buyer pursuant to Section 9.2(b) with respect to
Sections 4.1, 4.2 and 4.3, shall not terminate (collectively,
the "Non-Terminating Representations"). The Shareholders and
Buyer each hereby waive all applicable statutory limitation
periods with respect to the breach of any Non-Terminating
Representations.
(iii) The representations and warranties contained in
Section 3.9 (Employee Benefit Plans), and in the certificate
required to be delivered by Shareholders pursuant to Section
9.1(b) with respect to Section 3.9, shall
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terminate when the applicable statutes of limitations with
respect to the liabilities in question expire, plus sixty (60)
days;
(iv) Any claim made by a party hereunder by filing a
suit or action in a court of competent jurisdiction or a court
reasonably believed to be of competent jurisdiction for breach
of a representation or warranty prior to the termination of
the survival period provided hereunder for such claim shall be
preserved despite the subsequent termination of such survival
period; and
(v) Buyer and Shareholders acknowledge that
indemnification hereunder with respect to the breach of any
post-Closing covenant or agreement contained in this
Agreement, including any breach of any covenant or agreement
contained in this Article 8, and any pre-Closing covenant or
agreement that is a Fully Indemnified Representation and
Covenant, shall not be subject to any time or other
limitations.
8.7.(b) Deductible. No amount shall be payable by the
Indemnifying Party under Sections 8.1(a), 8.1(b), 8.2(a) or
8.2(b)(other than with respect to the Fully Indemnified Representations
and Covenants) unless and until the aggregate amount otherwise payable
by such Indemnifying Party exceeds one percent of the sum of the
Purchase Price plus the amounts set forth in item (iv) in Section 2.1
(the "Deductible"), in which event such Indemnifying Party shall only
be obligated to pay the amount payable by such Indemnifying Party in
excess of the amount of the Deductible, and, subject to the limitations
set forth in Sections 8.7(c) and 8.7(d), all future amounts that become
payable by such Indemnifying Party under Sections 8.1(a), 8.1(b),
8.2(a) or 8.2(b) from time to time thereafter.
8.7.(c) Threshold. No amount shall be payable by the
Indemnifying Party under Sections 8.1(a), 8.1(b), 8.2(a) or 8.2(b)
(other than with respect to the Fully Indemnified Representations and
Covenants) for any individual item or series of related items where the
Losses relating to such item or items is less than Twenty-Five Thousand
Dollars ($25,000) (the "Threshold"), and such amounts shall not be
applied against the Deductible.
8.7.(d) Aggregate Amount Limitation. Except with respect to
the Fully Indemnified Representations and Covenants, the Shareholders',
on the one hand, and Buyer's, on the other hand, aggregate liability
for Losses pursuant to Sections 8.1(a), 8.1(b) (other than the Purchase
Price Adjustment) and 8.2(a) shall not exceed ten percent (10%) of the
sum of the Purchase Price plus the amounts set forth in item (iv) in
Section 2.1 (the "Cap"); provided, that the Cap shall be reduced by 33%
(to 66.7% of the Cap) upon the expiration of the General Survival
Period, and by an additional 33% (to 33.3% of the Cap) on the second
anniversary of the Closing Date, but any such reduction shall not
affect any claims made prior to the date of such reduction.
8.7.(e) Mitigation. An Indemnified Party shall take all
commercially reasonable steps to mitigate all indemnifiable Losses upon
and after becoming aware of any event
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that could reasonably be expected to give rise to any Loss that is
indemnifiable hereunder.
8.7.(f) Materiality. For purposes of determining the amount of
any Losses that are the subject matter of a claim for indemnification
hereunder, the Threshold and Deductible amounts shall be the
materiality standard and, therefore, each representation, warranty and
other provision contained in this Agreement and each certificate
delivered pursuant hereto (other than the representation and warranty
in Section 3.7(a)) shall be read without regard and without giving
effect to any materiality or Material Adverse Effect or other
qualification contained in such representation or warranty (as if such
qualification were deleted from such representation and warranty).
8.8 Exclusive Remedy.
Buyer hereby acknowledges and agrees that, from and after the
Closing, its sole remedy with respect to any and all claims for money damages
arising out of or relating to this Agreement, with the exception of the Purchase
Price Adjustment provided in Section 2.4 herein, claims for common law fraud and
claims under the Tax Sharing Agreement, shall be pursuant to the indemnification
provisions set forth in this Article 8.
8.9 Limitations on Claims by Shareholders.
Notwithstanding the terms and provisions of Section 5.10
herein, each of the Shareholders hereby agrees that he will not make any claim
for indemnification or reimbursement against PFMI, the Company, its Subsidiaries
or the Buyer by reason of the fact that he was a director, officer, employee, or
agent of PFMI, the Company or any Subsidiary or was serving at the request of
PFMI, the Company or any Subsidiary as a partner, trustee, director, officer,
employee, or agent of another entity (whether such claim is for judgments,
damages, penalties, fines, costs, amounts paid in settlement, losses, expenses,
or otherwise and whether such claim is pursuant to any statute, charter
document, bylaw, agreement, or otherwise) with respect to any action, suit,
proceeding, complaint, claim, or demand brought by Buyer against such
Shareholder pursuant to this Agreement or the Tax Sharing Agreement.
9. CLOSING
The closing of this transaction (the "Closing") shall take
place at the offices of Xxxxxxxx & Xxxxx LLP, 000 Xxxx Xxxxxxxx Xxxxx, Xxxxxxx,
Xxxxxxxx 00000, at 10:00 A.M. local time on June 30, 2004, or at such other time
and place as the parties hereto shall agree upon or, if the conditions to
Closing set forth in Articles 6 and 7 have not been satisfied (other than those
conditions that by their nature are to be satisfied at the Closing, but subject
to the satisfaction or waiver of those conditions by the party entitled to the
benefit thereof) as of such date, on the third business day following
satisfaction or waiver of such conditions. Such date is referred to in this
Agreement as the "Closing Date." The Closing shall be deemed effective as of
11:59 p.m. on the Closing Date.
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9.1 Documents to be Delivered by Company and Shareholder.
At the Closing, Shareholders' Agent shall deliver to Buyer the
following documents, in each case duly executed or otherwise in proper form:
9.1.(a) Stock Certificates. Stock certificates or certificates
representing the Shares, duly endorsed for transfer or with duly
executed stock powers attached.
9.1.(b) Compliance Certificate. A certificate, signed by the
Shareholders and dated the Closing Date, stating that the conditions
specified in Sections 6.1, 6.2, 6.3, 6.6 and 6.13 have been fully
satisfied as of the Closing.
9.1.(c) Certified Resolutions. Certified copies of the
resolutions of the board of directors of PFMI, authorizing and
approving this Agreement, the Ancillary Agreements and the consummation
of the transactions contemplated hereby and thereby.
9.1.(d) Charter; Bylaws. A copy of the bylaws of Company and
its Subsidiaries and of PFMI, certified by Company's and PFMI's
secretary, respectively, and a copy of the charter of Company and its
Subsidiaries and of PFMI, each charter being certified by the Secretary
of State of the State of North Carolina.
9.1.(e) Resignations. The resignations of those officers and
directors of PFMI and of the Company and its Subsidiaries specified in
Schedule 9.1(e), effective as of the Closing Date and in form
reasonably satisfactory to Buyer's counsel.
9.1.(f) Escrow Agreement. The Escrow Agreement, substantially
in the form attached hereto as Exhibit B (subject to such
administrative changes as may be required to be made by the Escrow
Agent).
9.1.(g) Good Standing Certificates. Copies of the certificate
of good standing of PFMI, the Company and each of its Subsidiaries
issued on or not more than ten (10) days before the Closing Date by the
Secretary of State (or comparable officer) of the jurisdiction of each
such Person's organization.
9.1.(h) Corporate Records. All minute books, stock ledgers,
seals and other corporate records of PFMI, the Company and the
Subsidiaries.
9.1.(i) Other Documents. All other documents required to be
delivered to Buyer at or prior to the Closing pursuant to this
Agreement, including Payoff Letters, the FIRPTA Affidavit, Third-Party
Approvals and Governmental Approvals, and such other certificates of
authority and documents as Buyer may reasonably request.
9.2 Documents to be Delivered by Buyer.
At the Closing, Buyer shall deliver to Shareholders' Agent the
following documents, in each case duly executed or otherwise in proper form:
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9.2.(a) Purchase Price. Evidence of the wire transfers
required by Section 2.3 hereof.
9.2.(b) Compliance Certificate. A certificate, signed by an
authorized officer of Buyer and dated the Closing Date, stating that
the conditions specified in Sections 7.1, 7.2 and 7.3 have been fully
satisfied as of the Closing.
9.2.(c) Certified Resolutions. A certified copy of the
resolutions of the board of directors of Buyer authorizing and
approving this Agreement and the consummation of the transactions
contemplated hereby.
9.2.(d) Incumbency Certificate. Incumbency certificates
relating to each person executing any document delivered to
Shareholders' Agent by Buyer at or prior to the Closing pursuant to the
terms hereof.
9.2.(e) Escrow Agreement. The Escrow Agreement, substantially
in the form attached hereto as Exhibit B, subject to such
administrative changes as may be required to be made by the Escrow
Agent.
9.2.(f) Other Documents. All other documents required to be
delivered to Shareholders' Agent at or prior to the Closing pursuant to
this Agreement and such other certificates of authority and documents
as Shareholders' Agent may reasonably request.
10. TERMINATION
10.1 Termination Without Breach.
This Agreement may be terminated at any time prior to the
Closing:
10.1.(a) by mutual written agreement of Buyer and the
Shareholders,
10.1.(b) by Buyer if the condition set forth in Section 6.12
is not fulfilled to Buyer's satisfaction by the close of business on
the sixth business day following Buyer's receipt of the audited
financial statements and access to audit work papers as described
therein.
10.1.(c) by either Buyer or the Shareholders if the Closing
shall not have occurred on or before ninety days after the date of this
Agreement (unless such delay is due to requests for information
pursuant to the HSR Act, in which case the parties may agree to an
extension of this date), provided the terminating party has not,
through breach of a representation, warranty or covenant, prevented the
Closing from occurring on or before such date.
10.2 Termination for Breach.
10.2.(a) Termination by Buyer. If (i) there has been a
material violation or breach by PFMI, the Shareholders or the
Shareholders' Agent of any of the representations, warranties,
covenants or agreements contained in this Agreement or the
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Tax Sharing Agreement that has not been waived in writing by Buyer,
(ii) there has been a failure of satisfaction of a condition to the
obligations of Buyer that has not been waived or (iii) the
Shareholders' Agent shall have attempted to terminate this Agreement
under this Article 10 or otherwise without grounds to do so, then Buyer
may, by written notice to Shareholders' Agent at any time prior to the
Closing, terminate this Agreement.
10.2.(b) Termination by the Shareholders. If (i) there has
been a material violation or breach by Buyer of any of the
representations, warranties, covenants or agreements contained in this
Agreement that has not been waived in writing by the Shareholders, (ii)
there has been a failure of satisfaction of a condition to the
obligations of the Shareholders that has not been waived or (iii) Buyer
shall have attempted to terminate this Agreement under this Article 10
or otherwise without grounds to do so, then Shareholders' Agent may, by
written notice to Buyer at any time prior to the Closing, terminate
this Agreement.
10.3 Effect of Termination.
Termination of this Agreement pursuant to this Section 10.2 or
Section 10.1 shall terminate all obligations of the parties hereto; provided,
however, that such termination shall not in any way terminate, limit or
restrict:(i) the Confidentiality and Nondisclosure Agreement between Buyer and
Company attached hereto as Exhibit I (the "Confidentiality Agreement"), which
shall survive until the parties expressly terminate such Confidentiality
Agreement; or (ii) the rights and remedies of any party hereto against any other
party that has violated, breached any of the representations, warranties,
covenants or agreement of this Agreement or the Tax Sharing Agreement prior to
termination hereof. Subject to the foregoing, the parties' obligations under
Section 11.9(c), Section 11.2 and Section 5.16 of this Agreement shall survive
termination.
11. MISCELLANEOUS
11.1 Further Assurance.
Each party agrees that it will execute and deliver, or cause
to be executed and delivered, on or after the date of this Agreement, all such
other instruments and will take all reasonable actions as may be necessary to
transfer and convey the Shares to the Buyer, on the terms herein contained, to
consummate the transactions contemplated hereby, and to effectuate the
provisions and purposes hereof.
11.2 Disclosures and Announcements.
Announcements concerning the transactions provided for in this
Agreement by Buyer or the Shareholders or any of their Affiliates shall be
subject to the approval of the Buyer and the Shareholders' Agent in all
essential respects, except that approval shall not be required as to any
statements and other information which any party may be required to make
pursuant to any applicable rule or regulation of the SEC or as otherwise
required by law.
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11.3 Assignment; Parties in Interest.
11.3.(a) Assignment. Except as expressly provided herein, the
rights and obligations of a party hereunder may not be assigned,
transferred or encumbered without the prior written consent of the
other parties. Notwithstanding the foregoing, Buyer may at any time, in
its sole discretion, assign, in whole or in part, (a) its rights and
obligations pursuant to this Agreement to one or more of its
Affiliates; (b) its rights under this Agreement for collateral security
purposes to any lender providing financing to Buyer, the Company or any
of their Affiliates and any such lender may exercise all of the rights
and remedies of the Buyer hereunder; and (c) its rights under this
Agreement, in whole or in part, to any subsequent purchaser of PFMI,
the Company or any of its respective subsidiaries or any material
portion of its respective assets (whether such sale is structured as a
sale of stock, sale of assets, merger, recapitalization or otherwise);
provided, however, that Buyer shall nevertheless remain liable for all
obligations imposed upon it under, or to which it is subject pursuant
to, the provisions of this Agreement.
11.3.(b) Parties in Interest. This Agreement shall be binding
upon, inure to the benefit of and be enforceable by the respective
successors and permitted assigns of the parties hereto. Nothing
contained herein shall be deemed to confer upon any other person any
right or remedy under or by reason of this Agreement.
11.4 Law Governing Agreement; Forum.
This Agreement may not be modified or terminated orally, and
shall be construed and interpreted according to the internal Laws of North
Carolina, excluding any choice of law rules that may direct the application of
the Laws of another jurisdiction. The parties hereto agree that any suit, action
or proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the transactions
contemplated hereby may only be brought in the United States District Court for
the Southern District of Ohio, and each of the parties hereby consents to the
jurisdiction of such courts (and of the appropriate appellate court therefrom)
in any such suit, action or proceeding and irrevocably waives, to the fullest
extent permitted by law, any objection that it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding in any such court or
that any such suit, action or proceeding that may be brought in any such court
has been brought in an inconvenient forum. Process in any such suit, action or
proceeding may be served on any party anywhere in the world, whether within or
without the jurisdiction of any such court.
11.5 WAIVER OF JURY TRIAL.
EACH OF THE PARTIES HERETO EXPRESSLY WAIVES ITS RIGHTS TO A
TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO OR ARISING IN ANY WAY
FROM THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY. EACH OF THE PARTIES
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO THIS
AGREEMENT, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS
AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN FUTURE
DEALINGS.
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EACH OF THE PARTIES FURTHER WARRANTS AND REPRESENTS THAT EACH HAS REVIEWED THIS
WAIVER WITH ITS LEGAL COUNSEL AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS
JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
11.6 Amendment and Modification.
The parties to this Agreement may amend, modify or supplement
this Agreement in such manner as may be agreed upon in writing by Buyer and the
Shareholders' Agent.
11.7 Notice.
All notices, requests, demands and other communications
hereunder shall be given in writing and shall be: (a) personally delivered; or
(b) sent to the parties at their respective addresses indicated herein by
registered or certified U.S. mail, return receipt requested and postage prepaid,
or by private overnight mail courier service providing for a receipted delivery.
The respective addresses to be used for all such notices, demands or requests
are as follows:
(a) If to Buyer, to:
Pierre Holding Corp.
c/o Madison Dearborn Partners
Three First Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Telephone: 000-000-0000
Attention: Xxxxx X. Xxxxxx
(with copies to)
Xxxxxxxx & Xxxxx LLP
000 X. Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Telephone: 000-000-0000
Attention: Xxxxxx X. Xxxx, P.C.
(b) If to Shareholders or Shareholders' Agent, to:
Xx. Xxxxx X. Xxxxx
000 Xxxxxx Xxxxxx XX
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Telephone: (000) 000-0000
(with a copy to)
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Xxxxxxx Xxxxxxxxx, Xxx.
Xxxxx & Lardner LLP
000 Xxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
(and to)
T. Xxxxxxx Xxxxxx, Esq.
Xxx Xxxxx Xxxxx, Xxxxx 000-X
0000 Xxxxxx Xxxxxx
Xxxxx Xxxxx, Xxxxx Xxxxxxxx 00000
Telephone: (000) 000-0000
If personally delivered, such communication shall be deemed
delivered upon actual receipt; if sent by overnight courier pursuant to this
paragraph, such communication shall be deemed delivered upon receipt; and if
sent by U.S. mail pursuant to this paragraph, such communication shall be deemed
delivered as of the date of delivery indicated on the receipt issued by the
relevant postal service, or, if the addressee fails or refuses to accept
delivery, as of the date of such failure or refusal. Any party to this Agreement
may change its address for the purposes of this Agreement by giving notice
thereof in accordance with this Section 11.7.
11.8 Shareholders' Agent
Xxxxx X. Xxxxx, as Shareholders' Agent pursuant to the
Shareholders Agent Agreement attached as Exhibit J (the "Shareholders Agent
Agreement"), shall be the designated agent of the Shareholders with exclusive
authority to make all decisions and determinations and to take all actions
(including giving consents and waivers to this Agreement) required or permitted
hereunder on behalf of the Shareholders, and any such action, decision or
determination so made or taken shall be deemed the action, decision or
determination of the Shareholders, and any notice, document, certificate or
information required to be given to any Shareholder shall be deemed so given if
given to Shareholders' Agent. The appointment of the Shareholders' Agent shall
be deemed coupled with an interest and shall be irrevocable, and Buyer and any
other Person may conclusively and absolutely rely, without inquiry, upon any
action of the Shareholders' Agent on behalf of the Shareholders in all matters
in which it has been granted authority pursuant to this Section 11.8 and
pursuant to the Shareholders Agent Agreement. All actions, decisions and
instructions of the Shareholders' Agent taken, made or given pursuant to the
authority granted to the Shareholders' Agent pursuant to this Section 11.8 and
pursuant to the Shareholders Agent Agreement shall be final, conclusive and
binding upon all Shareholders. The Shareholders' Agent and the Shareholders
covenant and agree not to change any of the terms of the Shareholders Agent
Agreement without the prior written consent of Buyer.
11.9 Expenses.
Regardless of whether or not the transactions contemplated
hereby are consummated:
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11.9.(a) Other Professionals. Xxxx Xxxxx, who is a director of
the Company, shall be compensated by the Company at Closing for
professional services performed on behalf of the Company and PFMI in
connection with the this Agreement and the transactions contemplated
hereby. Each of the Shareholders and Buyer represent and warrant to all
other parties to this Agreement that, with respect to himself or
itself, there is no broker, agent or other intermediary involved or in
any way connected with the transactions contemplated hereby on his or
its behalf, respectively, the Shareholders represent and warrant that
there is no such Person involved on behalf of PFMI, and each agrees to
hold the others harmless from and against all claims for brokerage
commissions or finder's fees arising in connection with the execution
of this Agreement or the consummation of the transactions provided for
herein.
11.9.(b) Transfer Taxes. Any sales, use, excise, transfer or
other similar tax imposed with respect to the transactions provided for
in this Agreement and the Asset Distribution Letter Agreement, and any
interest or penalties related thereto, shall be paid by Shareholders,
whether such tax is imposed prior to or after Closing.
11.9.(c) Other. Except as may otherwise be provided herein,
each of the parties shall bear its own fees and expenses (including the
fees and expenses of its own lawyers, accountants, appraisers and other
advisers) in connection with this Agreement and the transactions
contemplated hereby; provided, however, that the Company shall bear all
such fees and expenses incurred by or on behalf of PFMI, the Company
and the Subsidiaries prior to Closing and such fees and expenses shall
be deemed Shareholder Transaction Expenses in the computation of the
Purchase Price pursuant to Section 2.1; provided further, in the event
of a breach by any Shareholder, PFMI, the Company or any Subsidiary of
Section 5.13 of this Agreement and the termination of this Agreement by
Buyer, the Shareholders shall pay all of Buyer's costs and expenses
(including attorneys', accountants' and consultants' fees and other
out-of-pocket expenses) in connection with the negotiation and
execution of this Agreement and the performance of Buyer's obligations
hereunder, including Buyer's and its representatives' due diligence.
Shareholders shall bear all fees and expenses arising in connection
with or related to the Asset Distribution Letter Agreement, whether
such fees and expenses arise prior to or after the Closing.
11.10 Specific Performance.
Each Shareholder acknowledges that the Company's business is
unique and recognizes and affirms that in the event of a breach of this
Agreement by such Shareholder, money damages may be inadequate and Buyer may
have no adequate remedy at law. Accordingly, each Shareholder agrees that Buyer
shall have the right, in addition to any other rights and remedies existing in
its favor, to enforce its rights and such Shareholder's obligations hereunder
not only by an action or actions for damages but also by an action or actions
for specific performance, injunctive and/or other equitable relief.
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11.11 Entire Agreement.
This Agreement (including the Exhibits, the Schedules and the
Ancillary Agreements) and the Benefits Side Letter Agreement sets forth the
entire agreement between the parties hereto with respect to the transactions
contemplated herein and supersedes and replaces any prior understanding,
agreement or statement of intent with respect to the transactions contemplated
herein, and there have been and are no agreements, representations or warranties
between the parties other than those set forth or provided for herein. Buyer
acknowledges that it has conducted its own independent review and analysis of
the business of PFMI, Company and of the Shares and that it has been provided
access to the records, properties and personnel of Company and, where
appropriate, PFMI and the Shareholders for this purpose. The mere listing (or
inclusion of a copy) of a document or other item shall not be adequate to
disclose an exception to a representation or warranty made in the Agreement,
unless the representation or warranty has to do with the existence of the
document or other item itself. No exceptions to any representations or
warranties disclosed on one Schedule shall constitute an exception to any other
representations or warranties unless the exception is disclosed on each such
other applicable Schedule or cross-referenced in such other applicable section
or unless the applicability of such exception to another Schedule is reasonably
apparent on its face.
11.12 Counterparts.
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
11.13 Headings.
The headings in this Agreement are inserted for convenience
only and shall not constitute a part hereof.
11.14 Glossary of Terms.
The following sets forth the location of definitions of
capitalized terms defined in the body of this Agreement:
"Acquired Group" shall have the meaning set forth in the Tax Sharing
Agreement.
"Acquisition Proposal" shall have the meaning specified in Section
5.13(b).
"Affiliate" of a Person means a Person who, directly or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with, such Person. For purposes of this definition, "control",
when used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
correlative meanings.
"Agreement" shall have the meaning specified in the preamble to this
Agreement.
"Ancillary Agreements" shall have the meaning specified in Section
3.1(a).
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"Annual Report" shall have the meaning specified in Section 3.6(a)(i).
"Asset Distribution Letter Agreement" shall have the meaning specified
in Section 5.11.
"Audited Financial Statements" shall have the meaning specified in
Section 3.6(a)(iii).
"Average Working Capital Amount" shall mean the 12-month average of the
Company's and its consolidated Subsidiaries' working capital during the 12-month
period as of the end of third monthly period in the Company's fiscal year ended
March 5, 2005, calculated in accordance with Schedule 2.1.
"Benefit Plans" shall have the meaning specified in Section 3.9(a).
"Buyer Indemnitees" shall have the meaning specified in Section 8.1.
"Buyer's Accountants" shall have the meaning specified in Section
2.5(b)(iv).
"Buyer" shall have the meaning specified in the preamble to this
Agreement.
"Cap" shall have the meaning specified in Section 8.7(d).
"Cash" shall mean all cash, cash equivalents, certificates of deposit
and bankers' acceptances of the Company and its Subsidiaries.
"Closing Balance Sheet" shall have the meaning specified in Section
2.5(b)(i).
"Closing Date" shall have the meaning specified in the preamble to
Article 9.
"Closing Indebtedness Amount" means the amount of Closing Indebtedness
including, without limitation, all amounts listed under the heading "PFMI Debt"
on Schedule 3.6(f).
"Closing Indebtedness" means the outstanding balance of Indebtedness of
PFMI, the Company and its Subsidiaries as of the close of business on the
Closing Date; provided that, for purposes of such calculation, all interest,
prepayment penalties, premiums, fees and expenses (if any) which would be
payable if such Indebtedness was paid in full at the Closing shall be treated as
Indebtedness.
"Closing Working Capital" shall have the meaning specified in Section
2.5(a).
"Closing" shall have the meaning specified in the preamble to Article
9.
"Code" shall have the meaning specified in Section 3.9(b).
"Columbia Hill Aviation" shall mean Columbia Hill Aviation, LLC, a
North Carolina limited liability company.
"Company Common Stock" shall have the meaning specified in Section 3.4.
"Company Intellectual Property" shall have the meaning specified in
Section 3.15.
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"Company Notes" shall have the meaning specified in the definition of
"Indebtedness" in this Section 11.14.
"Company" shall have the meaning specified in the recitals to this
Agreement.
"Confidential Information" means all information of a confidential or
proprietary nature (whether or not specifically labeled or identified as
"confidential"), in any form or medium, that relates to the business, products,
financial condition, services or research or development of the PFMI, the
Company, the Subsidiaries or their respective suppliers, distributors,
customers, independent contractors or other business relations, as such is
related to the businesses of PFMI, the Company and the Subsidiaries.
Confidential Information includes, but is not limited to, the following: (i)
internal business and financial information (including information relating to
strategic and staffing plans and practices, business, finances, training,
marketing, promotional and sales plans and practices, cost, rate and pricing
structures and accounting and business methods); (ii) identities of, individual
requirements of, specific contractual arrangements with, and information about,
PFMI's, the Company's and the Subsidiaries' suppliers, distributors, customers,
independent contractors or other business relations and their confidential
information, as such is related to the business; (iii) trade secrets, ideas,
know-how, compilations of data and analyses, techniques, systems, recipes,
formulae, compositions, research and development information, records, reports,
manuals, drawings, specifications, designs, plans, proposals, technical data,
documentation, models, data and databases relating thereto, manufacturing
processes and techniques, financial and marketing plans and customer and
supplier lists and information; (iv) inventions, innovations, improvements,
developments and methods (whether or not patentable); and (v) all other Company
Intellectual Property of a confidential nature. Notwithstanding the foregoing,
"Confidential Information" shall not include information, data, knowledge or
know-how that (i) enters the public domain through no violation of this
Agreement by any Shareholder or any of its representatives or agents, (ii) is
received from a third party not under obligation of confidentiality to Buyer,
PFMI, the Company or its Subsidiaries or (iii) is independently developed
without reliance on any Confidential Information.
"Confidentiality Agreement" shall have the meaning specified in Section
10.3.
"Xxxxxxxx Fee" shall mean all outstanding amounts owed to Xxxxxxxx Race
Cars, LLC under that certain Endorsement Agreement, dated as of June
22, 2001, by and between the Company and Xxxxxxxx Race Cars, LLC.
"Debt Financing Commitment Letter" shall have the meaning specified in
Section 4.7.
"Debt Financing" shall have the meaning specified in Section 4.7.
"Deductible" shall have the meaning specified in Section 8.7(b).
"Directors and Officers" shall have the meaning specified in Section
5.10(a).
"EBITDA" shall mean the Company's consolidated net income plus, to the
extent (but only to the extent) deducted in determining such net income (A)
interest expense for indebtedness for borrowed money, (B) federal, state, local
and foreign income tax expense, (C) depreciation expense, (D) amortization
expense, (E) management, administrative or similar fees
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and expenses paid to Madison Dearborn Capital Partners IV, L.P. or any of its
Affiliates, (F) to the extent not accounted for in clauses (A) through (E) above
or (G) below, those items listed on Schedule 1 to the Debt Financing Commitment
Letter which relate to non-recurring expenses incurred by the Company prior to
the date hereof, and (G) transaction expenses incurred in connection with the
transactions contemplated by this Agreement, including lender fees, attorney
fees, accountant fees and investment banker or financial advisor fees,
write-offs of capitalized loan costs and capitalized Indenture restructuring
fees, payment of 1% call premium on Indenture and loan prepayment penalty costs,
payments of the (i) Executive Bonus Payments, (ii) Non-Compete Payments, (iii)
Xxxxx Fee, (iv) Xxxxxxxx Fee, and (v) Shareholder Transaction Expenses, and
compensatory transfers of retained assets to senior management of the Acquired
Group pursuant to the Asset Distribution Letter Agreement. To avoid confusion,
the Company's unaudited EBITDA calculated in the foregoing manner was $52.5
million for the fiscal year ended March 6, 2004. Furthermore, EBITDA shall be
calculated in accordance with GAAP applied on a basis consistent with the
preparation of the Company's audited financial statements for its fiscal year
ended March 6, 2004.
"Environmental Laws" means all federal, state and local Laws, including
common law, and Orders purporting to regulate the use, misuse, pollution or
preservation of land, air or water resources, or the exposure of persons or
property to pollutants, contaminants, hazardous substances, noise, odor or
radiation, including without limitation the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. 9601 et seq., as amended,
the Resource Conservation and Recovery Act, 42 U.S.C. 6901 et seq., as amended,
the Clean Air Act, 42 U.S.C. 7401 et seq., as amended, the Clean Water Act, 33
U.S.C. 1251 et seq., as amended, the Occupational Safety and Health Act, 29
U.S.C. 655 et seq., as amended.
"ERISA" shall have the meaning specified in Section 3.9.
"Escrow Account" shall have the meaning specified in Section 2.3(a).
"Escrow Agent" shall mean Bank of America Private Bank.
"Escrow Agreement" shall have the meaning specified in Section 2.3(a).
"Escrowed Amount" shall have the meaning specified in Section 2.3(a).
"Estimated Closing Balance Sheet" shall have the meaning specified in
Section 2.2.
"Exclusivity Period" shall have the meaning specified in Section
5.13(a).
"Executive Bonus Payments" shall mean all amounts due and owing under
the Existing Executive Agreements between the Company and each of Xxxxxxx X.
Xxxxxxxx, Xx., Xxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxx, less applicable amounts,
in each case, that the Company as their employer is required by law to withhold
for payment of taxes.
"Executive Rollover Amount" shall mean for each of Xxxxxxx X. Xxxxxxxx
and Xxxxxx X. Xxxxxx, $3,100,000 and $2,300,000, respectively.
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"Executives" shall mean each of Xxxxxxx X. Xxxxxxxx, Xx., Xxxxxx X.
Xxxxxxx and Xxxxxx X. Xxxxxx.
"Existing Executive Agreements" shall mean (i) the Employment
Agreement, dated as of December 31, 2001, by and between the Company and Xxxxxx
X. Xxxxxxx, (ii) the Employment Agreement, dated as of December 31, 2001, by and
between the Company and Xxxxxx X. Xxxxxx, and (iii) the Incentive Agreement,
dated as of August 18, 1999, by and between the Company and Xxxxxxx X. Xxxxxxxx,
Xx. (as amended), in each case as amended through the date hereof.
"Facilities and Equipment" shall have the meaning specified in Section
3.10.
"FDA" shall have the meaning specified in Section 3.11.
"Federal Tax" shall have the meaning specified in the Tax Sharing
Agreement attached hereto as Exhibit H.
"FIRPTA Affidavit" shall have the meaning specified in Section 6.10.
"Food or Foods" shall mean all products (whether finished food or food
ingredients) that PFMI, the Company and the Subsidiaries manufacture as of the
Closing Date, and all products (whether finished food or food ingredients) that
PFMI, the Company and the Subsidiaries have manufactured during the three year
period prior to the Closing Date.
"Forward-Looking Data" shall have the meaning specified in Section
4.10.
"Fully Indemnified Representations and Covenants" shall mean the
representations and warranties in Sections 3.1(a), (b), (c) and (e) (Shareholder
Authority, Validity, Ownership), the first sentence of Section 3.2(a), Sections
3.2(b) and (c) (PFMI Organization, Ownership, Liabilities), Sections 3.3(a), (e)
(except with respect to foreign qualifications), (f) and (g) (Company
Organization, Qualification, Subsidiaries, Investments, etc.), Section 3.4
(Capital Stock), Section 3.20 (Affiliate Transactions), Section 3.24
(Brokerage), Section 4.1 (Organization and Power), Section 4.2 (Authority),
Section 4.3 (No Brokers or Finders), Section 5.3(f) (Taxes) and Section 5.4(f)
(Sale of Shares), and in the certificate required to be delivered by
Shareholders pursuant to Section 9.1(b) with respect to Sections 3.1(a), 3.1(b),
3.1(c), 3.1(e), 3.2(a), 3.2(b), 3.2(c), 3.3(a), 3.3(e), 3.3(f), 3.3(g), 3.4,
3.20, 3.24, 5.3(f) and 5.4(f), and in the certificate required to be delivered
by Buyer pursuant to Section 9.2(b) with respect to Sections 4.1, 4.2 and 4.3.
"GAAP" shall mean United States generally accepted accounting
principles consistently applied during the periods involved.
"General Survival Period" shall have the meaning specified in Section
8.7(a).
"Governmental Approvals" shall have the meaning specified in Section
6.5.
"Xxxxx Fee" shall mean all amounts owing to Xxxx Xxxxx, including
without limitation advisory fees and expenses, pursuant to his letter agreement
with the Company dated as of January 29, 2004.
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"Hazardous Materials" means (a) any element, compound or chemical that
is defined, listed or otherwise classified as a contaminant, pollutant, toxic
pollutant, toxic or hazardous substance, extremely hazardous substance or
chemical, hazardous waste, medical waste, biohazardous or infectious waste,
special waste, solid waste or words of similar meaning or effect under
Environmental Laws; (b) petroleum, petroleum-based or petroleum-derived
products; (c) polychlorinated biphenyls; (d) any substance exhibiting a
hazardous waste characteristic, including but not limited to corrosivity,
ignitibility, toxicity or reactivity as well as any radioactive or explosive
materials; and (e) asbestos or asbestos-containing materials.
"HSR Act" shall have the meaning specified in Section 3.5.
"Income Tax" or "Income Taxes" shall have the meaning specified in the
Tax Sharing Agreement.
"Indebtedness" means with respect to any Person to the extent required
to be reflected as a liability on a balance sheet for such Person prepared in
accordance with GAAP, (i) any indebtedness for borrowed money or issued in
substitution for or exchange of indebtedness for borrowed money, (ii) any
indebtedness evidenced by any note, bond, debenture or other debt security,
(iii) any indebtedness for the deferred purchase price of property or services
with respect to which a Person is liable, contingently or otherwise, as obligor
or otherwise (other than trade payables and other current liabilities incurred
in the ordinary course of business), (iv) any obligations under capitalized
leases with respect to which a Person is liable as obligor, (v) any indebtedness
secured by a Lien on a Person's assets, (vi) any distributions payable or
loans/advances payable to any Affiliates, shareholders or partners as of the
Closing, which are not paid at Closing, (vii) any obligation or liability on the
Closing Balance Sheet or the balance sheet of PFMI or the Hickory Cost Center
(other than any obligation or liability associated with the unredeemed stock of
PFMI from the management buyout transaction on July 26, 2002 ) as of the close
of business on the Closing Date which does not relate to the ongoing business of
the Company in the ordinary course, (viii) any other liabilities recorded in
accordance with GAAP on the balance sheet of such Person which are not due
within one year of the Closing, and (ix) any accrued interest, prepayment
penalties and premiums on any of the foregoing; provided that with respect to
the Company's 10-3/4% Senior Notes Due 2006 issued subject to the Indenture (the
"Company Notes"), the amount of premium which shall constitute "Indebtedness"
hereunder shall not exceed one percent (1%) of the face amount of the Company
Notes.
"Indemnified Party" shall have the meaning specified in Section 8.4(a).
"Indemnifying Party" shall have the meaning specified in Section
8.4(a).
"Indenture" shall mean the indenture dated as of June 9, 1998 among the
Company, each of several subsidiaries of the Company as guarantors and State
Street Bank and Trust Company as trustee, as supplemented by a First
Supplemental Indenture dated as of September 5, 1998, a Second Supplemental
Indenture dated as of February 26, 1999, a Third Supplemental Indenture dated as
of October 8, 1999, and a Fourth Supplemental Indenture dated as of March 8,
2004, providing for the issuance of the Company's Notes.
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"Intellectual Property" shall mean all of the following in any
jurisdiction throughout the world: (i) patents, patent applications and
invention disclosures; (ii) trademarks, service marks, trade dress, trade names,
corporate names, logos and slogans (and all translations, adaptations,
derivations and combinations of the foregoing) and Internet domain names,
together with all goodwill associated with each of the foregoing; (iii)
copyrights and copyrightable works; (iv) registrations and applications for
registration for any of the foregoing; (v) trade secrets, confidential
information, know-how, recipes, formulae and inventions; and (vi) computer
software (including but not limited to source code, executable code, data,
databases and documentation).
"IRS" shall have the meaning specified in Section 3.9(f).
"Knowledge" shall have the meaning specified in Section 3.
"Laws" shall mean all foreign, federal, state and local laws, statutes,
codes, regulations, orders, notices, rules or ordinances, including without
limitation rules and regulations of the FDA, USDA and FTC, and any requirements,
restrictions, limitations, conditions or obligations contained therein.
"Leased Real Property" means all leasehold or subleasehold estates and
other rights to use or occupy any land, buildings, structures, improvements,
fixtures or other interest in real property held by the Company or any
Subsidiary.
"Leases" means all leases, subleases, licenses, concessions and other
agreements (written or oral) pursuant to which the Company or any Subsidiary
holds any Leased Real Property, including the right to all security deposits and
other amounts and instruments deposited by or on behalf of the Company or any
Subsidiary thereunder.
"Liens" shall have the meaning specified in Section 3.1(c).
"Losses" shall have the meaning specified in Section 8.1.
"Material Adverse Effect" or "Material Adverse Change" shall mean any
change, development or effect, either individually or in the aggregate, that has
been, or would reasonably be expected to be, materially adverse to the assets,
liabilities, business, operations, results of operations or condition (financial
or otherwise) of PFMI, the Company and the Subsidiaries, considered as one
enterprise, or the ability of Shareholders, Shareholders' Agent or Buyer to
consummate timely the transactions contemplated hereby, excluding, in any case,
any change, effect or circumstance that results from or relates to: (i) changes
in (A) United States or global economic conditions that do not
disproportionately affect the Company or the Subsidiaries, or (B) increases in
the cost of raw materials used in the industry in which the Company and the
Subsidiaries operate that do not disproportionately impact the Company or the
Subsidiaries, or (C) Laws or accounting standards, principles or interpretations
of general application that do not disproportionately impact the Company or the
Subsidiaries; (ii) the announcement by Buyer of its plans or intentions with
respect to the conduct of the Company's business; or (iii) any natural disaster
or any acts of terrorism, sabotage, military action or war (whether or not
declared) or any escalation or worsening thereof that do not disproportionately
affect the Company and the Subsidiaries, considered as one enterprise.
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"Neutral Accounting Firm" shall have the meaning specified in Section
2.5(b)(iii).
"Non-Compete Payments" shall mean all outstanding amounts owed to X.
Xxxx Xxxxxx and Xxxxxxx X. Xxxxxx, Xx., pursuant to the Non-Competition
Agreements.
"Non-Compete Period" shall have the meaning specified in Section 5.14.
"Non-Competition Agreements" shall mean (i) the Consulting and
Noncompete Agreement dated as of January 6, 2000 between the Company and X. Xxxx
Xxxxxx and (ii) the Consulting and Non-Competition Agreement, dated as of
January 29, 1998, between the Company and Xxxxxxx X. Xxxxxx, Xx.
"Non-Terminating Representations" shall have the meaning specified in
Section 8.7(a)(ii).
"North Carolina Employees" shall mean, collectively, Xxxx Xxxxxxx,
Xxxxxx Xxxxx, Xxxx Cape, Xxxxxxxx Xxxxx, Xxxxx Xxxxxxx, Xxxxx Xxxxxx, Xxxx
Xxxxx, Xxxx Xxxxxxxx, Xxxxxxx Xxxxxxx, Xxxxxxx Xxxxxxx, Xxxx Xxxxxxxx, Xxxxx
XxXxxxxx, Xxxxx XxXxxx, Xxxxx Xxxxx, Xxxxx Xxxxx, Xxxx Xxxxxxxxxx, Xxxxxx
Xxxxxx, Xxxxxx Xxxxxx and Xxxx Xxxxxxxx.
"Objection" shall have the meaning specified in Section 2.5(b)(ii).
"Offering Materials" shall have the meaning specified in Section
5.17(c).
"Offerings" shall have the meaning specified in Section 5.17(c).
"Orders" shall have the meaning specified in Section 3.13(a).
"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, owned by the Company or any
Subsidiary.
"Payoff Letters" shall have the meaning specified in Section 6.7.
"Permitted Liens" shall mean (i) Liens for current state and local
property taxes or assessments not yet due or delinquent or which are being
contested in good faith and with respect to which adequate reserves have been
made in accordance with GAAP; (ii) Liens arising by operation of Law and with
respect to which adequate reserves have been made in accordance with GAAP; (iii)
mechanics', carriers', workers', repairers' and other similar liens arising or
incurred in the ordinary course of business and with respect to which adequate
reserves have been made in accordance with GAAP; (iv) exceptions shown on the
surveys or other matters of record made available to Buyer which do not
materially affect the current use of the Company's real property; and (vii) any
land use ordinances and zoning ordinances (but not violations thereof).
"Person" shall mean any individual, partnership, firm, corporation,
joint venture, association, trust, unincorporated organization, limited
liability company, limited liability partnership or other legal entity.
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"PFMI Common Stock" shall have the meaning specified in Section 3.2(b).
"PFMI" shall have the meaning specified in the recitals to this
Agreement.
"Preliminary Purchase Price" shall have the meaning specified in
Section 2.2.
"Purchase Price Adjustment" shall have the meaning specified in Section
2.4.
"Purchase Price" shall have the meaning specified in Section 2.1.
"Quarterly Reports" shall have the meaning specified in Section
3.6(a)(ii).
"Recent Audited Financial Statements" shall have the meaning specified
in Section 6.12.
"Release" shall have the meaning specified in Section 3.14(a).
"Schedules" shall mean the disclosure schedules attached to this
Agreement.
"Shareholder's Accountants" shall have the meaning specified in Section
2.5(b)(ii).
"Shareholders Agent Agreement" shall have the meaning specified in
Section 11.8.
"Shareholders' Agent" shall have the meaning specified in the preamble
to this Agreement.
"Shareholder Transaction Expenses" shall mean all fees and expenses of
PFMI, the Company, the Subsidiaries and the Shareholders (including, without
limitation, fees and expenses of legal counsel, accountants, investment bankers,
brokers, finders or other representatives and consultants retained by any of
them and any change of control or retention payments or fees or transaction
related bonuses paid or payable to any Person (other than the Executive Bonus
Payments, the Xxxxx Fee, the Non-Compete Payments and the Xxxxxxxx Fee)) with
respect to this Agreement, each of the agreements contemplated hereby and the
transactions contemplated hereby and thereby, if paid at or subsequent to the
Closing.
"Shareholders" shall have the meaning specified in the preamble to this
Agreement.
"Shareholders Agreement" shall mean that certain Shareholders
Agreement, dated as of April 17, 2001, by and among Xxxxx X. Xxxxx, Xxxxx X.
Xxxxxxxxx and Xxxxx X. Xxxxxxxxxx, Xx.
"Shares" shall have the meaning specified in the recitals to this
Agreement.
"Subsidiaries" shall have the meaning specified in Section 3.3(f).
"Tax Return" or "Return" shall have the meaning specified in the Tax
Sharing Agreement attached hereto as Exhibit H.
"Tax Sharing Agreement" shall mean that certain Tax Sharing and
Indemnification Agreement attached hereto as Exhibit H.
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"Tax" or "Taxes" shall have the meaning specified in the Tax Sharing
Agreement attached hereto as Exhibit H.
"Taxing Authority" shall have the meaning specified in the Tax Sharing
Agreement attached hereto as Exhibit H.
"Third Party Approvals" shall have the meaning specified in Section
6.4.
"Threshold" shall have the meaning specified in Section 8.7(c).
"Unaudited Financial Statements" shall have the meaning specified in
Section 3.6(a)(v).
"Update Period" shall have the meaning specified in Section 5.9.
Where any group or category of items or matters is defined collectively in the
plural number, any item or matter within such definition may be referred to
using such defined term in the singular number.
[Signatures on following page]
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date and year first above written.
SHAREHOLDERS: BUYER:
PIERRE HOLDING CORP.
/s/ Xxxxx X. Xxxxxxxxxx, Xx. By: /s/ Xxxxx X. Xxxxxx
-------------------------------- ------------------------------------
Xxxxx X. Xxxxxxxxxx, Xx. Name: Xxxxx X. Xxxxxx
Its: President
/s/ Xxxxx X. Xxxxx
--------------------------------
Xxxxx X. Xxxxx
/s/ Xxxxx X. Xxxxxxxxx
--------------------------------
Xxxxx X. Xxxxxxxxx
SHAREHOLDERS' AGENT:
/s/ Xxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxx
-------------------------------- ------------------------------------
Xxxxx X. Xxxxx Xxxxx X. Xxxxx, as Trustee of the Voting
Trust Agreement, dated February 1, 2004,
among Xxxxx Xxxx Xxxxxxxxxx, Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxx Xxxxxxx Xxxxxxxxxx,
Xxxxxx Xxxx Xxxxxxxxx Xxxxxx, Xxxxx Xxxxx
Xxxxxxxxx Xxxxxxx, S&D Land Company, LLC,
Xxxxxx Xxxx Xxxxxxxxx Xxxxxx and Xxxxxxx
Xxxxxx Xxxxxx, as Co-Trustees of the
Xxxxxxx Xxxxxxx Xxxxxx Grandchild Trust,
Xxxxxx Xxxx Xxxxxxxxx Xxxxxx and Xxxxxxx
Xxxxxx Xxxxxx, as Co-Trustees of the Xxxxxx
Xxxxxx Xxxxxx Grandchild Trust, T. Xxxxxxx
Xxxxxx, as Trustee of the Will X. Xxxxx
Irrevocable Trust and as Trustee of the
Xxxxxx X. Xxxxx Irrevocable Trust
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