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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) July 9, 1996
VAN DE KAMP'S, INC.
(Exact Name of Registrant as Specified in Charter)
DELAWARE 33-97752 43-1721518
(State or Other (Commission File (IRS Employer
Jurisdiction of Incorporation) Number) Identification No.)
1000 St. Louis Union Station, St. Louis, Missouri 63103
(Address of Principal Executive Offices) (Zip Code)
(314) 241-0303
(Registrant's telephone number, including area code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 9, 1996, Van de Kamp's, Inc., a Delaware corporation (the
"COMPANY"), completed an acquisition (the "ACQUISITION") of substantially all of
the assets of the frozen foods division of The Quaker Oats Company ("QUAKER
OATS"). These assets include the CELESTE-Registered Trademark- frozen pizza
business and the AUNT JEMIMA-Registered Trademark- frozen breakfast products
business of Quaker Oats (the "BUSINESSES"). As part of the Acquisition, the
Company purchased the trademarks associated with the CELESTE-Registered
Trademark- name and was granted an exclusive, perpetual, royalty-free license of
the AUNT JEMIMA-Registered Trademark- trademark for use in the frozen breakfast
products business. Also included in the acquisition is the Jackson, Tennessee
manufacturing facility which is used in the Businesses, which the Company
intends to continue to use as a manufacturing facility for the Businesses. The
purchase price of approximately $188 million is subject to certain adjustments.
The purchase price was established through a sale process conducted by Goldman,
Sachs & Co. and through subsequent negotiations with Quaker Oats.
The Company financed the Acquisition and related costs with an equity
contribution by VDK Holdings, Inc., the Company's parent, of $40 million and
with additional senior secured bank borrowings totalling $155 million.
Approximately $135 million of this bank debt was incurred through an amendment
to the Company's existing senior bank facility. Pursuant to this amendment, The
Chase Manhattan Bank, N.A. acts as agent for the following lenders: The Chase
Manhattan Bank, N.A.; Banque Nationale de Paris; Banque Paribas; Caisse
Nationale de Credit Agricole; Cooperative Centrale Raiffeisen-Boerenleenbank
B.A., "Rabobank Nederland," New York Branch; Dresdner Bank AG, New York and
Grand Cayman Branches; Federal Street Partners; First Bank National Association;
The First National Bank of Boston; First Union National Bank of North Carolina;
Fleet National Bank; Harris Trust and Savings Bank; Merrill Lynch Senior
Floating Rate Fund, Inc.; Midland Bank PLC; New York Life Insurance Company;
Pilgrim America Prime Rate Trust; Prime Income Trust; Senior High Income
Portfolio, Inc.; and Van Kampen American Capital Prime Rate Income Trust. In
addition, the Company incurred $20 million of senior bank debt from The Chase
Manhattan Bank, N.A., which loan is secured by cash collateral posted by VDK
Holdings, Inc.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) and (b). Providing the financial statements and pro forma financial
information required by this item is not practical at the time of this report on
Form 8-K. Such financial statements and pro forma financial information are
expected to be filed within 60 days of this filing by an amendment to this
report on Form 8-K.
(c) Exhibits. The following exhibits are filed herewith in accordance
with Item 601 of the Regulation S-K:
EXHIBIT NO. EXHIBIT DESCRIPTION
2.1 Asset Purchase and Sale Agreement, dated as of May 15, 1996, between
Van de Kamp's, Inc. and The Quaker Oats Company.
2.2 Supplement No. 1 to Asset Purchase and Sale Agreement, dated as of
July 9, 1996, between Van de Kamp's, Inc. and The Quaker Oats Company.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: July 24, 1996 VAN DE KAMP'S, INC.
By: /s/ TIMOTHY B. ANDERSEN
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Timothy B. Andersen
Chief Financial Officer and
duly authorized officer
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INDEX TO EXHIBITS
Exhibit Number Exhibit
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2.1 Asset Purchase and Sale Agreement, dated as of May 15, 1996,
between Van de Kamp's, Inc. and The Quaker Oats Company.
2.2 Supplement No. 1 to Asset Purchase and Sale Agreement,
dated as of July 9, 1996, between Van de Kamp's, Inc.
and The Quaker Oats Company.
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EXHIBIT 2.1
ASSET PURCHASE AND SALE AGREEMENT
THIS ASSET PURCHASE AND SALE AGREEMENT (this "AGREEMENT") is made and
entered into this 15th day of May, l996, by and between Van de Kamp's, Inc., a
Delaware corporation ("BUYER") and The Quaker Oats Company, a New Jersey
corporation ("SELLER").
WHEREAS, Seller has been and is engaged in the businesses of (i)
manufacturing (A) at the Real Property (as hereinafter defined) the following
frozen food products: waffles, pancakes, french toast and pancake batter under
the brand name "Aunt Jemima" and selected private label brands; and pizza
products under the brand name "Celeste" and selected private label brands, and
(B) at the Canadian Facility (as hereinafter defined) the following frozen food
products: waffles, pancakes and french toast under the brand name "Aunt Jemima"
and selected private label brands, and (ii) marketing and selling the products
described in subclauses (i)(A) and (i)(B) above. The businesses described in
clauses (i) and (ii) above are hereinafter collectively referred to as the
"BUSINESS", and the products described in such clauses are hereinafter
collectively referred to as the "PRODUCTS". For purposes of clarification, the
term "Business" shall not be deemed to include the manufacture of frozen
breakfast products by Seller or its affiliates for McDonald's Corporation (the
"McDonald's Business").
WHEREAS, Seller desires to sell and assign to Buyer, and Buyer desires to
purchase and assume from Seller, certain assets and liabilities of the Business
pursuant to the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, on the basis of the respective representations and
warranties set forth herein, the premises set forth hereinabove, and the
covenants, agreements and indemnities contained herein, the parties hereto agree
as follows:
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ARTICLE I
PURCHASE OF CERTAIN ASSETS BY BUYER
1.1 SALE OF ASSETS. Seller hereby agrees to sell, assign, transfer,
convey and deliver to Buyer, or to cause its appropriate Affiliate (as
hereinafter defined) to sell, assign, transfer, convey and deliver to Buyer, and
Buyer hereby agrees to purchase and accept from Seller (or its appropriate
Affiliate) at the Closing (as defined in SECTION 1.6 hereof), all of Seller's
right, title and interest in and to the assets described in clauses (a) through
(k) below (collectively, the "ACQUIRED ASSETS"). For purposes of this
Agreement, "AFFILIATE" shall mean any Person (as hereinafter defined) who
directly or indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, a specified Person. The term
"control" (including the terms "controlling", "controlled by" and "under common
control with") means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise. "PERSON"
shall mean an individual, corporation, partnership, association, limited
liability company, trust, unincorporated organization, or government or
political subdivision thereof.
a. REAL PROPERTY. The parcel of land legally described in SCHEDULE
1.1(A) hereto, together with all privileges and easements appurtenant thereto,
and any and all buildings, plants, facilities, installations, fixtures and other
structures and improvements situated or located thereon or attached thereto (the
"REAL PROPERTY");
b. EQUIPMENT. All machinery, equipment, furniture, tools, spare
parts, maintenance equipment and supplies, computer hardware and peripherals,
software owned by Seller and other items of personal property (other than the
Vehicles and Inventory, which are separately referenced in SECTIONS 1.1 (c) and
1.1 (d), respectively) located on the Real Property or used primarily in
connection with the Business, including those items listed or described on
SCHEDULE 1.1(b) which are not located on the Real Property, but excluding any of
the items described in this paragraph which are disposed of by Seller in the
ordinary course of business in accordance with the terms of this Agreement
between the date hereof and the Closing Date (as defined in SECTION 1.6 hereof)
(the "EQUIPMENT");
c. VEHICLES. All automobiles and other vehicles owned by the
Company which are located on or about the Real Property and used primarily in
connection with the Business, including those automobiles and other vehicles
described on SCHEDULE 1.1(c) (the "VEHICLES");
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d. INVENTORIES. All raw materials, ingredients, work-in-process,
finished goods and packaging materials inventories owned by Seller, used in
connection with the Business, and located on the Real Property or at Seller's
distribution centers or other facilities listed on SCHEDULE 1.1(d) hereto (the
"DISTRIBUTION CENTERS") as of the Closing Date (the "INVENTORY"). For purposes
of clarification, the term "Inventory" shall not include any raw materials,
ingredients, work-in-process, finished goods and packaging materials inventories
used exclusively in the McDonald's Business;
e. BOOKS AND RECORDS. All books and records of Seller relating
exclusively to the Business (hereinafter, "Books and Records"), including,
without limitation, customer and supplier lists, market information, marketing
and sales plans, correspondence and files, accounting records, inventory
records, sales and sales promotional data, advertising materials, cost and
pricing information, product development information, title reports, title
policies, engineering and environmental studies, technical data, specifications,
work standards and manufacturing, assembling and process information, designs,
processes, operating manuals, operating data and plans, engineering drawings,
working drawings, schematics, blueprints, flowsheets and models, and waste
disposal records;
f. PERMITS. Subject to SECTION 1.11 hereof, all permits held by
Seller which relate exclusively to the Business or the Acquired Assets (the
"PERMITS");
g. CONTRACTS. Subject to SECTION 1.11 hereof, all contracts,
agreements, commitments or other binding arrangements, whether oral or written
(including purchase orders and unfilled customer orders as of the Closing Date)
relating primarily to the Business or the Acquired Assets, including any such
contracts, agreements, commitments or arrangements entered into by Seller
between the date hereof and the Closing Date in the ordinary course of business
or as otherwise permitted under this Agreement or as otherwise agreed in writing
by Buyer (the "ASSUMED CONTRACTS");
h. INTELLECTUAL PROPERTY. All trademarks and copyrights (and
registrations and applications therefor), labels, trade names, brand names,
common law trademarks, trade dress, patents and patent applications used
exclusively in the Business, including without limitation the Intellectual
Property (as defined in SECTION 2.18 hereof); and all trade secrets, know-how,
processes, technology, formulas, recipes, mixing instructions, product
specifications and other intangible property used exclusively in the Business,
together with all rights, benefits and privileges pertaining thereto and all
goodwill associated therewith, including the right to sue for past infringements
or violations of rights associated therewith.
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i. PREPAID EXPENSES. Subject to SECTION 1.10 hereof, all prepaid
expenses, deposits and similar items related to the Business or the Acquired
Assets (collectively, the "PREPAID EXPENSES");
j. CLAIMS. Except as set forth in SCHEDULE 1.1(XIII), all claims of
Seller against third parties relating primarily to the Acquired Assets or the
Business, including without limitation, (i) those claims in respect of rights
under manufacturers' and vendors' warranties, guarantees or similar obligations,
and (ii) all rights of indemnity and claims that Seller may have against any
Person who damaged or injured, or caused any damage or injury to, any portion of
the Acquired Assets or the Business; and
k. GOODWILL. All goodwill of the Business, excluding any goodwill
attributable to the Aunt Jemima Trademarks, the Licensed Patents or the Shared
Technology (each as hereinafter defined);
PROVIDED, HOWEVER, that, without limitation, the Acquired Assets shall not
include and Seller will retain and Buyer will not acquire the following assets
and property (the "EXCLUDED ASSETS"):
(i) all assets and property of Seller not specifically included
in the definition of Acquired Assets;
(ii) cash and cash equivalents;
(iii) the accounts and notes receivable of the Business, including
any intercompany receivables;
(iv) tax refunds, tax, insurance and other claims or rights to
recoveries and similar benefits of the Business;
(v) rights accruing to Seller under this Agreement;
(vi) the corporate seal, certificate of incorporation, minute
books, stock books, tax returns, books of account or other
records having to do with the corporate organization of
Seller or its affiliates;
(vii) insurance policies related to the Business;
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(viii) except as otherwise specifically provided to the contrary in
this Agreement or in the Interim Trademark License Agreement
(as hereinafter defined) or in the AJ License (as
hereinafter defined), any interest in any trademark or trade
name owned or used by Seller or any Affiliates, including
without limitation (i) the word "Quaker" or any similar
trade name or trademark, (ii) corporate symbols (including
without limitation the Quaker man logo) or any other trade
name, trademark, logo, color scheme, script characters or
other design elements used publicly by Seller or its
Affiliates in connection with the Acquired Assets or
otherwise, and (iii) the "Aunt Jemima" trademarks and any
modifications thereof or derivations therefrom, as the same
are registered and/or used anywhere in the world (the "AUNT
JEMIMA TRADEMARKS");
(ix) except for Books and Records and Inventory, any assets
located at, on or in (a) the Quaker Tower, 321 North Clark
Street, Chicago, Illinois 60610, (b) any customer business
center of Seller, (c) any sales office of Seller, (d) any
distribution center of Seller, including the Distribution
Centers, (e) the Barrington research and development center,
617 West Main Street, Barrington, Illinois, (f) Seller's
facility located at 19 Albert Street, Trenton, Ontario,
Canada (the "CANADIAN FACILITY"), and (g) Seller's Canadian
headquarters and plant located at Quaker Park, Hunter Street
East, Peterborough, Ontario, Canada;
(x) any real property other than the Real Property;
(xi) any and all patents and patent applications which are not
set forth on SCHEDULE 2.18(a) hereof, including without
limitation the patents and patent applications which are to
be licensed to Buyer pursuant to the terms of the Patent
License Agreement described in SECTION 1.8 (the "LICENSED
PATENTS");
(xii) any and all trade secrets, know-how, processes, technology,
mixing instructions and product specifications
(collectively, the "TECHNOLOGY") not used exclusively in the
Business, including, without limitation, the Technology
which is to be licensed to Buyer pursuant to the terms of
the Shared Technology License Agreement described in SECTION
1.8 (the "SHARED TECHNOLOGY"); and
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(xiii) the assets, properties and rights described in SCHEDULE 1.1
(XIII) attached hereto.
1.2 ASSUMPTION OF OBLIGATIONS AND LIABILITIES. In partial consideration
of the transfer to Buyer of the Acquired Assets, Buyer shall at the Closing
assume and shall thereafter pay, fulfill, perform and otherwise discharge when
due, only the following obligations and liabilities of Seller to the extent
related to the Business or to the Acquired Assets (collectively, the "ASSUMED
LIABILITIES"):
a. ASSUMED CONTRACTS. All liabilities and obligations under the
Assumed Contracts (including, without limitation, those Assumed Contracts listed
in SCHEDULE 2.12 (a)) accruing after the Closing Date;
b. PERMITS. All liabilities and obligations under the Permits
accruing after the Closing Date;
c. PERMITTED LIENS. All liabilities and obligations under or
arising from the Permitted Liens (as defined in SECTION 2.6 hereof);
d. EMPLOYEE MATTERS. Those liabilities and obligations imposed on
Buyer relating to employees and employee matters, as provided in ARTICLE V;
e. TRADE DEALS. All liabilities and obligations with respect to any
trade deals which have been offered with respect to the Business to the extent
related to (i) off-invoice deals or allowances paid to customers or deducted
from customer invoices by or for the benefit of Buyer with respect to sales of
the Business occurring on or after the Closing Date and all other off-invoice
allowance programs established by Buyer, (ii) bill-back or lump sum allowances
(including in-ad coupons, slotting allowances and other similar deals) for any
of Seller's trade deals which have been offered by Buyer or continue to be
available to customers on or after the Closing Date, to the extent related to
sales of the Business occurring on or after the Closing Date, and all other
bill-back or lump sum allowances established by Buyer, and (iii) bill-back or
lump sum allowances (including in-ad coupons, slotting allowances and other
similar deals) paid or reimbursed to the extent customer performance has
occurred on or after the Closing Date. SCHEDULE 1.2(e) contains a summary of
trade deals outstanding as of April 30, 1996 (or, in the case of in-ad coupons,
as of May 9, 1996) which have been entered into by Seller with respect to the
Business.
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f. COUPONS. Any and all liabilities and obligations for coupons
related to the Business (whether issued by Buyer or Seller) which are paid by
Seller's or Buyer's coupon clearinghouse on or after the Closing Date; PROVIDED,
HOWEVER, that notwithstanding the foregoing, Seller shall reimburse Buyer on a
dollar for dollar basis for any coupons issued by Seller to the extent such
coupons are paid by Seller's or Buyer's coupon clearinghouse within the thirty
day period immediately following the Closing Date. SCHEDULE 1.2(f) contains a
summary list of all coupons (including expiration dates) issued by Seller as of
May 9, 1996 with respect to the Business since January 1, 1996.
g. PRODUCT RETURNS. All liabilities and obligations with respect to
any return of Products (for trade damage or otherwise) on or after the Closing
Date; PROVIDED, HOWEVER, that notwithstanding the foregoing, Seller shall
reimburse Buyer on a dollar for dollar basis, in an aggregate amount not to
exceed $100,000, for any returns of Products during the thirty day period
immediately following the Closing Date, except to the extent such returns are
attributable to breaches by Buyer of the covenant set forth in SECTION 4.2(d)
below;
h. PRODUCT LIABILITIES. All liabilities and obligations for
personal injury, other injury to persons or property damage resulting from,
caused by or arising out of, use or exposure to any of the Products, except as
otherwise specifically provided in clauses (ix) and (x) below; and
i. INVENTORY. All liabilities and obligations for inventory ordered
by Seller in the ordinary course of the Business prior to the Closing Date and
delivered to Buyer on or after the Closing Date to the extent not included in
the Closing Inventory Statement;
PROVIDED, HOWEVER, that except for the Assumed Liabilites and except
as provided in SECTION 1.10, Buyer shall not assume or take subject to and
Seller shall retain and be responsible for all of Seller's liabilities and
obligations relating to the Business and the Acquired Assets (the "Excluded
Liabilities") including, without limitation:
(i) any and all liabilities or obligations of Seller relating to
businesses other than the Business;
(ii) subject to SECTION 1.11, any liability or obligation under
contracts of Seller or permits of Seller that are not
Assumed Contracts or Permits and any liability or obligation
under the Assumed Contracts or Permits which accrue or arise
prior to the Closing Date;
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(iii) any profit or loss derived from the sale provided for by
this Agreement;
(iv) any intercompany debt, settlement or other liability or
obligation arising prior to the Closing Date between the
Business and Seller or any Affiliate of Seller;
(v) subject to the provisions of ARTICLE V which shall be
controlling, any liability or obligation of Seller relating
to the employment or termination of employment of any Person
arising prior to the Closing Date;
(vi) any liability or obligation relating to any indebtedness for
borrowed money owed by Seller to any third party or any
guarantee by Seller in favor of any third party;
(vii) any liability or obligation under any contract, agreement,
commitment or other binding arrangement, whether oral or
written, that is designated as an Excluded Asset;
(viii) any accounts payable of the Business as of the Closing Date,
except to the extent related to liabilities referenced in
SECTION 1.2(i) above;
(ix) all liabilities and obligations for personal injury, other
injury to persons or property damage resulting from, caused
by or arising out of, use or exposure to any of the Products
which were manufactured and sold by the Business prior to
the Closing Date;
(x) all liabilities and obligations for personal injury, other
injury to persons or property damage resulting from, caused
by or arising out of, use or exposure to any of the Products
which were manufactured by the Business prior to the Closing
Date and sold by the Business subsequent to the Closing
Date, except to the extent such liabilities and obligations
are caused by or arise out of, directly or indirectly, in
whole or in part, actions taken by Buyer on or after the
Closing Date;
(xi) any claims, actions, suits, proceedings, arbitrations, or
litigation pending at the Closing Date, including those
items listed in SCHEDULE 2.5;
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(xii) any liability or obligation for federal, state or local
income Taxes (as hereinafter defined), or Taxes of any other
nature except as otherwise provided in this Agreement; or
(xiii) except as otherwise provided in this Agreement, any other
liabilities or obligations which prior to the Closing Date
should be accrued in accordance with U.S. GAAP as applied by
Seller (as described in SECTION 2.11).
1.3 PURCHASE PRICE AND OTHER CONSIDERATION. The aggregate cash purchase
price payable by Buyer to Seller for the Acquired Assets is One Hundred
Eighty-Eight Million U.S. Dollars ($188,000,000.00) (the "PURCHASE PRICE")
(subject to adjustment as provided in SECTIONS 1.4, 1.5 and 1.9). The
Purchase Price (as adjusted pursuant to SECTION 1.4(a) and SECTION 1.5 (if
applicable)) will be payable to Seller by Buyer on the Closing Date by wire
transfer of immediately available U.S. funds to the account specified by
Seller on SCHEDULE 1.3. Seller shall have the right to modify the wire
transfer instructions specified in SCHEDULE 1.3 from time to time prior to
Closing by providing Buyer written notice thereof in accordance with the
provisions of SECTION 9.12 below.
1.4 INVENTORY ADJUSTMENT.
(a) At least two business days prior to the Closing Date, Seller shall
deliver to Buyer a statement (the "ESTIMATED INVENTORY STATEMENT") of the
estimated Inventory of the Business as of the Closing Date (the "ESTIMATED
INVENTORY AMOUNT"). On the Closing Date, if the Estimated Inventory Amount set
forth in the Estimated Inventory Statement is lower than $8,000,000 (the "BASE
AMOUNT"), then the Purchase Price payable pursuant to SECTION 1.3 hereof shall
be decreased dollar for dollar by the amount of the difference between the Base
Amount and the Estimated Inventory Amount. On the other hand, if, on the
Closing Date, the Estimated Inventory Amount is greater than the Base Amount,
then the Purchase Price payable pursuant to SECTION 1.3 hereof shall be
increased dollar for dollar by the amount of such excess of the Estimated
Inventory Amount over the Base Amount. On the Closing Date, Seller shall take a
complete physical count of the Inventory of the Business and Buyer or its
representatives shall be permitted to observe such physical count being taken.
Within thirty (30) days after the Closing Date, Seller shall deliver to Buyer a
statement (the "CLOSING INVENTORY STATEMENT") indicating the actual value of the
Inventory as of the Closing Date (the "CLOSING INVENTORY AMOUNT"). Buyer and
Seller agree that such Closing Inventory Statement shall be prepared in
accordance with the procedures and principles set forth in SCHEDULE 1.4(a).
Buyer and its representatives shall have
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the right to review all work papers and procedures used to prepare the Closing
Inventory Statement and shall have the right to perform any other reasonable
procedures necessary to verify the accuracy thereof. Each party shall bear its
own expenses incurred in connection with the above procedures.
(b) Unless Buyer, within thirty (30) days after delivery to Buyer of the
Closing Inventory Statement, notifies Seller in writing that it objects to the
Closing Inventory Statement, and specifies the basis for such objection, such
Closing Inventory Statement shall become final, binding and conclusive upon the
parties for purposes of this Agreement. If Buyer and Seller are unable to
resolve any objections to the Closing Inventory Statement within fifteen (15)
days after any such notification has been given, either party shall have the
option to refer the dispute to the New York office of Coopers & Lybrand
("COOPERS"). If for any reason Coopers is unavailable to resolve such dispute
between Buyer and Seller and if Buyer and Seller are also unable to mutually
agree upon the designation of another accounting firm within five (5) days after
the dispute has been referred to Coopers pursuant to the preceding sentence,
either party may thereafter request that the American Arbitration Association
("AAA") make such designation. The accounting firm so designated will make a
determination as to each of the items in dispute, which determination shall be
final, conclusive and binding upon each of the parties hereto. Buyer and Seller
shall cooperate with each other and with each other's authorized representatives
in order to resolve any and all matters in dispute under this SECTION 1.4 as
soon as practicable and shall share equally the fees and expenses of the
designated accounting firm and the AAA.
(c) If the value of the Closing Inventory Amount is lower than the
Estimated Inventory Amount, then the Purchase Price shall be decreased dollar
for dollar by the amount of the difference. In such event, Seller shall remit
the amount of such difference to Buyer, with interest at a rate of six percent
(6%) per annum (the "AGREED RATE") from the Closing Date to the date of payment,
within fifteen (15) days after delivery to Buyer of the Closing Inventory
Statement as provided above; PROVIDED, HOWEVER, that acceptance by Buyer of such
payment shall not constitute a waiver of Buyer's right to object to the Closing
Inventory Statement during the thirty (30) day period following its delivery.
If Buyer does raise an objection and if resolution of such objection results in
a further payment due from Seller to Buyer, payment of such additional amount,
with interest at the Agreed Rate, from the Closing Date to the date of payment,
shall be made to Buyer within five (5) days following final resolution of this
objection.
(d) If the value of the Closing Inventory Amount exceeds the Estimated
Inventory Amount, then the Purchase Price shall be increased dollar for dollar
by the amount of such excess. In such event, Buyer shall within five (5) days
after the expiration of the thirty (30) day
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period referred to above, or if Buyer contests the Closing Inventory Statement,
within five (5) days after final resolution of such objection, remit to Seller
the amount of such excess, together with interest thereon at the Agreed Rate,
from the Closing Date to the date of payment.
(e) Any undisputed or resolved amounts under this SECTION 1.4 shall be
payable within five (5) days of the date such amount is determined to be
undisputed or resolved, with interest at the Agreed Rate, even if other amounts
continue to be disputed and unresolved.
1.5 NET SALES AND DIRECT CONTRIBUTION ADJUSTMENT.
(a) Subject to SECTION 1.5(d) below, Seller shall deliver to Buyer on or
prior to July 15, 1996, a statement (the "CELESTE NET SALES STATEMENT") of "Net
Sales" for the Celeste portion of the Business (excluding private label) for the
months of May and June, 1996 (the "ACTUAL NET SALES AMOUNT"). If the Closing
occurs after such Celeste Net Sales Statement has been prepared and delivered to
Buyer and the Actual Net Sales Amount set forth therein is lower than
$10,525,000 (the "TARGETED NET SALES AMOUNT"), then the Purchase Price payable
pursuant to SECTION 1.3 at Closing shall be decreased dollar for dollar by the
amount of the difference between the Targeted Net Sales Amount and the Actual
Net Sales Amount. If, on the other hand, the Closing occurs before the Celeste
Net Sales Statement has been prepared and delivered to Buyer and the Actual Net
Sales Amount subsequently shown therein is lower than the Targeted Net Sales
Amount, the Purchase Price shall be adjusted on a post-Closing basis by
decreasing such Purchase Price dollar for dollar by the amount of the
difference between the Actual Net Sales Amount and the Targeted Net Sales
Amount. If the preceding sentence applies, Seller shall remit the amount of any
such difference to Buyer, together with interest thereon at the Agreed Rate,
from the Closing Date to the date of payment, within fifteen (15) days after
delivery to Buyer of the Celeste Net Sales Statement as provided above. Buyer
and Seller agree that the Celeste Net Sales Statement shall be prepared
consistent with the principles used to prepare the Financial Statements as
described in SECTION 2.11.
(b) Subject to SECTION 1.5(d) below, Seller shall deliver to Buyer on or
prior to July 15, 1996, a statement (the "CELESTE DIRECT CONTRIBUTION
STATEMENT") of the "Direct Contribution" of the Celeste portion of the Business
(excluding private label) for the months of May and June, 1996 (the "ACTUAL
DIRECT CONTRIBUTION AMOUNT"). If the Closing occurs after the Celeste Direct
Contribution Statement has been prepared and delivered to Buyer and the Actual
Direct Contribution Amount set forth therein is lower than $1,433,000 (the
"TARGETED DIRECT CONTRIBUTION AMOUNT"), then the Purchase Price payable pursuant
to SECTION 1.3 at Closing shall be decreased by an amount equal to ten times the
difference between the Targeted Direct
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Contribution Amount and the Actual Direct Contribution Amount. If, on the other
hand, the Closing occurs before the Celeste Direct Contribution Statement has
been prepared and delivered to Buyer and the Actual Direct Contribution Amount
subsequently shown therein is lower than the Targeted Direct Contribution
Amount, the Purchase Price shall be adjusted on a post-Closing basis by
decreasing such Purchase Price by an amount equal to ten times the difference
between the Actual Direct Contribution Amount and the Targeted Direct
Contribution Amount. If the preceding sentence applies, Seller shall remit to
Buyer the amount of any required adjustment, together with interest thereon at
the Agreed Rate, from the Closing Date to the date of payment, within fifteen
(15) days after delivery to Buyer of the Celeste Direct Contribution Statement
as provided above. Buyer and Seller agree that the Celeste Direct Contribution
Statement shall be prepared consistent with the principles used to prepare, and
shall include the items set forth in, the Financial Statements as described in
SECTION 2.11.
(c) If the Actual Net Sales Amount shown in the Celeste Net Sales
Statement exceeds the Targeted Net Sales Amount, Buyer and Seller agree that the
amount of any such excess will reduce on a dollar for dollar basis any
adjustments which would otherwise be made to the Purchase Price pursuant to
SECTION 1.5(b) above. Likewise, if the Actual Direct Contribution Amount shown
in the Celeste Direct Contribution Statement exceeds the Targeted Direct
Contribution Amount, Buyer and Seller agree that each dollar of such excess
shall reduce by ten dollars the adjustments which would otherwise be made to the
Purchase Price pursuant to SECTION 1.5(a) above. Notwithstanding any other
provision of this Agreement, the parties agree that in no event shall the
aggregate amount of adjustments made to the Purchase Price pursuant to this
SECTION 1.5 exceed $5,000,000 in the aggregate. Futhermore, the parties agree
that the amounts and multiples used in this SECTION 1.5 to calculate any
Purchase Price adjustments shall be used for no other purpose whatsoever,
including, without limitation, as a measure of damages in any future disputes
involving this Agreement.
(d) Notwithstanding SECTIONS 1.5(a) and 1.5(b) above, if the Closing
occurs prior to July 1, 1996, the parties agree that the Targeted Net Sales
Amount and the Targeted Direct Contribution Amount will be reduced on a pro rata
basis by multiplying such amounts by a ratio determined as follows: the
numerator of such ratio shall equal the actual number of business days in May
and June, 1996 occurring prior to the Closing Date, and the denominator shall
equal 42. Furthermore, the Celeste Net Sales Statement and the Celeste Direct
Contribution Statement which are used to determine Purchase Price adjustments,
if any, pursuant to SECTIONS 1.5(a) through 1.5(c) above shall only report Net
Sales and Direct Contributions for the period in May and June, 1996 preceding
the Closing Date. For purposes of this Agreement, "Business Day" shall mean any
weekday on which banks in Chicago, Illinois are open for business.
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1.6 THE CLOSING. The closing of the sale and purchase contemplated
hereunder (the "CLOSING") shall be effective and shall take place in New York
City at the offices of Richards & O'Neil, LLP, 885 Third Avenue, New York, New
York 10022 on (i) July 1, 1996 or as soon thereafter as practicable, but not
later than three days after all conditions to each party's obligation to close
hereunder shall have been satisfied or waived; or (ii) such earlier date as is
mutually agreed by Buyer and Seller. The day on which the Closing actually
takes place is referred to herein as the "CLOSING DATE". The Closing shall be
deemed to have occurred on the opening of business on the Closing Date.
1.7 ALLOCATION OF THE PURCHASE PRICE. The Purchase Price and the Assumed
Liabilities shall be allocated among the Acquired Assets in accordance with the
requirements of Section 1060 of the Internal Revenue Code of 1986, as amended
(the "CODE") and in the manner set forth in SCHEDULE 1.7. Seller and Buyer
shall make all appropriate tax filings on a basis consistent with such
allocation.
1.8 SELLER'S CLOSING OBLIGATIONS. At the Closing, Seller shall deliver to
Buyer the following:
a. An opinion of counsel in the form attached hereto as EXHIBIT A.
b. A duly executed deed in the form customarily used in the
jurisdiction where the Real Property is located, as attached hereto as EXHIBIT
B, transferring the Real Property to Buyer.
c. A duly executed assignment of all of Seller's right, title and
interest under the Assumed Contracts and the Permits, in the form of EXHIBIT C
hereto.
d. A duly executed assignment in recordable form of all trademarks
registered in the United States that are set forth in SCHEDULE 2.18(a), in the
form of EXHIBIT D attached hereto.
e. A duly executed assignment in recordable form of all patents and
patent applications that are set forth in SCHEDULE 2.18(a), in the form of
EXHIBIT E attached hereto.
f. A duly executed general assignment of all trademarks and
copyrights (and registrations and applications therefor), labels, trade names,
brand names, common law trademarks, trade dress and trade secrets, know-how,
processes, technology, formulas, recipes,
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mixing instructions and products specifications and other intangible property,
other than the Intellectual Property, which are owned by Seller and used
exclusively in the Business, in the form of EXHIBIT F attached hereto.
g. A bill of sale in the form of EXHIBIT G hereto transferring
Acquired Assets other than the Real Property to Buyer.
h. A duly executed counterpart original of the Aunt Jemima trademark
license agreement in the form of EXHIBIT H hereto (the "AJ LICENSE"). For
purposes of this Agreement, the "Aunt Jemima" trademarks which are to be
licensed to Buyer pursuant to the AJ License are hereinafter referred to as the
"LICENSED TRADEMARKS."
i. A duly executed counterpart original of the Transition Services
Agreement in the form of EXHIBIT I hereto (the "TRANSITION SERVICES AGREEMENT").
j. A duly executed counterpart original of the Interim Trademark and
Trade Name License Agreement in the form of EXHIBIT J hereto (the "INTERIM
TRADEMARK LICENSE AGREEMENT").
k. A duly executed counterpart original of the Patent License
Agreement in the form of EXHIBIT K hereto (the "PATENT LICENSE AGREEMENT").
l. A duly executed counterpart original of a co-pack agreement
providing for the production of frozen pancakes for McDonald's Corporation, in
the form of EXHIBIT L hereto (the "MCDONALD'S CO-PACK AGREEMENT").
m. A duly executed counterpart original of the Shared Technology
License Agreement, in the form of EXHIBIT M hereto (the "SHARED TECHNOLOGY
LICENSE AGREEMENT").
n. [This subsection (n)and EXHIBIT N have been intentionally
omitted.]
o. A title insurance policy (the "TITLE POLICY"), or updated title
commitment brought down to the Closing Date together with a binding commitment
by Chicago Title Insurance Company ("TITLE COMPANY") to issue a title policy on
the Real Property, subject only to (a) such exceptions as are contained in
Schedule B of the title commitment attached hereto as EXHIBIT O, (b) matters
over which the Title Company issues an endorsement in a form reasonably
satisfactory to Buyer, and (c) matters caused by Buyer.
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p. All documents necessary to transfer to Buyer title to any motor
vehicles that are included in the Acquired Assets.
q. An officer's certificate executed and delivered by a duly
authorized officer of Seller, certifying that, subject to SECTION 8.1 of this
Agreement and except for Pre-Closing Matters (as hereinafter defined), the
representations and warranties of Seller contained in this Agreement were true
and correct in all material respects on the date of this Agreement and shall be
true and correct in all material respects as of the Closing Date with the same
effect as though such representations and warranties had been made or given
again at and as of the Closing Date (except for any representation or warranty
expressly stated to have been made or given as of a specified date, which, at
the Closing Date, shall be true and correct in all material respects as of the
date expressly stated).
r. The officer's certificate referred to in SECTION 6.1(b).
s. Such other documents and instruments (including a FIRPTA
certificate) as Buyer reasonably may request not less than five days prior to
the Closing Date.
t. A survey in the form of the Survey (as defined in SECTION 2.6),
with those matters of survey delineated as "Exceptions To Be Cleared by
Reconveyance" on the excerpts from the Survey attached hereto as EXHIBIT R
removed.
1.9 BUYER'S CLOSING OBLIGATIONS. At the Closing, Buyer shall deliver to
Seller the following:
a. The Purchase Price referred to in SECTION 1.3 in the manner set
forth therein, as adjusted pursuant to SECTION 1.4(a) and SECTION 1.5 (if
applicable) hereof.
b. A duly executed assumption of the Assumed Liabilities in the form
attached hereto as EXHIBIT P.
c. An opinion of counsel in the form attached hereto as EXHIBIT Q.
d. A duly executed counterpart original of the AJ License.
e. A duly executed counterpart original of the Transition Services
Agreement.
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f. A duly executed counterpart original of the Interim Trademark
License Agreement.
g. A duly executed counterpart original of the Patent License
Agreement.
h. A duly executed counterpart original of the McDonald's Co-Pack
Agreement.
i. A duly executed counterpart original of the Shared Technology
License Agreement.
j. The officer's certificate referred to in SECTION 7.1(C).
k. Such other documents and instruments as Seller reasonably may
request not less than five days prior to the Closing Date.
1.10 PREPAID EXPENSES AND PRORATIONS. Within thirty (30) days immediately
following the Closing, the parties shall prorate all Prepaid Expenses and
similar items related to the Business and/or the Acquired Assets to the extent
Buyer reasonably is expected to receive the benefits thereof after the Closing,
and Buyer shall reimburse Seller within such thirty (30) day period for the
unused portion of such Prepaid Expenses or other items as of the Closing Date.
In addition, within such thirty (30) day period following the Closing, all items
listed below relating to the Business and the Acquired Assets will be prorated
as of the Closing Date, with Seller liable to the extent such items relate to
any time period up to and including the day prior to the Closing Date, and Buyer
liable to the extent such items relate to the Closing Date and all periods
subsequent thereto: personal property, real estate, occupancy and water taxes,
if any, on or with respect to the Business or the Acquired Assets; rents and
other items due to Seller or payable by Seller under any Assumed Contract; the
amount of any license or registration fees with respect to any licenses or
registrations which are being assigned or transferred hereunder; the amount of
sewer rents and charges for water, telephone, electricity and other utilities
and fuel; and any other items which are normally prorated in connection with
similar transactions. Seller agrees to furnish Buyer with such documents and
other records as Buyer reasonably requests in order to confirm all adjustment
and proration calculations made pursuant to this SECTION 1.10. The net
aggregate amount of such prorations shall be treated as an adjustment to the
Purchase Price paid by Buyer to Seller on the Closing Date pursuant to SECTION
1.3. If current payments with respect to items to be prorated pursuant to this
SECTION 1.10 are not ascertainable on or before such post-Closing settlement
date, such payments shall be prorated on the basis of the most recently
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ascertainable bill therefor and shall be reprorated between Seller and Buyer
when the current bills with respect to such items have been issued and a cash
settlement shall be made promptly thereafter on an item by item basis.
1.11 NONASSIGNABLE ASSUMED CONTRACTS AND PERMITS.
a. To the extent that any Assumed Contract or Permit is not capable
of being assigned or transferred without the consent or waiver of the other
party thereto or any third party (including a government or governmental unit),
or if such assignment or transfer or attempted assignment or transfer would
constitute a breach thereof or a violation of any law, decree, order, regulation
or other governmental edict, this Agreement shall not constitute an assignment
or transfer thereof, or an attempted assignment or transfer of any such Assumed
Contract or Permit until such time as such consent or waiver is obtained.
b. Anything in this Agreement to the contrary notwithstanding,
Seller is not obligated to transfer to Buyer any of its rights and obligations
in and to any of the Assumed Contracts or Permits without first having obtained
all necessary consents and waivers. Prior to the Closing Date, Seller shall use
its reasonable efforts (which shall not require Seller to incur any financial or
onerous obligation) to obtain consents to the assignment of the Material
Contracts and Permits, including without limitation those listed in SCHEDULE
1.11, PROVIDED, HOWEVER, that Seller shall not, without Buyer's consent (which
shall not be unreasonably withheld), agree to any modification of any such
Material Contract or Permit in the course of obtaining any such consents or
waivers, or pay or commit to pay any consideration payable from the Acquired
Assets. Prior to and for a reasonable period of time after the Closing Date,
not to exceed ninety (90) days, Seller shall cooperate with Buyer to assist
Buyer in obtaining any other consents and waivers under any Assumed Contract or
Permit which are reasonably requested by Buyer.
c. If any such consent or waiver cannot be obtained in such ninety
(90) day period, Seller and Buyer will cooperate to implement reasonable
arrangements resulting in Buyer obtaining the benefits and privileges of the
relevant Assumed Contract or Permit (including without limitation enforcement
for the benefit of Buyer of any and all rights of Seller against a third party
or otherwise) while protecting Seller from continuing liabilities or obligations
thereunder. Subject to the foregoing, with respect to any Assumed Contract
providing for the lease of a material item of Equipment, such reasonable
arrangements shall provide for Buyer's use of such Equipment (or of replacement
machinery or equipment of comparable quality and functionality) for at least the
remaining balance of the applicable lease's term. Seller shall use
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reasonable efforts to implement the above-described arrangements such that the
Business operations in which the equipment is used are not unreasonably and
materially interrupted.
1.12 RISK OF LOSS. In the event a material Acquired Asset is damaged
or destroyed, ordinary wear and tear excepted, between the date hereof and the
Closing Date (any such event being referred to herein as an "Event of Loss"),
Seller at its expense shall have the right at its option to either (i) promptly
repair or replace the item with comparable property of like value and quality,
or (ii) pay to Buyer the cost of replacing such damaged or destroyed Acquired
Asset with an asset of like value and quality. Notwithstanding the foregoing,
any Event of Loss which constitutes a Material Adverse Change (as defined in
SECTION 8.1) shall be dealt with in accordance with the procedures specified in
SECTION 8.1.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
2.1 ORGANIZATION AND QUALIFICATION OF SELLER. Seller is a corporation
duly organized, validly existing and in good standing under the laws of New
Jersey. Seller has full corporate power, authority and qualification to own or
lease the Acquired Assets and to conduct the Business in the manner and in the
places where the Acquired Assets are owned or leased or the Business is
conducted by it, and to make this Agreement and any other agreements
contemplated hereby, and to incur and perform its obligations hereunder and
thereunder. Seller is duly qualified to do business and is in good standing in
each jurisdiction in which the conduct of the Business or the ownership or
operation of the Acquired Assets, as applicable to it, requires such
qualification, except where the failure to be so qualified or in good standing
would not have a material adverse effect on the Business or the Acquired Assets,
each taken as a whole, or on the transactions contemplated hereby.
2.2 AUTHORITY OF SELLER. All necessary corporate action has been taken by
Seller to authorize the execution, delivery and performance of this Agreement
and the transactions contemplated hereby.
2.3 EXECUTION AND BINDING EFFECT. This Agreement has been duly and
validly executed and delivered by Seller and constitutes the legal, valid and
binding obligation of Seller and will be enforceable against Seller in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, moratorium, insolvency, fraudulent conveyance, reorganization,
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liquidation or other laws relating to or affecting creditors' rights and
remedies or by equitable principles.
2.4 NO CONTRAVENTION. Except as set forth in SCHEDULE 2.4, the execution,
delivery and performance of this Agreement by Seller and the consummation by
Seller of the transactions contemplated hereby, and the fulfillment of and
compliance by Seller with the terms and conditions hereof, do not and will not:
a. conflict with or violate any provisions of the Articles of
Incorporation or Bylaws of Seller;
b. require any consent, approval or notice under or conflict with,
permit or result in a termination or breach of, or constitute (with or without
notice or lapse of time or both) a default under, or accelerate or permit the
acceleration of any performance required by, any Assumed Contract or Permit to
which Seller is a party, under which it has any rights, or by which it or any of
the Acquired Assets is bound or subject;
c. violate any law, statute or ordinance or any rule, regulation,
order, writ, injunction or decree of any court or of any Governmental Authority
(as hereinafter defined) applicable to the Business, or by which any of the
Acquired Assets may be bound or subject. For purposes of this Agreement,
"Governmental Authority" shall mean (i) any government or political subdivision
thereof whether federal, state, local or foreign, and (ii) any agency,
department, division, court, tribunal or instrumentality of any such government
or political subdivision; or
d. require any filing, declaration or registration with, or permit,
consent or approval of, or the giving of notice to, any Governmental Authority,
excluding from the foregoing SECTIONS 2.4(a) through 2.4(d):
(i) such conflicts, violations, breaches, defaults,
accelerations, filings, declarations, registrations, permits, consents,
approvals and notices, the absence of which, either singly or in the aggregate,
would not be material;
(ii) any consents or waivers required in connection with the
Assumed Contracts or Permits;
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(iii) any local filings or recordings to be made by Buyer
that may be necessary to transfer any of the Acquired Assets; and
(iv) any filings required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder (the "HSR ACT") and under any other applicable antitrust laws and
regulations, and the expiration of applicable waiting periods under the HSR Act
and such other applicable antitrust laws.
2.5 LITIGATION. Except as set forth in SCHEDULE 2.5, (a) there are no
claims, actions, suits, proceedings or investigations pending or threatened in
writing by or against Seller with respect to (i) the Business, (ii) the Acquired
Assets, (iii) the Licensed Trademarks, (iv) the Licensed Patents, or (v) the
transactions contemplated hereby, at law or in equity or before or by any
Federal, state, municipal, foreign or other governmental department, commission,
board, agency, instrumentality or authority, and (b) there are no orders,
decrees or judgments pending or in effect against Seller with respect to (i) the
Business, (ii) the Acquired Assets, (iii) the Licensed Trademarks, (iv) the
Licensed Patents, or (v) the transactions contemplated hereby.
2.6 TITLE TO ACQUIRED ASSETS. The Real Property is owned in fee simple
free and clear of any material liens, charges, pledges, security interests,
rights, easements, covenants, conditions, rights of first refusal or purchase
options, restrictions or other encumbrances (collectively, "LIENS") except for
(a) taxes, assessments, governmental charges or levies which are not yet due and
payable ("TAXES NOT YET DUE AND PAYABLE"), (b) the non-material claims of
contractors, materialmen, repairmen and similar persons which are not yet due
and payable, (c) matters excepted in or excluded from coverage in Schedule B of
the preliminary title report attached hereto as EXHIBIT O, (d) any liens or
imperfections of title which are matters of record on the date hereof, (e) any
encroachments or other facts or conditions that are revealed on the survey
prepared by Barge, Waggoner, Sumner and Cannon dated May 7, 1996 attached to
SCHEDULE 2.6(a) hereto (the "SURVEY"); PROVIDED, HOWEVER, that those matters of
survey delineated as "Exceptions To Be Cleared by Reconveyance" on the excerpts
from the Survey attached hereto as EXHIBIT R shall not be excepted from Seller's
representation concerning the Real Property contained in this SECTION 2.6, (f)
any existing applicable building and zoning ordinances, and (g) those items set
forth in SCHEDULE 2.6(a). Except with respect to intellectual property, as to
which no representations or warranties are made in this SECTION 2.6, and except
for Permitted Liens or other items referenced in SCHEDULE 2.6(a), Seller has
good and valid title to all of the other Acquired Assets free and clear of any
Liens except for (x) Taxes Not Yet Due and Payable and (y) that portion of the
Inventory and Equipment disposed of in the ordinary course of business between
the date hereof and the Closing Date. The exceptions to title referred to in
clauses (a)
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through (g) above are collectively referred to herein as the "PERMITTED LIENS".
Except as set forth on SCHEDULE 2.6(b), none of Seller or its Affiliates has
entered into any leases or subleases currently in effect relating to the use or
occupancy of real property in connection with the Acquired Assets or the
Business.
2.7 ACQUIRED ASSETS USED IN THE BUSINESS. Except for the Excluded Assets
and except as set forth in SCHEDULE 2.7(a), the Acquired Assets constitute all
of the material assets, properties and rights used in the conduct of the
Business, as presently conducted by Seller at the Real Property. To the
knowledge of Seller and except as set forth in SCHEDULE 2.7(b) or SCHEDULE 2.14,
all physical assets located on the Real Property which are currently used in the
Business are in working order and have been maintained in accordance with
reasonable maintenance schedules, except for any physical assets having an
individual value of not more than $35,000.
To the knowledge of Seller and except as set forth in SCHEDULE 2.7(b) or
SCHEDULE 2.14, with respect to the Real Property:
(i) All buildings, structures, fixtures, systems and other
improvements on the Real Property used primarily in the Business as of the
Closing Date are in working order and have been maintained in accordance with
reasonable maintenance schedules, except for any buildings, structures,
fixtures, systems and other improvements having an individual value of not more
than $35,000 (such buildings, structures, fixtures, systems and other
improvements are hereinafter referred to as the "IMPROVEMENTS");
(ii) All water, gas, electrical, steam, compressed air,
telecommunication, sanitary and storm sewage lines and systems and other
systems, if any, serving the Real Property are installed and in working order,
with the exception of any such systems the absence or failure of which would not
have a material adverse effect on the Business as it is currently conducted by
Seller;
(iii) As of the Closing Date, the existence, use, occupancy and
operation of the Improvements is not dependent on the granting of any special
permit, exception, approval or variance which has not been obtained by Seller,
except in such cases, if any, where the failure to obtain such a permit,
exception, approval or variance would not have a material adverse effect on the
Business as it is currently conducted by Seller;
(iv) There is no pending or threatened (a) change of zoning, building
or other similar laws, ordinances or regulations adversely affecting the Real
Property which would
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materially interfere with how such property is currently used, occupied or
operated by Seller, or (b) condemnation of such property; and
(v) Seller has not received notice from any Governmental Authority
requiring material work to be done or material improvements to be made upon the
Real Property and/or the Improvements, and Seller has no knowledge of the
enactment or adoption of any ordinance or resolution by any such Governmental
Authority authorizing material work or material improvements for which an
assessment may be levied against such Real Property and/or Improvements.
2.8 TAXES. There are no pending or, to Seller's knowledge, threatened
actions or proceedings, assessments or collections of Taxes of any kind with
respect to the Business that could subject Buyer to any liability for such Taxes
for the period prior to the Closing Date. "Taxes" means any and all taxes
imposed by any national, state or local taxing authority, including without
limitation, all income, gross receipts, sales, use, value-added, property, use
and occupancy, business occupation, mercantile, ad valorem, transfer, license,
withholding, payroll, employment, excise, environmental, capital stock,
franchise, estimated or other tax of any kind whatsoever, including any
interest, penalties and additions thereto. Seller is not a foreign person
within the meaning of Section 1445(b)(2) of the Code.
2.9 BROKERS AND FINDERS. Except for Goldman, Sachs & Co., whose fees
Seller shall pay, Seller has not employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated by this Agreement.
2.10 ENVIRONMENTAL COMPLIANCE. Except as set forth on SCHEDULE 2.10:
a. Seller is conducting the Business on the Real Property in
compliance with the federal, state, or local laws, rules or regulations in
effect as of the date of this Agreement which are applicable to the Real
Property and relate to environmental matters, including the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), the
Resource Conservation and Recovery Act of 1976 ("RCRA"), the Federal Water
Pollution Control Act, the Clean Air Act, the Hazardous Materials Transportation
Act, the Toxic Substances Control Act, the Safe Drinking Water Act, and any
other Federal environmental laws, as such environmental laws have been amended
from time to time, and similar state and local laws, and regulations in effect
as of the date of this Agreement which implement such laws (collectively
referred to as "ENVIRONMENTAL LAWS");
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b. Since January 1, 1994, Seller has not received and is not aware
of any threatened receipt of written notice that it is in non-compliance in any
material respect with the Environmental Laws relating to the Real Property;
c. For the five year period next preceding the date of this
Agreement, the Business has been conducted on the Real Property in compliance
with all Environmental Laws and decrees and orders issued thereunder applicable
to the ownership of the Acquired Assets and the operation of the Business which
were in effect on the appropriate dates, and Seller has not received, and is not
aware of the threatened receipt of, any notice of failure to comply in any
material respect with such Environmental Laws, decrees or orders;
d. Except as permitted by, and in compliance with, the Environmental
Laws, (A) the Acquired Assets, including the Real Property, have not been used
by Seller for the generation, use, storage, manufacture, transportation,
treatment or disposal of Hazardous Substances (as hereinafter defined), and (B)
no Hazardous Substances, including asbestos-containing materials and
polychlorinated biphenyls, are currently located on the Real Property. For
purposes of this Agreement, "Hazardous Substance" shall mean any substance,
chemical, or waste that is listed under the Environmental Laws as hazardous,
toxic, or dangerous or as a contaminant or pollutant, and any petroleum
products;
e. Except for ammonia releases, there has been no releasing,
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, migrating, disposing or dumping of Hazardous Substances by
Seller which would result in any material liability (hereinafter a "Hazardous
Discharge") from, onto, or into the Acquired Assets, including the Real
Property, and no contaminated soil or groundwater for which the Environmental
Laws require a response action or corrective action has resulted therefrom on
the Real Property or any real property adjacent to the Real Property;
f. There are not currently and never have been any underground
storage tanks used or located on the Real Property;
g. There are no outstanding or threatened in writing Environmental
Complaints (as hereinafter defined) against the owners or operators of any
facilities that have received Hazardous Substances generated by Seller in the
course of conducting the Business which would result in any liability to Buyer
with respect to the Acquired Assets or the Business. For purposes of this
Agreement, "Environmental Complaint" shall mean any complaint,
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summons, citation, notice, directive, order, claim, litigation, proceeding or
judgment letter, request for information or other written communication from any
Governmental Authority or private party (A) involving a Hazardous Discharge, on
or off-site, or (B) objecting to odor, noise or discharges of liquid, solid or
gaseous materials from the Acquired Assets, whether hazardous or not;
h. Since January 1, 1994, there have been no reportable ammonia
releases at the Real Property (based upon E.P.A. reportable quantity of one
hundred pounds).
2.11 FINANCIAL STATEMENTS. Attached as SCHEDULE 2.11 are the following
financial statements: Statement of Inventory and Net Property of the Business
as of December 31, 1995 and Financial Summary - Direct Contribution of the
Business for the years ended December 31, 1995, December 31, 1994 and December
31, 1993; Financial Summary - Direct Contribution for the domestic retail
portion of the Business (excluding Canadian and Food Service Results) for the
quarter ended March 31, 1996 and for the month ended April 30, 1996; and
Statement of Net Sales for the Canadian and Food Service portions of the
Business for the quarter ended March 31, 1996 and for the month ended April 30,
1996 (collectively, the "FINANCIAL STATEMENTS"). Seller agrees to continue to
provide Buyer with additional monthly financial statements of Financial
Summary - Direct Contribution for the domestic retail portion of the Business
(excluding Canadian and Food Service results) and Statements of Net Sales for
the Canadian and Food Service portions of the Business for each month as soon as
practicable after they were or are prepared through the Closing Date. Except as
noted in the Financial Statements, or otherwise in SCHEDULE 2.11, the Financial
Statements:
a. were prepared from the books and records of Seller;
b. except as set forth in clause (i) below, have been prepared in
accordance with U.S. GAAP, applied on a consistent basis for all periods
presented, have been prepared by means of following consistent application of
internal accounting practices in use by Seller, and along with other pertinent
financial records of Seller have been used to prepare Seller's consolidated
financial statements, and fairly present, in all material respects, the
inventory and net property of the Business as of the date set forth therein and
the direct contribution of the Business for the periods indicated in accordance
with U.S. GAAP, PROVIDED:
(i) The Financial Statements are not a complete presentation of
the financial position or results of operations of the Business. The Financial
Statements exclude certain shared operating expenses including, without
limitation, broker selling expenses, certain
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allocated marketing expenses, product research, and general and administrative
services, as well as financing costs, taxes based upon income and any one-time
or non-recurring charges, all of which the Seller provided to or paid for the
benefit of the Business to support its operations. The Financial Statements
further differ from U.S. GAAP in that all periods exclude effects of LIFO
accounting and in Seller's methodology of allocating period cost inventory
adjustment. As a result of the Business' relationship with Seller, the
financial position and results of operations are not necessarily indicative of
what actually would have occurred had the Business been a stand-alone entity;
and
c. the books, records and accounts relating to the Business are
accurate and complete in all material respects.
2.12 CONTRACTS.
a. SCHEDULE 2.12 (a) discloses all Assumed Contracts, whether oral
or written, relating primarily to the Business or the Acquired Assets of the
type described in the next sentence or which involve the payment or receipt by
Seller of in excess of $75,000 during the remaining term thereof, but excluding
(i) purchase or supply orders or commitments arising in the ordinary course of
business and (ii) Assumed Contracts required to be listed in another Schedule
(collectively, the "MATERIAL CONTRACTS"). The Assumed Contracts disclosed on
SCHEDULE 2.12(a), without respect to the amount to be paid or received
thereunder, also shall include the following: (A) collective bargaining
contracts or similar arrangements with any labor union or other similar
organization, excluding any such contracts which are Excluded Assets; (B)
contracts containing covenants by the Business not to compete in any line of
business; (c) consent decrees; (D) contracts for the sale or purchase of any
assets of or for the Business other than in the ordinary course of business; (E)
indentures, mortgages, industrial revenue bond agreements, notes, loan or credit
agreements or other agreements or obligations relating to the borrowing of money
or to a guaranty or assumption, directly or indirectly, of obligations of
others; (F) security agreements, pledges, conditional sale agreements or title
retention agreements; or (G) contracts with any current or former employee or
any member of their family or their Affiliates, in each case solely to the
extent such contracts involve payments or have a value of more than $50,000.
True and complete copies of each written Material Contract and true and complete
written summaries of each oral Material Contract described in SCHEDULE 2.12(a)
(together with any and all modifications, amendments or supplements thereto)
have been made available to Buyer prior to execution of this Agreement.
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b. Except as set forth in SCHEDULE 2.12(b), all Material Contracts
are valid and in full force and effect, except to the extent the enforceability
thereof may be affected by applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws or general principles of equity. Except as set
forth in SCHEDULE 2.12(b), no material default by Seller exists under any
Material Contract and there does not exist any event applicable to Seller that,
with notice or lapse of time or both, would constitute an event of default or
result in a right to accelerate or terminate or a material loss of rights under
any Material Contract. To the best of Seller' knowledge, except as set forth in
SCHEDULE 2.12(b), no other party to any Material Contract is currently in
material default thereunder and Seller is not aware of any event applicable to
such other party that, with notice or lapse of time or both, would constitute an
event of default or result in a right to accelerate or terminate or a loss of
material rights under any Material Contract.
2.13 ABSENCE OF CERTAIN CHANGES. To Seller's knowledge, except as set
forth in SCHEDULE 2.13, with respect to the Business, the Acquired Assets, the
Licensed Trademarks and the Licensed Patents, Seller has not since December 31,
1995:
a. permitted or allowed any of the Acquired Assets, Licensed
Trademarks or Licensed Patents to be mortgaged, pledged or subjected to any
Lien, other than Permitted Liens;
b. materially written down or materially written up the value of any
Inventory other than in the ordinary course of business;
c. sold, transferred or leased any of the Acquired Assets, Licensed
Trademarks or Licensed Patents, other than (i) sales of Inventory (including
disposal of obsolete, damaged or defective Inventory) in the ordinary course of
business and (ii) sales or disposal of physical assets having an individual
value of less than $50,000 and an aggregate value of less than $200,000 and
which are not otherwise material to the Business;
d. granted increases in the compensation of any Transferred
Employee, which increases singly or in the aggregate are material, other than in
the ordinary course of business and consistent with past practice;
e. adopted, entered into or agreed to enter into, or amended or
agreed to amend, any benefit plans with respect to the Business, which adoptions
or amendments singly or in the aggregate are or would be material to the
Business taken as a whole, other than in the ordinary course of business and
consistent with past practice;
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f. changed any methods of accounting for the Acquired Assets or the
Business;
g. except as set forth in the Financial Statements or as otherwise
previously disclosed to Buyer, suffered any changes in the Acquired Assets,
liabilities, operations or financial condition of the Business (excluding for
the period of time between the date hereof and the Closing Date the financial
condition of the Celeste portion of the Business) which have been either
individually or in the aggregate materially adverse;
h. waived any right of material value under any Material Contract;
i. otherwise operated the Business other than in the ordinary
course; or
j. agreed, whether in writing or otherwise, to take any of the
actions set forth in this SECTION 2.13.
2.14 COMPLIANCE WITH LAWS. Except as set forth in SCHEDULE 2.14, Seller is
conducting the Business in compliance with all statutes, laws, rules,
regulations, ordinances, decrees and orders applicable to the ownership of the
Acquired Assets, the Licensed Trademarks and the Licensed Patents and the
operation of the Business which are in effect as of the date hereof (excluding
those relating to environmental matters which are separately addressed in
SECTION 2.10 and as to which no representations or warranties are made in this
SECTION 2.14) and has not received and is not aware of any threatened receipt of
any notice that it is in noncompliance with any such statutes, laws, rules,
regulations, ordinances, decrees or orders.
2.15 INSURANCE; CLAIMS. Seller has maintained and will continue to
maintain through the Closing Date a reasonable and customary program of casualty
and property insurance (which may include self-insurance) with respect to the
Acquired Assets and the Business. SCHEDULE 2.15 contains a list of all property
damage and personal injury claims against Seller with respect to the Business or
the Acquired Assets during the past two years involving any claim in excess of
$50,000. Between the date of this Agreement and the Closing Date, Seller shall
provide or make available to Buyer all information pertaining to the Acquired
Assets and the Business as reasonably requested by Buyer or Buyer's brokers or
insurers to effect insurance on the Acquired Assets and the Business at the
Closing Date.
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2.16 EMPLOYEE BENEFIT PLANS. SCHEDULE 2.16 hereto contains a true and
complete list of each material plan, contract, program and arrangement,
including, without limitation, each material pension, bonus, deferred
compensation, incentive compensation, stock purchase, supplemental retirement,
severance or termination pay, stock option, hospitalization, medical, life
insurance, dental, disability, salary continuation, vacation, supplemental
unemployment benefits, profit-sharing, ESOP, retirement, union contract and each
other material employee benefit plan, program, policy or arrangement,
maintained, contributed to, or required to be contributed to, by Seller for the
benefit of any Transferred Employee described in ARTICLE V.
2.17 LABOR MATTERS. With respect to the Business, except as disclosed in
SCHEDULE 2.17, Seller has not, to the best of its knowledge, in the three-year
period next preceding the date of this Agreement (i) engaged in any unfair labor
practice or discriminated on the basis of race, color, religion, sex, national
origin, age or handicap in its employment practices, and no complaints are
pending or threatened against Seller before any Governmental Authority regarding
any such unfair labor practice or discrimination, or (ii) experienced a labor
strike or a threatened labor strike. Except as set forth in SCHEDULE 2.17, no
Transferred Employees are represented by any union or collective bargaining unit
and, since December 31, 1995, Seller has not received written notice that the
Transferred Employees have any intention to organize or join a union, labor
organization or collective bargaining unit.
2.18 INTELLECTUAL PROPERTY. SCHEDULE 2.18(a) sets forth a complete and
accurate list of (i) all trademarks, copyrights and trade names which are
registered in the United States and are in use by Seller or its Affiliates
exclusively in the Business, excluding the Aunt Jemima Trademarks, (ii) all
pending applications filed by or on behalf of Seller or its Affiliates for
registration in the United States of trademarks, copyrights and trade names that
relate exclusively to the Business, excluding the Aunt Jemima Trademarks, and
(iii) all patents issued in the United States and Canada to Seller or its
Affiliates which are used exclusively in the Business and all pending patent
applications filed in the United States and Canada by or on behalf of Seller or
its Affiliates which relate exclusively to the Business (collectively, the
"INTELLECTUAL PROPERTY"). The Intellectual Property, the Licensed Trademarks
and the Licensed Patents together constitute all of the material trademarks,
trade names, copyrights, and patents and patent applications which (i) are used
in the Business, and (ii) are necessary or required to operate the Business as
currently conducted by Seller. The Licensed Trademarks constitute all of the
registered Aunt Jemima Trademarks currently being used in the Business in the
United States and Canada. Seller is not using the "Celeste" trademark in the
United States or Canada in any business other than the Business. The complete
formulas and recipes used to prepare the Products are used exclusively in the
Business. The Intellectual Property, the Licensed Trademarks and the Licensed
Patents are
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owned by Seller free and clear of all Liens other than Permitted Liens, or (if
specifically indicated in SCHEDULE 2.18(a) as being licensed by Seller) have
been duly licensed for use by Seller, with the right to sublicense Buyer to use
all Licensed Trademarks and Licensed Patents. Except as set forth on SCHEDULE
2.18(b), none of the Intellectual Property, the Licensed Trademarks or the
Licensed Patents has been or is the subject of any pending adverse claim, or to
the knowledge of Seller, any threatened litigation or claim of infringement.
Except as set forth on SCHEDULE 2.18(b), to the knowledge of Seller, no third
parties are infringing any of the Intellectual Property, the Licensed Trademarks
or the Licensed Patents. Except as set forth in SCHEDULE 2.18(b), neither Seller
or its Affiliates has granted any licenses or other rights as related to the
Business with respect to any of the Intellectual Property, Licensed Trademarks
or Licensed Patents, nor has Seller or its Affiliates any obligation to grant
such licenses or other rights. Each of the applicable registrations of
Intellectual Property (except for any patents and patent applications) and
Licensed Trademarks are valid and subsisting and Seller has the exclusive right
to use, sell, license and dispose of or bring actions for infringement of its
rights in any of the Intellectual Property, Licensed Trademarks and Licensed
Patents. No third party consents will be required for the use of any
Intellectual Property, Licensed Trademarks or Licensed Patents as a consequence
of the transactions contemplated by this Agreement. The Acquired Assets
comprised of intellectual property other than the Intellectual Property have not
been subjected by Seller to liens, charges, pledges, security interests or other
encumbrances. Except as provided in the immediately preceding sentence, Seller
makes no representations or warranties whatsoever (either in this SECTION 2.18
or elsewhere in this Agreement) with respect to any intellectual property other
than the Intellectual Property, the Licensed Trademarks and the Licensed
Patents.
2.19 NO OTHER REPRESENTATIONS OR WARRANTIES. Except for the
representations and warranties contained in this ARTICLE II, neither Seller nor
any other person or entity makes any other express or implied representation or
warranty on behalf of Seller or its Affiliates, and Seller hereby disclaims any
such representation or warranty, with respect to the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby or
with respect to the Acquired Assets, the Licensed Trademarks, the Licensed
Patents or the Business, notwithstanding the delivery or disclosure to Buyer,
any of its officers, directors, employees, agents or representatives of any
documentation or other information by or on behalf of Seller or any affiliate
with respect to any one or more of the foregoing, including, without limitation,
any projections or forecasts made by Seller or delivered to Buyer by or on
behalf of Seller.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
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Buyer hereby represents and warrants to Seller as follows:
3.1 ORGANIZATION AND QUALIFICATION OF BUYER. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of Delaware with
full corporate power, authority and qualification to make this Agreement and any
other agreements contemplated hereby, and to incur and perform its obligations
hereunder and thereunder.
3.2 AUTHORITY OF BUYER. All necessary corporate action has been taken by
Buyer to authorize the execution, delivery and performance of this Agreement and
the transactions contemplated hereby.
3.3 EXECUTION AND BINDING EFFECT. This Agreement has been duly and
validly executed and delivered by Buyer and constitutes the legal, valid and
binding obligation of Buyer and will be enforceable against Buyer in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
moratorium, insolvency, fraudulent conveyance, reorganization, liquidation or
other laws relating to or affecting creditors' rights and remedies or by
equitable principles.
3.4 NO CONTRAVENTION. Except as set forth in SCHEDULE 3.4, the execution,
delivery and performance of this Agreement by Buyer and the consummation by
Buyer of the transactions contemplated hereby, and the fulfillment of and
compliance by Buyer with the terms and conditions hereof, do not and will not:
a. conflict with or violate any provisions of the Articles of
Incorporation or Bylaws of Buyer;
b. require any consent, approval or notice under or conflict with,
permit or result in a termination or breach of, or constitute (with or without
notice or lapse of time or both) a default under, or accelerate or permit the
acceleration of any performance required by, any contract or other agreement to
which Buyer is a party, under which it has any rights, or by which it is bound
or subject;
c. violate any law, statute or ordinance or any rule, regulation,
order, writ, injunction or decree of any court or of any Governmental Authority
applicable to Buyer, or by which Buyer may be bound or subject; or
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d. require any filing, declaration or registration with, or permit,
consent or approval of, or the giving of notice to, any Governmental Authority,
excluding from the foregoing SECTIONS 3.4(a) through 3.4(d):
(i) such conflicts, violations, breaches, defaults,
accelerations, filings, declarations, registrations, permits, consents,
approvals and notices, the absence of which, either singly or in the aggregate,
would not be material;
(ii) any consents or waivers required in connection with the
Assumed Contracts or Permits;
(iii) any local filings or recordings to be made by Buyer
that may be necessary to transfer any of the Acquired Assets; and
(iv) any filings required under the HSR Act and under any other
applicable antitrust laws and regulations, and the expiration of applicable
waiting periods under the HSR Act and such other applicable antitrust laws.
3.5 BROKERS AND FINDERS. Buyer has not employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated by this Agreement.
3.6 LITIGATION. There is no claim, action, suit, proceeding or
investigation pending or, to Buyer's knowledge, threatened by or against Buyer
with respect to the transactions contemplated hereby, at law or in equity or
before or by any Federal, state, municipal, foreign or other governmental
department, commission, board, agency, instrumentality or authority, and there
is no order, decree or judgment pending or in effect against Buyer with respect
to the transactions contemplated hereby.
3.7 FINANCIAL CAPABILITY. Buyer has arranged for, and will have at
Closing sufficient liquid assets on hand to pay the Purchase Price and to
otherwise consummate the transactions contemplated hereby.
3.8 NO OTHER REPRESENTATIONS AND WARRANTIES. Except for the
representations and warranties contained in this ARTICLE III, neither the Buyer
nor any other person or entity makes any other express or implied representation
or warranty on behalf of Buyer or its Affiliates, and Buyer hereby disclaims any
such representation or warranty, with respect to the execution and
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delivery of this Agreement or the consummation of the transactions contemplated
hereby, notwithstanding the delivery or disclosure to Seller, any of its
officers, directors, employees, agents or representatives of any documentation
or other information by or on behalf of Buyer or any affiliate with respect to
any one or more of the foregoing.
ARTICLE IV
COVENANTS
4.1 COVENANTS OF SELLER. Seller covenants and agrees with Buyer as
follows:
a. ACCESS; CONFIDENTIAL INFORMATION. From the date hereof until the
Closing Date, Seller shall furnish to Buyer and its representatives all
information relating solely to the Business reasonably requested by Buyer and
provide access to any Acquired Assets that Buyer may reasonably request at such
times as shall be mutually agreed upon by the parties. Any confidential
information provided to Buyer shall be subject to the terms of that certain
letter agreement dated January 26, 1996 entered into between Seller and Buyer
(the "CONFIDENTIALITY AGREEMENT"). The provisions of the Confidentiality
Agreement shall survive any termination of this Agreement.
b. CONDUCT OF BUSINESS. From the date hereof until the Closing
Date, except as set forth on SCHEDULE 4.1 (b), without the written consent of
Buyer (which consent shall not be unreasonably withheld), Seller shall not:
(i) operate the Business other than in the ordinary course of
business;
(ii) make any sale, transfer, lease or other disposition of any
material Acquired Assets, Licensed Trademarks or Licensed Patents or
mortgage, pledge or otherwise create a security interest in any of the
Acquired Assets, Licensed Trademarks or Licensed Patents, other than
Permitted Liens and other than in the ordinary course of business;
(iii) fail to maintain the books, accounts and records of the
Business on a basis consistent with past practice;
(iv) enter into, amend or cancel any Material Contract or Permit
in respect of the Acquired Assets or the Business other than in the
ordinary course of business, or waive any right of material value under any
Material Contract;
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(v) perform, take any action or incur or permit to exist any of
the acts, transactions, events or occurrences of the type described in
SECTION 2.13;
(vi) fail to use reasonable efforts to maintain the goodwill and
reputation associated with the Business;
(vii) grant any increase in compensation to Transferred
Employees or any increase in the rate of commission, bonus or other
variable compensation or any increase in any other direct or indirect
remuneration (including benefits) payable or to become payable to any such
Transferred Employees, which increases singly or in the aggregate would be
material;
(viii) enter into any lease of real property;
(ix) fail to continue Seller's existing practice with respect to
maintaining the Acquired Assets in their present operating condition and
repair (ordinary wear and tear excepted);
(x) fail to use reasonable efforts to keep the services of the
Transferred Employees and to maintain existing relationships with
suppliers, dealers, customers and others having material business
relationships with the Business;
(xi) permit any physical assets to be removed from the Real
Property other than in the ordinary course of business;
(xii) fail to maintain the Intellectual Property or Licensed
Trademarks; or
(xiii) engage in the sale of Products except in the ordinary
course of the Business;
c. REASONABLE EFFORTS; NOTIFICATIONS. Seller shall use
reasonable efforts to fulfill its conditions to Closing and otherwise to
consummate the transactions contemplated by this Agreement. Prior to the
Closing, Seller shall as promptly as reasonably practicable notify Buyer in
writing of the occurrence of any event as to which it obtains knowledge that is
reasonably likely to result in the failure of a condition specified in ARTICLE
VI or VII hereof.
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d. ANTITRUST FILINGS. As promptly as practicable after the
date hereof, Seller shall make all necessary filings applicable to it as a
result of the transactions contemplated hereby under the HSR Act and under any
other applicable antitrust laws and regulations, and make any amendments to such
filings as may be required, and Seller will cooperate with Buyer in connection
with all such antitrust filings.
e. PRESERVATION OF RECORDS. Seller shall preserve and, during
regular business hours and upon reasonable notice, use reasonable efforts to
make available to Buyer and its representatives for inspection and copying all
agreements, records, books and other documents pertaining to the Business or the
Acquired Assets (but excluding portions of such materials that contain or
reflect information relating to any other business of Seller) for periods prior
to the Closing Date, wherever located for the first to occur of six (6) years
from the date of each such document or six (6) years from the Closing Date, for
(a) the purposes of preparing tax returns and financial statements and
responding to tax audits, (b) the purposes of prosecuting or defending any
claim, litigation, proceeding or investigation which arises out of or relates to
the Business or the Acquired Assets or this Agreement, and (c) any other
reasonable business purpose not detrimental to Seller.
f. TRADE SECRETS. Seller shall not disclose or use for its own
benefit any trade secrets sold to Buyer pursuant to this Agreement, except for
such trade secrets which (i) were known to the trade or the public as of the
Closing Date, (ii) become known to the trade or the public after the Closing
Date through no fault of Seller, (iii) become available to Seller from a third
party who is lawfully in possession of such trade secrets and is under no
obligation to Buyer to maintain the confidentiality thereof; or (iv) is required
to be disclosed by court subpoena or other operation of law.
g. NO SHOP. From the date hereof until the earlier of (i) the
termination of this Agreement pursuant to SECTION 9.1 and (ii) the Closing Date,
Seller shall not, and shall cause its subsidiaries, Affiliates, agents,
representatives, and any other Person acting on its behalf not to, directly or
indirectly solicit, negotiate with respect to, actively facilitate or accept any
offers for the purchase or sale of the Business, or otherwise effect any
transaction inconsistent with the transactions contemplated herein or agree to
do any of the foregoing, and Seller shall terminate any existing activities or
discussions relating to the potential sale of the Business with any party other
than Buyer and its representatives.
h. NON-COMPETE COVENANT. Effective as of the Closing, Seller
shall not, and Seller shall cause its Affiliates not to, for a period of three
years from and after the Closing Date,
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directly or indirectly as a partner, joint venturer, employer, contractor,
consultant, shareholder, principal or agent engage in, control, advise with
respect to, manage, act as a consultant to, receive any economic benefit from or
exert any influence upon the marketing, manufacture, sale, distribution,
offering or promoting for sale in the United States or Canada of the following
frozen food products: waffles, pancakes, french toast, pancake batter and pizza;
PROVIDED, HOWEVER, that Seller may, without violating this covenant (i) own as
an investment not in excess of 5% of the securities of a corporation which
engages in such proscribed conduct if such securities are traded on a national
securities exchange or are traded publicly in the over-the counter market, (ii)
own as an investment not in excess of 5% interest in any partnership which
engages in such proscribed conduct, (iii) have an ownership interest otherwise
proscribed by this section if such interest arises as a result of the
acquisition of a business not principally engaged in the proscribed conduct,
(iv) be acquired by any person or entity that engages in the proscribed conduct,
or (v) in connection with an employee benefit plan, the assets of which are
managed by an independent investment advisor, invest in any corporation or other
entity which engages in such proscribed conduct. A business entity shall not be
principally engaged in the proscribed conduct if its sales of products which
would be proscribed hereunder constitute less than 25% of its total sales.
Notwithstanding the foregoing, nothing in this SECTION 4.1(h) shall be deemed to
prohibit, restrict or otherwise impair Seller's right or ability, directly or
indirectly, as a partner, joint venturer, employer, contractor, consultant,
shareholder, principal or agent, to engage in, control, advise with respect to,
manage, act as a consultant to, receive any economic benefit from or exert any
influence upon the marketing, manufacture, sale, distribution, offering or
promoting for sale anywhere in the world of frozen pancakes manufactured for
McDonald's Corporation.
i. NO SOLICITATION. Seller shall not, and shall cause its
respective Affiliates not to, directly or indirectly, for themselves or on
behalf of any other Person induce or attempt to induce any Transferred Employee
to leave his or her employment with Buyer at any time until the expiration of
two years from the Closing Date; PROVIDED, HOWEVER, that the foregoing shall not
prohibit any advertisement or general solicitation by or for the benefit of
Seller (or any employment resulting therefrom) that is not specifically targeted
at Transferred Employees.
j. NOTICE OF LOSS OF CUSTOMERS. Seller shall promptly notify
Buyer in writing if, prior to Closing, Seller receives written notice (or if the
Director of Sales Operations receives oral notice) from any customer of the
Business accounting for more than $2,000,000 of the Business' gross sales for
the calender year ended December 31, 1995 that such customer has terminated or
expects to terminate at least two-thirds of its business with Seller; PROVIDED,
HOWEVER that Buyer and Seller acknowledge and agree that such notice, in and of
itself, shall in no way be construed as a Material Adverse Change (as defined in
SECTION 8.1).
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k. CANADIAN BUSINESS. Between the date hereof and the Closing
Date, Seller shall meet with Buyer in good faith to discuss appropriate
transition arrangements, if any, related to the Canadian portion of the
Business.
l. PILOT PLANT. Seller agrees to make the Acquired Assets
referenced in Item 2 of SCHEDULE 1,1(b) (the "PILOT PLANT") available for
delivery to Buyer, on or after the Closing Date, on an "as is, where is" basis.
4.2 COVENANTS OF BUYER. Buyer covenants and agrees with Seller as
follows:
a. REASONABLE EFFORTS; NOTIFICATIONS. Buyer shall use
reasonable efforts to fulfill its conditions to Closing and otherwise to
consummate the transactions contemplated by this Agreement by July 1, 1996.
Prior to the Closing, Buyer shall as promptly as reasonably practicable notify
Seller in writing of the occurrence of any event as to which it obtains
knowledge that is reasonably likely to result in the failure of a condition
specified in ARTICLE VI or VII hereof.
b. ANTITRUST FILINGS. As promptly as is practicable after the
date hereof, Buyer shall make all necessary filings applicable to it as a result
of the transactions contemplated hereby under the HSR Act and under any other
applicable antitrust laws and regulations, and make any amendments to such
filings as may be required, and Buyer will cooperate with Seller in connection
with all such antitrust filings.
c. PRESERVATION OF RECORDS. Buyer shall preserve and, during
regular business hours and upon reasonable notice, use reasonable efforts to
make available to Seller and its representatives for inspection and copying all
agreements, records, books and other documents pertaining to the Business or the
Acquired Assets for periods prior to the Closing Date, wherever located for the
first to occur of six (6) years from the date of each such document or six (6)
years from the Closing Date, for (a) the purposes of preparing tax returns and
financial statements and responding to tax audits, (b) the purposes of
prosecuting or defending any claim, litigation, proceeding or investigation
which arises out of or relates to the Business, the Acquired Assets or this
Agreement, and (c) any other reasonable business purpose not detrimental to
Buyer.
d. RETURNS. Buyer shall not take any action to encourage or
otherwise induce current or former customers of the Business, or any of their
respective customers, to return (or to deduct from future invoices payable to
Seller), or to make any claim for repair, replacement or
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warranties relating to, any Products which were manufactured and sold by the
Business prior to the Closing Date.
e. PACKAGING. Buyer shall not produce or procure any labels,
packaging, promotional materials or other items (other than Inventory) related
to the Products or the Business which bear any of Seller's trademarks or trade
names, other than the Licensed Trademarks and the trademarks acquired by Buyer
hereunder. Buyer's use of Inventory comprised of labels, packaging, promotional
materials and other items bearing Seller's trademarks or trade names shall be
governed by the Interim Trademark License Agreement.
f. PILOT PLANT. Buyer agrees to pay all costs and expenses
associated with removing and transporting the Pilot Plant from Seller's facility
in Barrington, Illinois. Buyer also agrees to promptly repair, at its cost, any
damage to Seller's facility resulting from or otherwise related to the removal
of such Pilot.
ARTICLE V
EMPLOYEE MATTERS
5.1 TRANSFERRED EMPLOYEES. Buyer shall, prior to the Closing Date, offer
employment in connection with the conduct of the Business effective after the
Closing Date to those employees of Seller set forth in SCHEDULE 5.1(a) who are
actively employed on the Closing Date or who are on sick leave or short-term
disability (whether Seller-sponsored or statutory) on the Closing Date
(collectively, a "DISABILITY"), and to such other employees as are hired by the
Business between the date hereof and the Closing Date who are actively employed
on the Closing Date or who are on Disability on the Closing Date, on
substantially the same terms and conditions (except as otherwise specifically
provided in this ARTICLE V) and with substantially the same compensation as are
applicable to such employees immediately prior to the Closing Date. SCHEDULE
5.1(a) lists salaries or wages for each of the employees of Seller set forth
thereon, as applicable to such employee on the date hereof. Effective as of the
Closing Date, all such employees who accept Buyer's offer of employment will
become employees of Buyer (the "TRANSFERRED EMPLOYEES"). SCHEDULE 5.1(b) sets
forth a list and summary description of each employee benefit plan of Buyer
which Buyer agrees shall be applicable to Transferred Employees, on the same
terms and conditions as are applicable to other participants in such plans
except as otherwise specifically provided below, for at least the 180-day period
immediately following the Closing Date. For purposes of clarification, all
employees appearing on SCHEDULE 5.1(a) who are on Disability on the Closing
Date, and such other employees who are hired by the Business between the date
hereof and the Closing Date who are on Disability on the Closing
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Date, shall be deemed Transferred Employees unless and until such employees
qualify for long-term disability benefits without any intervening period of
active service as an employee of Buyer after the Closing Date. If any such
employee so qualifies for long-term disability benefits without any
intervening period of active service with Buyer, Seller will reimburse Buyer
in an amount equal to all salaries, wages and other benefits that Buyer paid
such employee for the period from the Closing Date until the date on which
such employee qualifies to receive long-term disability benefits. Upon such
qualification for long-term disability, any such employee shall be deemed for
purposes herein to be a Nontransferred Employee (as defined below). All
disability benefits payable pursuant to this SECTION 5.1 shall be determined
and payable in accordance with the terms of Seller's applicable disability
plan.
5.2 EMPLOYEE BENEFIT TRANSITION. With respect to each Transferred
Employee:
(a) Except as otherwise specifically provided herein, Buyer shall be
responsible for all claims, liabilities and obligations arising from or
otherwise relating to the employment and/or termination of employment on or
after the Closing Date of any Transferred Employee. Employees of the Business
who are on long-term disability at the Closing Date shall remain employees of
Seller and are collectively referred to herein as "Nontransferred Employees."
Buyer shall have no liability or obligation with respect to any Nontransferred
Employees, which liabilities and obligations shall be borne by Seller. Buyer
also shall have no liability or obligation with respect to employees of Seller
who decline Buyer's offer of employment pursuant to SECTION 5.1 above, PROVIDED
such offer is made by Buyer consistent with the terms of this ARTICLE V.
(b) Buyer shall waive pre-existing condition requirements, evidence of
insurability provisions, waiting period requirements or any similar provisions
under any group health or life insurance plan maintained or sponsored by or
contributed to by Buyer for Transferred Employees as of the Closing Date. In
the event that Buyer shall, within sixty (60) days following the Closing Date,
identify (or cause its group health plan administrator to identify) to Seller in
writing one or more Transferred Employees or their eligible dependents whose
health claims relate to a medical condition that existed prior to the Closing
Date and are reasonably expected to exceed $25,000 per individual, then Seller
shall reimburse Buyer for one-half of any health benefits paid or payable to
such Transferred Employee under the Buyer's group health plan during the ninety
(90) day period immediately following the Closing Date; PROVIDED, HOWEVER, that
in no event shall Seller be required to pay more than $75,000 with respect to
claims filed by any individual Transferred Employee or $150,000 in the aggregate
with respect to any and all such claims.
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(c) Seller's plans shall be responsible for any health and accident claims
of Transferred Employees and their eligible dependents to the extent such claims
are incurred prior to the Closing Date, PROVIDED that such claims are submitted
to Seller on or prior to the date that is six months following the Closing Date.
Buyer's plans shall assume responsibility for all other health and accident
claims relating to Transferred Employees. Buyer agrees that it will not
disclose to any Transferred Employees the foregoing six-month cut-off date for
claims incurred prior to the Closing Date or take any action to encourage or
induce Transferred Employees to file any such claims. For purposes of this
SECTION 5.2(c), a health or accident claim shall be deemed to have been incurred
when the services relating to the event or condition that is the subject of the
claim are performed or the supplies relating to any such event are furnished.
(d) With respect to pension, savings, severance, vacation, health and
welfare, disability benefits, executive compensation, incentive and bonus
arrangements, Buyer shall recognize the service of any Transferred Employee with
Seller for purposes of participation and vesting, but not for purposes of
benefit accrual, under its employee benefit plans and compensation arrangements.
(e) With respect to all post-Closing Date employment tax reporting
responsibilities, and for no other employment tax purpose, Buyer shall treat all
Transferred Employees as if they had been employed by Buyer as of January 1,
1996. In addition, Buyer and Seller hereby agree to follow the alternative
procedure for employment tax reporting as provided in Section 5 of Rev. Proc.
84-77, 1984-2 C.B. 753. Thus, Seller shall have no employment tax reporting
responsibilities for such Transferred Employees after the Closing Date.
(f) At a minimum, Buyer shall pay severance benefits (as defined in the
following sentence) to any salaried Transferred Employee who is involuntarily
terminated by Buyer during the 180-day period after the Closing Date (a
"TERMINATED EMPLOYEE") in accordance with Seller's severance plans; in addition,
for the duration of any such Terminated Employee's inactive service period,
Buyer shall continue to provide retirement, medical, dental and life insurance
benefits to such Terminated Employee on at least the same basis as if he/she
were actively employed by Buyer in the Business. For purposes of the preceding
sentence, the term "severance benefits" shall be limited to those severance
payments calculated and payable in accordance with "The Quaker Severance Pay
Plan" effective as of March 1, 1994 (the "PLAN"), a copy of which is attached
to SCHEDULE 5.2(f), and the term "inactive service period" shall have the
meaning specified in the Plan. In addition, any Terminated Employee who meets
the requirements of paragraphs 5(b)(2) and 5(b)(3) of the Plan and paragraph (q)
of subsection C-4
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of The Quaker Retirement Plan (a copy of which is attached to SCHEDULE 5.2(f))
(hereinafter, a "QUALIFIED TERMINATED EMPLOYEE") shall be eligible to have those
provisions applied to them at Seller's cost (and Buyer shall have no obligation
to provide such benefits), subject to and in accordance with the terms thereof,
and subject to the last sentence of this SECTION 5.2(f). Thereafter, Buyer
shall pay severance benefits to any Transferred Employee who is involuntarily
terminated by Buyer in accordance with Buyer's severance plans. Notwithstanding
the foregoing, in the event Buyer terminates the employment of one or more
salaried Transferred Employees during the 90-day period immediately following
the Closing Date, Seller agrees to reimburse Buyer for one-half of the aggregate
amount of the severance payments and other welfare benefits paid by Buyer to or
for the benefit of such terminated Transferred Employees; PROVIDED, HOWEVER,
that in no event shall Seller's obligation to reimburse Buyer for such severance
payments and welfare benefits exceed an aggregate of $250,000. Notwithstanding
the foregoing, Seller's reimbursement obligations pursuant to the preceding
sentence shall be reduced by $125,000 for each Qualified Terminated Employee who
is terminated during the 180 day period following the Closing Date. In the event
one or more Qualified Terminated Employees is so terminated, Buyer shall within
five (5) Business Days remit to Seller with respect to each such terminated
employee the sum of $125,000 (not to exceed in the aggregate $250,000) or such
lesser amounts as have previously been paid by Seller pursuant to the foregoing
reimbursement obligations.
5.3 COBRA. Seller will be responsible for satisfying obligations under
Section 601 ET SEQ. of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") and Section 4980B of the United States Internal Revenue Code,
as amended (the "Code") to provide continuation coverage to or with respect to
any Transferred Employee in accordance with law with respect to any "qualifying
event" occurring on or before the Closing Date. Buyer will be responsible for
satisfying obligations under Section 601 ET SEQ. of ERISA and Section 4980B of
the Code, to provide continuation coverage to or with respect to any Transferred
Employee in accordance with law with respect to any "qualifying event" which
occurs following the Closing Date.
5.4 VACATION. As of the Closing Date, Buyer will assume obligations of
Seller to Transferred Employees for any vacation entitlement and vacation pay
entitlement. Buyer shall provide vacation benefits to Transferred Employees in
accordance with SECTION 5.1.
5.5 QUALIFIED PLANS. Prior to the Closing Date, Transferred Employees are
covered under one or more pension plans for salaried and hourly employees
consisting of defined benefit plans and defined contribution plans ("Seller's
Qualified Plans"). Buyer maintains a defined
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contribution plan ("Buyer's Qualified Plan"). Buyer agrees that Buyer's
Qualified Plan will accept rollovers (including direct rollovers pursuant to
Section 401(a)(31) of the Code) by any Transferred Employee of any "eligible
rollover distribution" (within the meaning of Section 401(a)(31) of the Code)
from any of Seller's Qualified Plans at any time after the Closing, subject to
Seller providing Buyer with satisfactory evidence that the distributing plan
meets the requirements for qualification under Section 401(a) of the Code. In
the case of a direct rollover, Buyer shall provide the distributing plan with
satisfactory evidence that Buyer's Qualified Plan meets the requirements for
qualification under Section 401(a) of the Code. Except as provided above, Buyer
and Buyer's Qualified Plan shall assume no responsibility for accrued benefits
or accounts under Seller's Qualified Plans.
5.6 DISABILITY. Subject to SECTION 5.1, Seller shall retain
responsibility for all disability benefits payable on or after the Closing Date
with respect to all Nontransferred Employees and any Transferred Employees who
are on Disability on the Closing Date who subsequently qualify for long-term
disability benefits without any intervening period of active service as an
employee of Buyer. Buyer shall be responsible for all disability benefits
payable on or after the Closing Date with respect to all other Transferred
Employees. All benefits payable pursuant to this SECTION 5.6 shall be
determined and payable in accordance with SECTION 5.1.
5.7 WORKERS' COMPENSATION. Seller shall be responsible for all workers'
compensation claims, occupational disease claims and employer liability claims
for Transferred Employees, whether reported or unreported on the Closing Date,
that relate to events occurring prior to the Closing Date, except that Buyer
agrees (i) to be responsible for any such claims to the extent that the event
giving rise to the injury or disease is not reported to Seller or Seller's
workers' compensation carrier on or prior to the date that is six months
following the Closing Date, and (ii) that Seller shall have no responsibility
for cumulative trauma-type claims (e.g., carpal tunnel syndrome) that are
unfiled as of the Closing Date. Subject to the preceding sentence, Buyer shall
be responsible for all workers' compensation claims, occupational disease claims
and employer liability claims for Transferred Employees. Buyer agrees that it
will not disclose to any Transferred Employee the six month cut-off date for
claims that relate to events occurring prior to the Closing Date or take any
action to encourage or induce Transferred Employees to file any such claims.
5.8 NO THIRD PARTY BENEFICIARIES. Neither Buyer nor Seller intend this
ARTICLE V to create any rights or interest, except as between Buyer and Seller,
and no present or future employees of either party (or any dependents of such
employees) will be treated as third party beneficiaries in or under this
Agreement.
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5.9 DOCUMENTS AND FORMS. Seller and Buyer agree to use their reasonable
efforts to execute all necessary documents, file all required forms with any
governmental agencies and to undertake all actions that may be necessary or
desirable to implement expeditiously any actions contemplated in this ARTICLE V.
ARTICLE VI
CONDITIONS TO BUYER'S OBLIGATIONS
The obligations of Buyer under this Agreement are subject to the fulfillment,
prior to or on the Closing Date, of each of the following conditions, any of
which may be waived in whole or in part by Buyer:
6.1 PERFORMANCE OF AGREEMENTS; OFFICERS' CERTIFICATE.
a. Seller shall have performed and complied in all material
respects with all of its agreements, covenants and conditions required by this
Agreement to be performed or complied with by it prior to or at the Closing
Date.
b. Seller shall have delivered to Buyer a certificate of
Seller's President or any Vice President of Seller dated the Closing Date and
certifying the fulfillment of the conditions set forth in this SECTION 6.1.
6.2 ANTITRUST. Any waiting period applicable to the consummation of the
transactions contemplated by this Agreement under the HSR Act and any other
applicable antitrust laws and regulations shall have expired or been terminated.
6.3 NO PROCEEDING OR LITIGATION. No preliminary or permanent injunction
or other order shall have been issued by any court of competent jurisdiction, or
by any governmental or regulatory body, nor shall any statute, rule, regulation
or executive order have been promulgated or enacted by any governmental
authority which prevents the consummation of the transactions contemplated in
this Agreement.
6.4 CLOSING DELIVERIES. Seller shall have tendered delivery to Buyer of
all deliveries to be made to it pursuant to SECTION 1.8.
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6.5 SECRETARY'S CERTIFICATE. Seller shall have delivered to Buyer a
certificate of a Secretary or Assistant Secretary certifying (i) resolutions of
its Board of Directors approving this Agreement and the transactions
contemplated hereby (together with an incumbency and signature certificate
regarding the officers and other authorized representatives signing on its
behalf) and (ii) its certificate of incorporation and by-laws, in each case as
amended or restated.
ARTICLE VII
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller under this Agreement are subject to the
fulfillment, prior to or on the Closing Date, of each of the following
conditions, all or any of which may be waived in whole or in part by Seller:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF AGREEMENTS;
OFFICER'S CERTIFICATE.
a. The representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects on the date hereof
and as of the Closing Date with the same effect as though such representations
and warranties had been made or given again at and as of the Closing Date
(except for any representation or warranty expressly stated to have been made or
given as of a specified date, which, at the Closing Date, shall be true and
correct in all material respects as of the date expressly stated).
b. Buyer shall have performed and complied in all material respects
with all of its agreements, covenants and conditions required by this Agreement
to be performed or complied with by it prior to or at the Closing Date.
c. Buyer shall have delivered to Seller a certificate of its
President or any Vice President dated the Closing Date and certifying the
fulfillment of the conditions set forth in this SECTION 7.1.
7.2 ANTITRUST. Any waiting period applicable to the consummation of the
transactions contemplated by this Agreement under the HSR Act and any other
applicable antitrust laws and regulations shall have expired or been terminated.
7.3 NO PROCEEDING OR LITIGATION. No preliminary or permanent injunction
or other order shall have been issued by any court of competent jurisdiction, or
by any governmental or
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regulatory body, nor shall any statute, rule, regulation or executive order have
been promulgated or enacted by any governmental authority, which prevents the
consummation of the transactions contemplated in this Agreement.
7.4 CLOSING DELIVERIES. Buyer shall have tendered delivery to Seller of
all deliveries to be made to it pursuant to SECTION 1.9.
7.5 SECRETARY'S CERTIFICATE. Buyer shall have delivered to Seller a
certificate of Buyer's Secretary or Assistant Secretary certifying (i)
resolutions of the Board of Directors of Buyer approving the Agreement and the
transactions contemplated hereby (together with an incumbency and signature
certificate regarding the officers and other authorized representatives signing
on behalf of Buyer) and (ii) the certificate of incorporation and by-laws of
Buyer, in each case as amended or restated.
ARTICLE VIII
INDEMNIFICATION
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND OBLIGATIONS. The
representations and warranties of Seller in ARTICLE II and of Buyer in ARTICLE
III and all other obligations of the parties hereunder, shall survive the
Closing and shall continue in effect in accordance with their respective terms;
PROVIDED, HOWEVER, that the representations and warranties of Seller in ARTICLE
II and of Buyer in ARTICLE III shall expire on the second anniversary of the
Closing Date (except for representations and warranties relating to litigation
under SECTION 2.5, representations and warranties relating to environmental
matters under SECTION 2.10, representations and warranties relating to
compliance with laws under SECTION 2.14, and representations and warranties
relating to intellectual property under SECTION 2.18, each of which shall remain
in effect until the third anniversary of the Closing Date), and thereafter,
except as provided in the next succeeding sentence, no claim may be brought for
a breach of a representation or warranty in ARTICLE II or ARTICLE III after the
applicable expiration date set forth above. If written notice of a claim for
breach of a representation or warranty has been given by a party prior to the
applicable expiration date, then the relevant representation, warranty or other
obligation shall survive as to such claim until the claim has been finally
resolved; PROVIDED, HOWEVER, that proceedings to enforce such claim are
commenced within six (6) months following the date on which such written notice
is first provided hereunder. In the event that, from the date hereof through the
Closing, there shall occur any changes in the Acquired Assets, liabilities,
operations or financial condition of the Business, which may include Pre-Closing
Matters (excluding the financial condition of the Celeste portion of the
Business) which have been or would be materially adverse to the Business
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taken as a whole, whether such changes occur through breaches of the
representations and warranties contained herein or otherwise (a "Material
Adverse Change"), Buyer shall have the right to terminate this Agreement in
accordance with SECTION 9.1 upon providing ten (10) business days' written
notice to Seller, during which period Seller may cure (or, if not curable within
ten (10) business days, commence the cure of) such Material Adverse Change. In
the event Seller cures such Material Adverse Change within such ten (10)
business day period or, if such Material Adverse Change cannot be cured within
such ten (10) business day period, within sixty (60) business days after
Seller's receipt of Buyer's termination notice (and in either case on or before
September 30, 1996), then Buyer's termination notice shall have no force and
effect as to the Material Adverse Change so cured.
8.2 INDEMNIFICATION BY SELLER. Except as otherwise limited by this
ARTICLE VIII, Buyer and its officers, directors, employees, agents, successors
and assigns shall be indemnified and held harmless by Seller from any and all
liabilities, losses, damages, claims, costs and expenses, interest, awards,
judgments and penalties (including reasonable legal costs and expenses)
actually suffered or incurred by it (hereinafter a "BUYER LOSS"), actually
arising out of or resulting from:
a. the breach of any representation or warranty by Seller contained
herein, including with respect to any Pre-Closing Matter (as defined in SECTION
9.18), to the extent the existence of such Pre-Closing Matter results in a
violation of ARTICLE II;
b. the breach of any covenant or agreement by Seller contained
herein or in any document delivered hereunder at the Closing;
c. the failure of Seller to pay or otherwise discharge the Excluded
Liabilities;
d. any violation by Seller of, or failure by Seller to comply with,
the bulk transfer laws of any state or the fraudulent conveyance or preferential
transfer laws of the United States or any state;
e. the failure of Seller to comply with the Worker Adjustment and
Retraining Notification Act with respect to the termination of any employees of
the Business prior to the Closing Date;
f. any mechanic's liens made or asserted against the Acquired Assets
with respect to the goods furnished or services rendered prior to the Closing
Date and any Taxes Not
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Yet Due and Payable applicable to periods prior to the Closing Date that have
not been prorated pursuant to SECTION 1.10; and
g. except as otherwise provided in this Agreement, and without
limiting the foregoing, all claims, actions, suits, proceedings (including
arbitration and alternative dispute resolution proceedings) pending or
threatened against or with respect to the Business or the Acquired Assets prior
to the Closing Date.
Buyer agrees that prior to taking any action which reasonably could result in
the assertion by Buyer of a claim for indemnification in respect of
environmental matters hereunder, it promptly shall notify Seller of its
intention to take such action, shall consult with Seller as to the necessity
thereof and the most cost-efficient manner to implement the action proposed to
be taken, and shall not implement any such remedial or other measures without
the prior written consent of Seller (such consent not unreasonably to be
withheld or delayed). Buyer further agrees to provide Seller with copies of all
written reports, opinions, appraisals, findings, results and surveys
(collectively, "Reports") prepared by, and reasonable access to, any
environmental consultant, engineer or appraiser engaged by Buyer to permit
Seller (and its agents and representatives) to reasonably monitor any proposed
treatment of environmental matters. Seller agrees to maintain the
confidentiality of all Reports in the manner and to the extent set forth in
SECTION 4.1(a).
8.3 INDEMNIFICATION BY BUYER. Except as otherwise limited by this ARTICLE
VIII, Seller and its officers, directors, employees, agents, successors, assigns
and employee plans (and plan trustees, fiduciaries and administrators) shall be
indemnified and held harmless by Buyer from any and all liabilities, losses,
damages, claims, costs and expenses, interest, awards, judgments and penalties
(including reasonable legal costs and expenses) actually suffered or incurred by
it (hereinafter a "SELLER LOSS"), actually arising out of or resulting from:
a. the breach of any representation or warranty by Buyer contained
herein;
b. the breach of any covenant or agreement by Buyer contained herein
or in any document delivered hereunder at the Closing;
c. the failure of Buyer to pay or otherwise discharge the Assumed
Liabilities or any other liability or obligations incurred by Buyer in
connection with the Acquired Assets or its operation of the Business from and
after the Closing Date;
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d. the use, operation, ownership or control of any of the Acquired
Assets or the operation of the Business on or after the Closing Date;
e. the failure of Buyer to comply with the Worker Adjustment and
Retraining Notification Act with respect to the termination of any employees
(including Transferred Employees) on or after the Closing Date; or
f. any claim related to the rights of a Transferred Employee (or
dependent) to continuation coverage under Section 4980B of the Code or Section
601 ET SEQ. of ERISA, which arises due to or in connection with a qualifying
event that occurs after the Closing Date.
8.4 INDEMNIFICATION PROCEDURES.
a. For the purposes of this SECTION 8.4, the term "INDEMNITEE" shall
refer to the person indemnified, or entitled, or claiming to be entitled to be
indemnified, pursuant to the provisions of SECTION 8.2 or 8.3, as the case may
be; the term "INDEMNITOR" shall refer to the person having the obligation to
indemnify pursuant to such provisions; and "LOSSES" shall refer to "Seller
Losses" or "Buyer Losses", as the case may be.
b. An Indemnitee shall give written notice (a "NOTICE OF CLAIM") to
the Indemnitor within ten (10) business days after the Indemnitee has knowledge
of any claim (including a Third Party Claim, as hereinafter defined) which an
Indemnitee has determined has given or could give rise to a right of
indemnification under this Agreement. No failure to give such Notice of Claim
shall affect the indemnification obligations of the Indemnitor hereunder, except
to the extent Indemnitor can demonstrate such failure materially prejudiced such
Indemnitor's ability to successfully defend the matter giving rise to the claim.
The Notice of Claim shall state the nature of the claim, the amount of the Loss,
if known, and the method of computation thereof, all with reasonable
particularity and containing a reference to the provisions of this Agreement in
respect of which such right of indemnification is claimed or arises.
c. The obligations and liabilities of an Indemnitor under this
ARTICLE VIII with respect to losses arising from claims of any third party that
are subject to the indemnification provisions provided for in this ARTICLE VIII
("Third Party Claims") shall be governed by and contingent upon the following
additional terms and conditions: The Indemnitee at the time it gives a Notice
of Claim to the Indemnitor of the Third Party Claim shall advise the Indemnitor
that it shall be permitted, at its option, to assume and control the defense of
such Third Party Claim at its expense and through counsel of its choice if it
gives prompt notice of its
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intention to do so to the Indemnitee and confirms that the Third Party Claim is
one with respect to which the Indemnitor is obligated to indemnify. In the
event the Indemnitor exercises its right to undertake the defense against any
such Third Party Claim as provided above, the Indemnitee shall cooperate with
the Indemnitor in such defense and make available to the Indemnitor all
witnesses, pertinent records, materials and information in its possession or
under its control relating thereto as is reasonably required by the Indemnitor
and the Indemnitee may participate by its own counsel and at its own expense in
defense of such Third Party Claim. Similarly, in the event the Indemnitee is,
directly or indirectly, conducting the defense against any such Third Party
Claim, the Indemnitor shall cooperate with the Indemnitee in such defense and
make available to it all such witnesses, records, materials and information in
its possession or under its control relating thereto as is reasonably required
by the Indemnitee and the Indemnitor may participate by its own counsel and at
its own expense in the defense of such third party action. Except for the
settlement of a Third Party Claim which involves the payment of money only, no
Third Party Claim may be settled by the Indemnitor without the written consent
of the Indemnitee, which consent shall not be unreasonably withheld or delayed.
Similarly, no Third Party Claim may be settled by the Indemnitee without the
written consent of the Indemnitor, which consent shall not be unreasonably
withheld or delayed.
8.5 LIMITS ON INDEMNIFICATION. No claim may be made against Seller for
indemnification hereunder for a breach of any representation or warranty
contained herein unless and only to the extent the aggregate of all losses
incurred which are related to a breach of any representations or warranties
exceed $4,000,000 (the "BASKET") and then only with respect to that portion of
such losses which exceed the Basket. Notwithstanding the foregoing, Buyer and
Seller agree that any breach of the representations and warranties set forth in
SECTION 2.11 which constitutes a Pre-Closing Matter shall not be subject to the
Basket. Seller shall not be required to indemnify Buyer for any such losses
which in the aggregate exceed twenty percent (20%) of the Purchase Price. No
claim may be made against Buyer for indemnification hereunder for a breach of
any representation or warranty contained herein unless and only to the extent
the aggregate of all losses incurred which are related to a breach of any
representations or warranties exceed the Basket and then only with respect to
that portion of such losses which exceed the Basket. Buyer shall not be
required to indemnify Seller for any such losses which in the aggregate exceed
ten percent (10%) of the Purchase Price. Notwithstanding the preceding two
sentences or any other provision of this Agreement, if after July 31, 1996 all
closing conditions set forth in ARTICLES VI and VII (other than SECTION 7.1(a)
solely as it relates to the representations and warranties of Buyer set forth in
SECTION 3.7) shall have been satisfied or waived (it being acknowledged that all
conditions to Closing are not satisfied in the event of an uncured Material
Adverse Change), and the Closing has failed to occur within three days after all
such conditions have been satisfied or
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waived due to Buyer's inability or unwillingness to secure financing
commensurate with SECTION 3.7 (hereinafter, a "FINANCING BREACH") (i) Buyer
shall upon demand pay to Seller a break-up fee of $2,500,000 (the "BREAK-UP
FEE"), (ii) Seller shall have the right to immediately terminate this
Agreement upon providing written notice of termination to Buyer, and (iii)
Buyer shall indemnify Seller for any Seller Losses (including, without
limitation, losses based upon a subsequent sale of the Business at a reduced
purchase price) not to exceed $2,500,000 resulting from such Financing Breach
(against which the Break-up Fee shall not be credited), which Seller Losses
shall not be subject to the Basket. In the event Seller chooses not to
terminate this Agreement pursuant to the preceding sentence and Buyer
subsequently acquires the Business pursuant to and in accordance with the
terms of this Agreement, any Break-Up Fee previously paid to Seller shall be
credited against the Purchase Price.
8.6 ADJUSTMENT OF LIABILITY. Any indemnifiable Seller Loss or Buyer Loss,
as the case may be, shall be reduced by any tax benefit accruing to the
indemnified party on account of the indemnification payment and by the amounts
actually recovered by the indemnified party from its insurance carriers in
respect of such loss and any amounts recovered by such party subsequent to the
payment by the indemnifying party hereunder with respect to the same claim shall
be remitted to such indemnifying party, except that such remittance shall not
exceed the amount of the indemnification payment made by such indemnifying
party.
8.7 EXCLUSIVE REMEDY. From and after the Closing, except in the case of
fraud by a party hereto, neither party hereto shall be liable or responsible in
any manner whatsoever to the other party, whether for indemnification or
otherwise, except for indemnity as expressly provided in this ARTICLE VIII,
which provides the exclusive remedy and cause of action of the parties hereto
with respect to any matter arising out of or in connection with this Agreement
or any Schedule or Exhibit hereto or any opinion or certificate delivered in
connection herewith. After the Closing, Buyer shall not be entitled to a
rescission of the sale of the Acquired Assets except in the case of fraud by
Seller. Buyer hereby waives, releases and agrees not to make any claim or bring
any contribution, cost recovery or other action against Seller or any of
Seller's successors or assigns or any controlling person or other affiliate of
Seller, under CERCLA, common law, or any similar Federal, state or local law or
regulation now existing or hereafter enacted which seeks to allocate liabilities
between Buyer and Seller in a different manner than as expressly set forth in
this Agreement.
8.8 NO SPECIAL, EXEMPLARY OR PUNITIVE DAMAGES. The obligations of Seller
in respect of a claim for indemnification under this ARTICLE VIII shall not
include any special, exemplary or punitive damages except in cases of fraud by
Seller. Seller and Buyer agree that their respective
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rights and obligations in respect of environmental matters as provided in this
Agreement shall supersede any such rights and obligations either may have under
any existing or future law. With respect to environmental matters, Seller will
not be liable for the costs of remedial or other actions more extensive than
those required under applicable Environmental Laws in effect on the date hereof.
Except for any environmental losses or environmental expenses for which the
Seller is required to indemnify and hold harmless the Buyer in accordance with
this ARTICLE VIII, Buyer releases Seller from any and all environmental losses
and environmental expenses arising in connection with the Business.
ARTICLE IX
MISCELLANEOUS
9.1 TERMINATION OF AGREEMENT. This Agreement may be terminated at any
time prior to the Closing:
a. by mutual written consent of Buyer and Seller; or
b. if the Closing shall not have occurred by September 30, 1996,
PROVIDED however, that the right to terminate this Agreement under this SECTION
9.1(b) shall not be available to any party whose failure to perform any
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Closing to occur on or before such date;
c. by Buyer, as provided in SECTION 8.1; or
d. by Seller, as provided in SECTION 8.5.
In the event of termination of this Agreement by either or both of the parties
pursuant to this SECTION 9.1, written notice thereof shall forthwith be given to
the other party specifying the provision hereof pursuant to which such
termination is made, and (if such termination is properly made in accordance
with the terms hereof) this Agreement shall forthwith become void and there
shall be no liability on the part of the parties hereto (or their respective
officers, directors or affiliates) except (a) as set forth in SECTION 9.2 hereof
and (b) nothing herein shall relieve either party from liability for any breach
hereof.
9.2 EXPENSES. All filing fees incurred, or to be incurred, in connection
with filings under the HSR Act and any other applicable antitrust laws and
regulations shall be the sole responsibility of Buyer. Except as otherwise
provided in this SECTION 9.2, all other costs and
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expenses, including, without limitation, fees and disbursements of counsel,
financial advisors and accountants, incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs and expenses, whether or not the Closing shall have occurred.
9.3 WAIVER. The accuracy of any representation or warranty, the
performance of any covenant or agreement or the fulfillment of any condition of
this Agreement by Buyer on the one hand or Seller on the other, may be expressly
waived in writing by Buyer or Seller, as appropriate. Any waiver hereunder
shall be effective only in the specific instance and for the purpose for which
given. No failure or delay on the part of Buyer or Seller in exercising any
right, power or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
9.4 CONSENTS. Whenever this Agreement requires a permit or consent by or
on behalf of either party hereto, such consent shall be given in writing in a
manner consistent with the requirements for a waiver of compliance as set forth
in SECTION 9.3.
9.5 ASSIGNMENT; PARTIES IN INTEREST. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of, and be
enforceable by, the parties hereto and their respective successors and permitted
assigns, but neither this Agreement nor any of the rights, interests or
obligations herein shall be assigned, including by operation of law or
otherwise, by any party hereto without the prior written consent of the other
party. Notwithstanding the foregoing, Buyer may assign or delegate its rights,
obligations or liabilites under this Agreement in whole or in part (i) to a
subsidiary of Buyer, so long as Buyer shall remain fully liable for the
fulfillment of all such obligations and liabilites, and (ii) as security to its
lenders if so requested, so long as Buyer remains fully liable for the
fulfillment of all such obligations and liabilities.
9.6 FURTHER ASSURANCES. Each of the parties hereto agrees that, from and
after the Closing, upon the reasonable request of any other party hereto and
without further consideration, such party will execute and deliver to such other
party such documents and further assurances and will take such other actions
(without cost to such party) as such other party may reasonably request in order
to carry out the purpose and intention of this Agreement. Buyer further agrees
to cooperate with Seller's efforts to prosecute lawsuits, arbitrations,
settlement conferences and other procedures related to Seller's purchase of
waffle-making equipment (the "FRANZ HAAS EQUIPMENT") from Franz Haas Machinery
of America, Inc., including without limitation, by (i)
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making available to Seller from time to time such books, records and other
documents regarding the Franz Haas Equipment as Seller reasonably requests, (ii)
providing Seller with access to the Franz Haas Equipment, and (iii) making
employees of the Business available to Seller in connection with any such
proceedings.
9.7 ENTIRE AGREEMENT. This Agreement and the Schedules, the
Confidentiality Agreement and the other agreements and writings referred to
herein or delivered pursuant hereto which form a part hereof contain the entire
understanding of the parties with respect to the subject matter hereof. This
Agreement and the Confidentiality Agreement supersede all prior agreements
relating to the transactions contemplated hereunder.
9.8 AMENDMENT. This Agreement may be amended or modified in whole or in
part only by a duly authorized written agreement that refers to this Agreement
and is signed by the parties hereto or by their duly appointed representatives
or successors.
9.9 LIMITATIONS ON RIGHTS OF THIRD PARTIES. Nothing expressed or implied
in this Agreement is intended or shall be construed to confer upon or give any
person other than Buyer and Seller any rights or remedies under or by reason of
this Agreement or any transaction contemplated hereby.
9.10 CAPTIONS, GENDER AND "PERSON". The captions in this Agreement are
inserted for convenience of reference only and shall not be considered a part of
or affect the construction or interpretation of any provision of this Agreement.
Words used herein, regardless of the number and gender specifically used, shall
be deemed and construed to include any other number, singular or plural, and any
other gender, masculine, feminine, or neuter, as the context requires. Any
reference to a "person" herein shall include an individual, firm, corporation,
partnership, trust, governmental authority or body, association, unincorporated
organization or any other entity.
9.11 COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. It shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart. A facsimile copy of a signature hereto shall be fully
effective as if an original.
9.12 NOTICES. All notices, claims, certificates, requests, demands and
other communications hereunder shall be in writing and will be deemed to have
been duly given if
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personally delivered or telecopied or on the date of receipt indicated on the
return receipt if delivered or mailed (registered or certified mail, postage
prepaid, return receipt requested) as follows:
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a. If to Seller:
The Quaker Oats Company
P.O. Box 9001
Chicago, Illinois 60604-9001
Telecopy Number: 312-222-8315
Attention: Vice President and
General Corporate Counsel
b. If to Buyer:
Van de Kamp's, Inc.
1000 St. Louis Union Station
Suite 200
Saint Louis, Missouri 63103
Telefax: 314-632-5690
Attention: President
with copy to:
Van de Kamp's, Inc.
801 Montgomery Street
Suite 400
San Francisco, CA 94133
Telefax: 415-982-3023
Attention: Ian R. Wilson
or to such other address as the person to whom notice is to be given may have
previously furnished to the other in writing in the manner set forth above.
9.13 GOVERNING LAW AND JURISDICTION. This Agreement shall be governed by,
and construed and enforced in accordance with, the laws of the State of Illinois
without regard to its provisions concerning conflicts or choice of law. The
parties consent to the exclusive jurisdiction of the courts situated in Illinois
for the resolution of any disputes as to the construction of this Agreement.
9.14 BULK SALES LAW. Buyer waives compliance by Seller with the provision
of any applicable bulk sales laws. Seller shall promptly pay and discharge when
due or contest or litigate all claims of creditors that are asserted against
Buyer by reason of non-compliance with such laws, except with respect to any
such claims that relate to the Assumed Liabilities.
9.15 TRANSFER TAXES, SURVEY AND TITLE POLICY. All excise, sales, value
added, use, registration, stamp, transfer and similar taxes, levies, charges and
fees (including all real estate transfer taxes) incurred in connection with this
Agreement and the transactions contemplated
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hereby shall be shared equally, whether imposed by law on Seller or Buyer. Buyer
and Seller shall cooperate in providing each other appropriate resale exemption
certificates and other appropriate tax documentation. Buyer and Seller also
agree to share equally all fees and costs related to the Title Policy and the
Survey.
9.16 KNOWLEDGE OF SELLER. As used in this Agreement, "knowledge of
Seller", to "Seller's knowledge" or words of similar import shall mean the
actual knowledge, after due inquiry, as of the date of this Agreement of those
persons listed in SCHEDULE 9.16.
9.17 PUBLIC ANNOUNCEMENTS. All public announcements relating to this
Agreement or the transactions contemplated hereby shall be made at such time and
in such manner as the parties hereto shall mutually agree, except that nothing
in this Agreement shall prevent a party hereto from making any disclosure in
connection with the transactions contemplated by this Agreement to the extent
required by law or to the extent required by any securities exchange on which a
party has listed its securities, PROVIDED that prior notice of any such
disclosure is given to the other party.
9.18 SCHEDULES. All the Schedules and Exhibits referred to in this
Agreement are attached hereto and made a part of this Agreement. Any item
disclosed in the Schedules or in any of the Exhibits attached hereto, under any
specific Section or Schedule number hereof, shall be deemed to have been
disclosed for all purposes of this Agreement in response to every Section of
this Agreement in respect of which such disclosure is permitted or required. In
no event shall Seller have any liability by virtue of its failure to disclose in
response to any Section of this Agreement items which are disclosed herein in
response to another Section of this Agreement. Seller shall promptly, by notice
in accordance with this Agreement, supplement or amend any Schedule to this
Agreement to include any matters (i) which, if existing or occurring before or
at the date of this Agreement, would have been required to be set forth or
described in the Schedules, and (ii) any matters hereafter arising prior to the
Closing which, if existing or occurring before or at the date of this Agreement,
would have been required to be set forth or described in the Schedules, it being
hereby agreed and understood that any such amendment or supplement to any
schedule to this Agreement shall not operate to cure any prior breach by Seller
of any representation or warranty to which such amended or supplemented schedule
relates. Any such matters which either are or should be disclosed in an amended
schedule to ARTICLE II of the Agreement are herein referred to as "Pre-Closing
Matters".
9.19 SEVERABILITY. Nothing contained in this Agreement shall be construed
as requiring the commission of any act contrary to law. Wherever there is any
conflict between any provision
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of this Agreement and any statute, law, ordinance or regulation contrary to
which the parties have no legal right to contract, the latter shall prevail, but
in such event, the provisions of this Agreement thus affected shall be curtailed
and limited only to the extent necessary to bring it within the requirement of
such law. In the event that any part, section, paragraph or clause of this
Agreement shall be held to be indefinite, invalid or otherwise unenforceable,
the balance of this Agreement shall continue in full force and effect unless the
severance of the portion thus held unenforceable would unreasonably frustrate
the commercial purposes of this Agreement.
9.20 REVIEW OF FINANCIAL STATEMENTS. Prior to Closing, Seller shall
prepare a schedule which reconciles the Financial Statements with the underlying
books and records of the Seller and lists all differences or adjustments within
the reconciliation (the "RECONCILIATION"). Seller shall deliver the
Reconciliation to Buyer no later than twenty (20) days after the date of this
Agreement. Buyer and Seller shall meet to discuss Seller's methodology used to
prepare the Reconciliation. Prior to Closing, Buyer shall review the
Reconciliation to ascertain that the Reconciliation (i) agrees to the Financial
Statements, and (ii) agrees to and was derived from the underlying books and
records of Seller. Any differences or adjustments which relate to errors made
by Seller in connection with preparation of the Financial Statements must be
disclosed in writing by Seller to Buyer prior to the Closing and shall be deemed
a breach of the representations and warranties set forth in SECTION 2.11
constituting a Pre-Closing Matter for purposes of the second sentence of SECTION
8.5. Seller shall provide Buyer or Buyer's accountants reasonable access to the
underlying books and records of Seller to allow Buyer, with Seller's assistance,
to review the Reconciliation. Nothing contained or provided for in this SECTION
9.20 other than Seller's obligations to observe its covenants set forth in this
SECTION 9.20 shall be deemed a condition to Closing.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
duly authorized officers of Seller and Buyer as of the date first above written.
THE QUAKER OATS COMPANY
By:
-----------------------
Name:
Title:
VAN DE KAMP'S, INC.
By:
------------------------
Name:
Title:
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The following list briefly identifies the contents of the Schedules and
certain Exhibits to the Asset Purchase and Sale Agreement (the "Agreement"),
dated as of May 15, 1996, between Van de Kamp's, Inc. ("BUYER") and The Quaker
Oats Company ("SELLER"). In accordance with Regulation S-K under the Securities
Act of 1933 the actual Schedules and certain Exhibits have not been filed with
the Securities and Exchange Commission (the "COMMISSION"). The Company hereby
agrees to furnish supplementally a copy of any omitted Schedule and Exhibit
to the Commission upon request. The Exhibits which are included in this filing
are in the form as executed on July 9, 1996.
1. SCHEDULE 1.1(a) contains a legal description of real property acquired.
2. SCHEDULE 1.1(b) contains a list of certain equipment acquired.
3. SCHEDULE 1.1(c) contains a list of certain vehicles acquired.
4. SCHEDULE 1.1(d) contains a list of certain inventory acquired.
5. SCHEDULE 1.1(xiii) contains a description of certain claims of Seller
against third parties.
6. SCHEDULE 1.2(e) contains a summary of certain trade deals of Seller.
7. SCHEDULE 1.2(f) contains a summary list of certain coupons issued by
Seller.
8. SCHEDULE 1.3 contains certain payment account information and wire
instructions.
9. SCHEDULE 1.4(a) contains certain inventory calculation principles and
procedures.
10. SCHEDULE 1.7 contains the parties' agreement as to allocation of purchase
price.
11. SCHEDULE 1.11 contains a list of certain contracts of Seller.
12. SCHEDULE 2.4 contains a summary of certain contraventions, conflicts,
violations, consents etc. arising from Seller's consummation of
transactions at issue.
13. SCHEDULE 2.5 contains a list of certain claims, actions, suits,
proceedings, arbitrations, or litigations of Seller pending at the Closing
Date.
<PAGE>
14. SCHEDULE 2.6(a) attaches a survey of certain real property and certain
disclosures relating thereto.
15. SCHEDULE 2.7(a) contains a list of certain material assets, properties and
rights used in the Business (as defined).
16. SCHEDULE 2.7(b) contains a list of certain physical assets not located on
the real property acquired.
17. SCHEDULE 2.10 contains exceptions to Seller's environmental
representations.
18. SCHEDULE 2.11 attaches certain financial statements and exceptions to
Seller's financial statement representations.
19. SCHEDULE 2.12(a) contains a list of certain contracts assumed by Buyer.
20. SCHEDULE 2.12(b) contains exceptions to Seller's representations with
respect to certain material contracts.
21. SCHEDULE 2.13 contains certain changes to the Business since December 31,
1995.
22. SCHEDULE 2.14 contains exceptions to Seller's representations as to its
compliance with laws.
23. SCHEDULE 2.15 contains a list of property damage and personal injury claims
against Seller.
24. SCHEDULE 2.16 contains a list of certain employee benefit plans of Seller.
25. SCHEDULE 2.17 contains a summary of certain labor matters.
26. SCHEDULE 2.18(a) contains a list of intellectual property acquired.
27. Schedule 2.18(b) summarizes certain claims, infringements etc. with respect
to the intellectual property.
28. SCHEDULE 3.4 contains a summary of certain contraventions, conflicts,
violations, consents etc. arising from Buyer's consummation of transactions
at issue.
<PAGE>
29. SCHEDULE 4.1(b) contains exceptions to Seller's conduct of business
mandates prior to Closing.
30. SCHEDULE 5.1(a) contains a list of certain employees of Seller.
31. SCHEDULE 5.1(b) sets forth a list and summary of certain employee benefit
plans of Buyer.
32. SCHEDULE 5.2(f) attaches "The Quaker Severance Pay Plan."
33. SCHEDULE 9.16 contains a list of certain persons comprising "knowledge of
Seller."
34. EXHIBIT A contains a form of opinion of Seller's counsel regarding certain
legal matters relating to Seller.
35. EXHIBIT B contains a form of Special Warranty Deed relating to Seller's
Jackson, Tennessee property.
36. EXHIBIT C contains a form of Assignment relating to property to be conveyed
to Buyer under the Agreement.
37. EXHIBIT D contains a form of Assignment of United States Trademarks
relating to certain trademarks to be conveyed to Buyer pursuant to the
Agreement.
38. EXHIBIT E contains a form of Assignment relating to patents to be conveyed
to Buyer pursuant to the Agreement.
39. EXHIBIT F contains a form of General Assignment of Other Intellectual
Property relating to certain intellectual property to be conveyed to Buyer
pursuant to the Agreement.
40. EXHIBIT G contains a form of Bill of Sale relating to property to be
conveyed to Buyer pursuant to the Agreement.
41. EXHIBIT I contains a form of Transition Services Agreement relating to
services to be provided during a transitional period by Seller to Buyer.
42. EXHIBIT J contains a form of Interim Trademark and Trade Name License
Agreement relating to certain intellectual property to be licensed to Buyer
pursuant to the Agreement.
43. SCHEDULES TO EXHIBIT L:
(a) SCHEDULE 1 TO EXHIBIT L contains a description of the product subject
of EXHIBIT L.
(b) SCHEDULE 2 TO EXHIBIT L contains a list of assets not to be transferred
to Buyer under the Agreement.
(c) SCHEDULE 3 TO EXHIBIT L contains specifications relating to the product
described in SCHEDULE 1 TO EXHIBIT L.
(d) SCHEDULE 4 TO EXHIBIT L contains a computation of the price for the
product described in SCHEDULE 1 TO EXHIBIT L.
44. EXHIBIT O contains a form of Title Commitment relating to the Seller's
Jackson, Tennessee property.
45. EXHIBIT P contains a form of Assumption Agreement relating to certain
liabilities and obligations to be assumed by Buyer pursuant to the
Agreement.
46. EXHIBIT Q contains a form of opinion of Buyer's counsel regarding certain
legal matters relating to Buyer.
47. EXHIBIT R contains excerpts from a marked-up survey of the Seller's
Jackson, Tennessee property dated May 7, 1996, and shows exceptions to the
Seller's title to the Jackson, Tennessee property to be cleared up prior
to the closing of the transactions contemplated by the Agreement.
<PAGE>
EXHIBIT H
TO EXHIBIT 2.1
TRADEMARK LICENSE AGREEMENT
This Agreement is made and entered into on this 9th day of July, 1996 by and
between The Quaker Oats Company, a New Jersey corporation with its principal
place of business at 321 North Clark Street, Chicago, Illinois 60610, The Quaker
Oats Company of Canada Limited, an Ontario limited company with its principal
place of business at Quaker Park, Hunter Street East, Peterborough, Ontario K9J
7B2 (to be referred to collectively or individually, as the context may require,
as "Licensor") and Van de Kamp's, Inc., a Delaware corporation with its
principal place of business at 1000 St. Louis Union Station, Suite 200, Saint
Louis, Missouri 63103 (hereinafter "Licensee").
WHEREAS, Licensor and Licensee are parties to an Asset Purchase and Sale
Agreement dated May 15, 1996, as supplemented by Supplement No. 1 thereto of
even date herewith (the "Purchase Agreement") under which Licensee has purchased
certain assets from Licensor and under which the parties have agreed that
Licensee will be granted a license to use the trademarks listed on Exhibit A
(the "Trademarks") in the Territory (as hereinafter defined) on certain
products.
NOW, THEREFORE, in consideration of the rights and obligations set forth herein
and in the Purchase Agreement, the adequacy of which is hereby acknowledged, the
parties agree as follows:
1. GRANT OF RIGHTS.
A. Licensor grants to Licensee the exclusive, royalty-free,
perpetual right to use the Trademarks in those countries and
jurisdictions in which they are respectively registered and in
countries and jurisdictions to which the rights granted hereunder
are extended pursuant to Paragraph 6 hereof (the "Territory") in
connection with the manufacture and sale of the following frozen
food products: waffles, pancakes, french toast, pancake batter,
biscuits, muffins, strudel, croissants and all other frozen
breakfast products, with the exception of frozen cereals (the
"Licensed Products"). During the term of this Agreement, Licensor
shall not manufacture or sell, or license another party to
manufacture or sell, anywhere in the world, frozen products
bearing the Aunt Jemima brand, including, without limitation, the
Trademarks, provided, however, that Licensor may continue to use,
for up to six months following the date hereof, the Trademarks on
and in connection with frozen biscuits and frozen muffin batter
which Licensor sells in the food service channel.
Notwithstanding the foregoing, nothing herein shall prohibit or
prevent Licensor from manufacturing or selling, or licensing
another party to manufacture or sell, non-frozen products bearing
the Aunt Jemima brand, including, without limitation, the
Trademarks. The parties acknowledge that all rights, licenses
and privileges not specifically granted herein are excluded from
this Agreement.
B. If, within five (5) years of the date of execution of this
Agreement,
(i) Licensor decides to offer for sale, by soliciting offers in
a sale process, any or all of its remaining Aunt Jemima
branded businesses (the "Branded Business"); and
<PAGE>
(ii) to the extent the Branded Businesses are being offered for
sale with one or more non-Aunt Jemima branded businesses,
and the Aunt Jemima Branded Businesses constitute 66-2/3% or
more of the Net Sales (as that term is defined in Paragraph
9 hereof) of the business(es) Licensor is offering for sale
at such time; then
Licensor shall include Licensee in the sale process as a
prospective buyer on the same terms and conditions as it includes
other prospective buyers. Licensor, in its sole discretion,
shall determine which offer, if any, it will accept in the sale
process. Under no circumstances shall Licensor be obligated to
accept any offer from Licensee. Licensee acknowledges and agrees
that (a) Licensor is free to conduct the process leading up to a
possible sale of its Branded Business as Licensor, in its sole
discretion, determines (including, without limitation, by
negotiating with any prospective buyer and entering into a
preliminary or definitive agreement without prior notice to
Licensee or any other person), (b) Licensor reserves the right,
in Licensor's sole discretion, to change the procedures relating
to Licensor's consideration of a sale of such business at any
time without prior notice to Licensee or any other person, to
reject any and all proposals made by Licensee with regard to any
sale of the business, and to terminate discussions and
negotiations with Licensee at any time and for any reason and (c)
except for the obligations set forth in the first sentence of
this paragraph, unless and until a written definitive agreement
concerning the sale of such business has been executed, Licensor
will have no liability to Licensee with respect to such business
or the contemplated sale of such business, whether by virtue of
this Agreement or any other written or oral expression with
respect to any such sale or otherwise.
2. RESTRICTIONS ON AND COVENANTS OF LICENSOR.
A. Subject to Paragraph 1A, Licensor shall be free to display the
Trademarks on or in relation to any of its products in such forms
or manners as Licensor may choose, provided that any such use
shall be in accordance with prevailing community mores and
standards of good taste.
B. Licensor will use reasonable efforts to maintain in full force
and effect any and all registrations of the Trademarks in
jurisdictions or countries where Licensor is selling Aunt Jemima
branded products. In jurisdictions or countries where Licensor
is not selling Aunt Jemima branded products, Licensor will, at
Licensee's request, assist Licensee, as reasonably necessary, to
maintain registrations of the Trademarks, provided, however, that
all costs associated with such maintenance shall be borne by
Licensee. In all cases, registrations shall be made and
maintained in the name of Licensor and all use of the Trademarks
shall inure to the benefit of Licensor.
3 QUALITY CONTROL.
A. It is acknowledged that the Trademarks indicate to the public
that products sold under the Trademarks are of a commercially
consistent quality and standard. Licensee shall manufacture the
Licensed Products in accordance with written formulae and
specifications which have been approved by Licensor (together,
the "Specifications"),
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such approval not to be unreasonably withheld or delayed.
Subject to the provisions of this Paragraph 3A, Licensee shall
have the right to modify the Specifications of existing Licensed
Products, or to create formulae and specifications for new
product offerings within the definition of the Licensed Products,
so long as such modifications are not likely to have a material
adverse effect on the quality of the Licensed Products and so
long as such modifications to existing Specifications and the
creation of new formulae and specifications do not have a
material adverse effect on the reputation of the Trademarks
(collectively, an "Adverse Effect"). Licensee shall notify
Licensor of proposed modifications to existing Specifications and
of the creation of new formulae and specifications, provided,
however, that Licensee need only notify Licensor of modifications
to existing Specifications if such modifications necessitate a
change to Licensee's packaging or ingredient labeling. If, in
the reasonable judgment of Licensor, such modified or newly
created formulae and specifications would be likely to have an
Adverse Effect, Licensor shall, within thirty (30) days after
receiving such notice from Licensee, notify Licensee of any
objection to the modified or newly created formulae and
specifications. Failure to respond within such time shall be
deemed to constitute approval by Licensor. In the event of such
notice, Licensor and Licensee shall attempt in good faith to
reconcile their differences and to resolve the matter through
discussion and negotiation. If, despite the parties' good faith
attempts to resolve their differences, the matter remains
unresolved forty-five (45) days after Licensor notifies Licensee
of its objections, either party may submit the dispute to binding
arbitration, which shall be conducted as provided in Paragraph 3B
below. For purposes of this Agreement, "Specifications" shall
refer only to specifications and formulae which have been
approved for use by Licensor pursuant to the provisions of this
Paragraph. Licensor expressly acknowledges and agrees that
nothing in this Agreement gives Licensor any rights to or
interest in the Specifications or any other proprietary materials
owned by Licensee related to or used in connection with the
Licensed Products and that all such information shall be
considered confidential information subject to Paragraph 17.
B. Licensee and Licensor agree that, in the event that there is a
disagreement with regard to Paragraph 3A, Paragraph 4C or
Paragraph 5B(iii), senior management of the parties will meet and
negotiate in good faith in an attempt to resolve the dispute. In
the event that the parties are unable to resolve the dispute
within thirty (30) days from the date of written notice of
disagreement, either party may submit the dispute to binding
arbitration, which shall be conducted as follows: (i) the
arbitration panel shall be composed of three arbitrators, one
appointed by Licensee, one appointed by Licensor and one chosen
by the arbitrators appointed by Licensor and Licensee, provided,
however, the third arbitrator shall be an independent third party
knowledgeable in marketing and food product sales and mutually
satisfactory to Licensor and Licensee; (ii) the arbitrators, in
conducting such arbitration, shall have access to all relevant
documents and records of the parties; (iii) the arbitration shall
be conducted in accordance with the Commercial Arbitration Rules
of the American Arbitration Association (the "Rules) in effect on
the date such arbitration is commenced and shall be final and
binding on the parties; and (iv) unless otherwise agreed, all
arbitration proceedings shall be conducted in New York City, New
York in English. In the event a
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<PAGE>
mutually satisfactory third arbitrator is not appointed within
thirty (30) days of submission of a dispute to binding
arbitration, appointment of the third arbitrator shall be as
provided in the Rules, provided, however, that the third
arbitrator so appointed shall be an independent third party
knowledgeable in marketing and food product sales.
Notwithstanding the foregoing, the arbitration panel shall have
no power or authority to order the termination of the license or
this Agreement for any reason whatsoever. If either party
concludes in good faith that the quality of a product being sold
by the other party bearing any of the Trademarks presents a
material health hazard, such party shall have the right,
notwithstanding the negotiation and arbitration provisions set
forth above, to seek an injunction in a court of competent
jurisdiction to cause the other party to cease manufacturing,
sale or distribution of the offending product, or to recall
already distributed product.
C. Licensee covenants and agrees that the Licensed Products shall be
manufactured and sold in conformance with the Specifications and
with good manufacturing practices, as that term is used in the
United States in 21 C.F.R. Section 110 and as defined elsewhere,
where applicable, by law and that the Licensed Products shall be
truthfully and not misleadingly described, labeled and
advertised. Each Licensed Product shall comply in all material
respects with the labeling, packaging, advertising and other
relevant laws and regulations of all countries and jurisdictions
into which the Licensed Products may be directed by, or with the
authority of, Licensee.
D. On January 31 and July 31 of each year, and at such other times
as Licensor may reasonably request, Licensee agrees to submit to
Licensor a representative sample of each of the Licensed Products
for examination and testing, provided, however, that it shall not
be considered a material breach of this Agreement if Licensee
fails to submit such samples unless such failure continues ten
(10) days following Licensor's request for such samples.
E. Licensee shall permit Licensor or its authorized representatives
to inspect, two (2) times per year (and such other number of
times as Licensor may require if it has a reasonable basis to
believe that such inspections are necessary for quality control)
at any time during regular business hours, the relevant portion
of the facilities where, and systems by which, Licensed Products
are manufactured, packaged, shipped and/or held in order to
verify that the Licensed Products are manufactured, packaged,
shipped and held in compliance with this Agreement and with all
applicable laws and regulations. Licensee may restrict access by
Licensor's representatives to those areas of Licensee's
facilities where the Licensed Products and ingredients and
materials for the Licensed Products are manufactured, packaged,
tested, shipped or stored.
F. Within ten (10) business days after receipt thereof, Licensee
shall notify Licensor of each consumer complaint that it receives
alleging that a Licensed Product has caused adverse health
effects or injury requiring treatment by a physician where such a
complaint might reasonably result in a materially adverse effect
on the Trademarks. Licensor and Licensee shall meet, upon the
reasonable request by either party, to
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determine how consumer complaints will be handled or remedied.
Licensee shall bear all of its costs and expenses associated with
handling and/or remedying consumer complaints that arise in
connection with the Licensed Products, provided, however, that
nothing in this Paragraph shall relieve Licensee of its
obligation to reimburse and/or indemnify Licensor for all costs
or expenses borne by Licensor in connection with a Product Event
or Third Party Action pursuant to Paragraphs 10 and 11. Licensee
shall provide Licensor, no later than January 31 and July 31 of
each year, with a report of all consumer complaints, litigation
and unresolved complaints regarding the Licensed Products during
the preceding two calendar quarters and shall provide such
reports at such other times as reasonably requested by Licensor.
All reports provided under this Paragraph 3F shall be considered
to be confidential information subject to the provisions of
Paragraph 17.
G. Licensee shall maintain a product safety plan which includes
provisions for the control of chemical, physical, allergenic and
microbiological hazards, including effectiveness checks and
records. Licensee shall further maintain a traceable lot system,
from ingredient and package material receipt through delivery to
the customer, for the Licensed Products and shall maintain
positive product release, product hold, product recall and crisis
management procedures. All of the plans, systems and procedures
described in this Paragraph 3G shall be consistent with
generally accepted good practice for food enterprises engaged in
the manufacture and distribution of frozen products. Upon
Licensor's reasonable request, Licensee will provide Licensor
with each of the plans, systems and procedures described above.
All information provided under this Paragraph 3G shall be
considered to be confidential information subject to the
provisions of Paragraph 17.
H. Licensee further agrees to maintain all records relating to
Specifications, nutrition information, consumer complaints,
litigation, code dating, manufacturing and product defects for
the Licensed Products and shall make such records available to
Licensor for inspection upon Licensor's reasonable requests.
Such records shall be maintained for a period of no less than
three (3) years after the matter to which they pertain is closed.
All records provided under this Paragraph 3H shall be considered
to be confidential information subject to the provisions of
Paragraph 17.
I. Licensee shall package the Licensed Products in tamper evident
packaging. Further, Licensee shall routinely conduct
compatibility testing to ensure that no packaging or packaging
inks impart to the Licensed Products any odors or chemicals in
contravention of applicable laws or any unintended or undesirable
odors or chemicals which would be perceptible to the consumer.
J. Licensee may, without Licensor's prior written consent, use a
third party manufacturer to manufacture the Licensed Products
provided that use of any such third party manufacturer shall not
relieve Licensee of any of its obligations hereunder.
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K. Approval or acquiescence by Licensor in connection with any
examination, testing, or inspection pursuant to this Paragraph 3
shall not, in any manner, waive or limit Licensee's
responsibility to comply with all relevant terms and conditions
of this Agreement and with all laws and regulations applicable to
Licensee's exercise of the rights granted by this Agreement.
4 PACKAGING AND ADVERTISING.
A. All labels, packaging and advertising materials bearing any
Trademark shall include a statement which, in the reasonable
judgment of Licensor, sets forth an appropriate statement of the
relationship between Licensor and Licensee and which indicates
that the Trademark is owned by Licensor and is being used under
license.
B. All advertising campaigns, advertisements, packaging and
promotional activities for the Licensed Products, including the
use of particular publications, programs and other media, shall
be in accordance with prevailing community mores and standards of
good taste. Use of the Aunt Jemima brand in advertising
campaigns, advertisements, packaging and promotional activities
shall conform in all material respects with the image of the Aunt
Jemima brand portrayed by Licensor. More specifically, but
without limiting the generality of the foregoing, the Aunt Jemima
character shall be depicted only on packaging and reproductions
of packaging and shall never be personified in any manner,
including without limitation, through a living person or in the
form of dolls, models, cartoons or caricatures.
C. Licensee shall submit to Licensor samples of all proposed labels,
packaging, advertising and promotional materials bearing the
Trademarks at least thirty (30) days prior to their intended
first use. Licensor shall approve or disapprove Licensee's use
of such materials no later than ten (10) business days after
receipt of the proposed materials from Licensee. Failure to
respond within that time shall be deemed to constitute approval
by Licensor. Licensor may only withhold approval if Licensee's
use of such material would violate a provision in this Agreement.
If Licensor does not grant approval for use of labels, packaging,
advertising or promotional materials, either party may submit the
dispute to binding arbitration, which shall be conducted as
provided in Paragraph 3B. Notwithstanding the foregoing, to the
extent that there are no material changes to printed advertising
or promotional materials from previously approved printed
advertising or promotional materials, as the case may be,
Licensee need not submit such new materials for prior approval,
provided, however, that Licensee submit such materials to
Licensor within thirty (30) days of the date such materials are
used. If, following receipt of such materials, Licensor believes
the use of such materials violates a provision of this Agreement,
either party may submit such dispute to binding arbitration which
shall be conducted as provided in Paragraph 3B. Licensor hereby
consents to the use by Licensee of the color scheme being used as
of the date of this Agreement by Licensor on its corresponding
Aunt Jemima branded dry mix products for use by Licensee in
connection with the Licensed Products, provided, however, that
approval of all proposed labels, packaging, advertising and
promotional materials remains subject to all other terms and
conditions of this Agreement and Licensor's consent to use of a
color scheme does not
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relieve Licensee of its obligation to submit all materials to
Licensor for approval, as set forth above. Approval by Licensor
hereunder shall not, in any manner, waive or limit Licensee's
responsibility to comply with all relevant terms and conditions
of this Agreement and all laws and regulations regarding such
labels, advertising, packaging and promotional materials.
D. The Interim Trademark License Agreement between Licensor and
Licensee dated the date hereof (the "Interim Trademark License
Agreement") shall supersede Paragraphs 4A and 4C herein with
respect to packaging, labeling, advertising and promotional
materials in existence at the date of this Agreement.
5. NEW TRADEMARKS.
A. Licensor acknowledges that Licensee may, at any time during the
term of this Agreement, desire to use a new trademark (i.e., any
distinctive words, letters, numerals, symbols, designs, shapes,
color schemes and/or combinations thereof) on or in connection
with the Licensed Products. If the new trademark includes any
word or design which is common to a word or design that comprises
an element of any Trademark, such new trademark shall be
considered to be an "Associated Trademark." Licensee may not use
an Associated Trademark without the prior written approval of
Licensor, which approval shall not be unreasonably withheld or
delayed. All Associated Trademarks which have been approved by
Licensor and which are used or registered will be considered
Trademarks for purposes of this Agreement. Exhibit A shall be
deemed amended to include Associated Trademarks that are approved
by Licensor. Licensor may, or at the request of Licensee shall,
apply to register any or all such Associated Trademarks. All
such Associated Trademarks shall be owned solely by Licensor or,
at the direction of Licensor, one of Licensor's affiliates.
Notwithstanding the foregoing, Licensee shall bear all costs and
expenses associated with the development, use, registration and
maintenance of the Associated Trademarks, including but not
limited to, determining such trademark's availability and
registering such trademark. Licensee and Licensor shall
cooperate in attempting to obtain appropriate trademark
registrations for the Associated Trademarks.
B. (i) Subject to the restrictions set forth in Paragraph 4,
if Licensee desires to use on or in connection with
the Licensed Products, a new trademark which does not
include any word or design which is common to a word
or design that comprises an element of any Trademark,
such new trademark shall be considered to be an
"Unassociated Trademark." Unassociated Trademarks
shall be used by Licensee, on or in connection with
the Licensed Products (a) only when, as and if
approved in writing by Licensor, which approval shall
not be unreasonably withheld or delayed and (b) only
on or in connection with the specific Licensed
Product for which approval has been granted.
Licensee shall bear all costs and expenses associated
with development, use, registration and maintenance
of the Unassociated Trademark, including but not
limited to, the costs of determining such trademark's
availability, protection of the trademark and any
costs and expenses associated with any charges of
infringement relating to such
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Unassociated Trademark. All Unassociated Trademarks
shall be owned solely by Licensee and all use shall
inure to the benefit of Licensee.
(ii) Subject to the following sentences, Licensee shall
not use any Unassociated Trademark as a co-brand
(whether as a "house" mark, "umbrella" mark or
otherwise) on or in connection with any of the
Licensed Products (hereinafter "Co-Brand"). If
Licensee uses any Co-Brand, then, except as set forth
otherwise herein, this Agreement shall automatically
terminate two years from the date Licensee first
begins use of such Co-Brand in any jurisdiction,
provided, however, that if Licensee uses a Co-Brand
and ceases such use within eighteen (18) months of
its first use of such Co-Brand (such 18-month period
being referred to as the "Trial Period"), then this
Agreement shall not so terminate. Notwithstanding
the foregoing, Licensee may only use a Co-Brand
during one Trial Period without triggering
termination of this Agreement, provided, however,
that in the event Licensor, its successors or assigns
sells the Trademarks to a party which does not
control, is not controlled by, is not under common
control with, or is not a successor by merger or
consolidation with Licensor, Licensee shall be
entitled to one Trial Period regardless of whether
Licensee has previously used a Trial Period with a
prior owner of the Trademarks and provided further,
that Licensee shall never be entitled to more than
one Trial Period during the time the Trademarks
remain under the ownership of a party which controls,
is controlled by, is under common control with, or
is a successor by merger or consolidation with
Licensor.
(iii) For the avoidance of doubt, Licensor shall notify
Licensee, in writing, (a) when, incident to
Licensor's review of labeling, packaging, advertising
or promotional materials in accordance with Paragraph
4C, Licensor determines that an Unassociated
Trademark is proposed to be used as a Co-Brand, or
(b) at such other time as Licensor has reasonable
basis to believe Licensee is using a Co-Brand. If,
after receiving such notice pursuant to Paragraph
5B(iii)(a) or 5B(iii)(b), Licensee does not believe
it is proposing to use or using a Co-Brand, as the
case may be, then Licensee may submit the matter,
within five (5) days of receipt of such notice, to
binding arbitration which shall be conducted as
provided in Paragraph 3B. If Licensee ceases use of
a Co-Brand within ninety (90) days of receiving
notice of the Co-Brand from Licensor or, if the
matter is submitted to arbitration, within ninety
(90) days of receiving a decision from the
arbitration panel deeming Licensee's use to be a Co-
Brand, then such limited use shall not be deemed to
be use of a Co-Brand or a Trial Period, as defined
herein.
(iv) Any use of a Co-Brand which use lasts longer than
eighteen (18) months shall result in automatic
termination of this Agreement two (2) years following
the date such Co-Brand was first used on any Licensed
Product. Any use of a Co-Brand which use follows an
earlier Trial Period (where both the Trial Period and
the later use occur while the same party or a party
which controls, is controlled by, is under common
control with, or is a successor by merger or
consolidation with the same party, owns the
Trademarks) shall result in automatic termination of
this
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Agreement two years from the date Licensee began use
of the Co-Brand during the latter time period.
Notwithstanding any other provision of this
Agreement, once terminated pursuant to this Section
5B, nothing, including the transfer, sale or
assignment of the Trademarks to a successive owner,
shall revive the license, create any rights in
Licensee or its successors or assigns, or create any
liabilities in Licensor or its successors or assigns.
6. NEW COUNTRIES.
A. Subject to the other provisions herein, if Licensee desires to
sell the Licensed Products in countries or jurisdictions outside
the Territory from time to time, Licensor and Licensee shall
cooperate in attempting to obtain the appropriate trademark
registrations in those countries or jurisdictions. If Licensor
owns a valid and subsisting registration of the Aunt Jemima brand
and character in forms consistent with then-current approved
usage in any country or jurisdiction in which Licensee desires to
sell the Licensed Products, then such registration shall be
deemed to be a Trademark. Licensee shall bear all costs and
expenses associated with use and registration of Trademarks in
such new countries or jurisdictions, including, but not limited
to, the costs of determining the availability of the Trademarks
and protection of the Trademarks. Notwithstanding the foregoing,
all such new Trademarks will be owned solely by, and registered
in the name of, Licensor or at the direction of Licensor, one of
Licensor's affiliates. Exhibit A shall be deemed amended to
include Trademarks that are registered, or to which use is
extended, in additional countries pursuant hereto. Furthermore,
to the extent such sales are permitted by law in such new country
or jurisdiction, this provision shall not be construed to prevent
or otherwise restrict Licensee from selling Licensed Products in
such new country or jurisdiction pending registration of the
relevant Trademarks in the new country or jurisdiction.
B. If the applicable law of any country or jurisdiction permits or
requires the registration of Licensee as a user of the
Trademarks, Licensee agrees to execute, at its sole cost and
expense, such instruments or documents as may be necessary or
proper to effect such registration.
7. NO CHANGES TO TRADEMARKS.
Licensee shall use the Trademarks only in the form in which they are
registered and not make any changes to the graphic representation of
the Trademarks or the font or type face in which the Trademarks are
portrayed without Licensor's prior written consent, which consent
shall not be unreasonably withheld or delayed. Should Licensor modify
the graphic representation of the Trademarks or materially modify the
font or type face in which the Trademarks are portrayed for use on its
products, then Licensee shall also use such modified version in
connection with the Licensed Products. In such event, Licensor shall
provide Licensee with all appropriate artwork and graphics. Licensee
shall be given a reasonable period of time in which to change all
packaging and advertising for the Licensed Products to show the
modified version and shall be permitted to sell all Licensed Products,
consistent with the terms and conditions of this Agreement, which are
manufactured or packaged prior to the time Licensee changes its
packaging and advertising to show the modified version.
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8. TRADEMARK OWNERSHIP AND PROTECTION.
Licensee acknowledges and agrees that Licensor is, and Licensor (or,
where applicable, an affiliate of Licensor) or its successors or
assigns shall remain, the owner of the Trademarks. Licensee shall
acquire no ownership interest in the Trademarks through this Agreement
or otherwise. Each party shall fully cooperate with the other party
in efforts to obtain, perfect and enforce Licensor's rights in the
Trademarks. Licensee agrees that it shall not, in any country or
jurisdiction, register or attempt to register any Trademark. Licensee
further agrees that it shall not, in any country or jurisdiction, use,
register or attempt to register any other trademark or trade name
which is confusingly similar to any Trademark. Licensee shall not
contest or assist any other party in contesting the validity of
Licensor's ownership of the Trademarks.
9 TRADEMARK INFRINGEMENT AND DEFENSE.
A. Except as otherwise provided in this Paragraph 9A, Licensor shall
have the right to control the prosecution and settlement of any
action, suit, opposition or other proceeding (collectively,
"Proceeding") respecting any infringement, dilution, tarnishment,
unfair competition or passing off by a third party of, or with
respect to, any Trademarks (collectively, "Infringement")
including, without limitation, the decision whether to initiate a
Proceeding, provided, however, that in the event Licensor
initiates any Proceeding, Licensor shall promptly (a) notify
Licensee of any material developments with respect to such
Proceeding, (b) deliver to Licensee a copy of all pleadings,
correspondence and other material documents respecting such
Proceeding, and (c) notify Licensee of any offers of settlement
related to such Proceeding which it receives or which it proposes
to make. Licensor shall not offer, or accept any offer of, a
settlement that contains any material term or condition other
than the receipt or payment of money by Licensor, which
settlement would have a material adverse impact on the Trademarks
in connection with the Licensed Products, without the prior
written consent of Licensee, which consent shall not be
unreasonably withheld or delayed.
Each party shall promptly notify the other party of any
Infringement which comes to its attention. Licensor shall within
thirty (30) days from the date it receives notice from Licensee
of an Infringement notify Licensee of its decision as to whether
it will initiate a Proceeding. If Licensor elects not to
initiate a Proceeding or does not give timely notice to Licensee
of its decision with regard thereto, Licensee shall be authorized
to initiate a Proceeding at its sole cost and expense; provided
however, that Licensee shall promptly (a) notify Licensor of any
material developments with respect to such Proceeding, (b)
deliver to Licensor a copy of all pleadings, correspondence and
other material documents respecting such Proceeding and (c)
notify Licensor of any offers of settlement related to such
Proceeding which it receives or which it proposes to make.
Licensee shall not offer, or accept any offer of, a settlement
that contains any material term or condition other than the
receipt or payment of money by Licensee without the prior written
consent of Licensor, which consent shall not be unreasonably
withheld or delayed.
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At any time, upon five (5) days notice to Licensee, Licensor may
elect to assume the control of any Proceeding initiated by
Licensee, provided Licensor is selling Aunt Jemima branded
products in the relevant jurisdiction or country. If Licensor so
elects, the aggregate costs of the Proceeding shall be
apportioned in accordance with Subparagraphs (i) or (iii) of
this Paragraph 9A.
Licensor and Licensee shall cooperate to provide documents and
information in connection with any Proceeding.
Except as provided otherwise in this Paragraph 9, the following
principles of cost and damage recovery shall apply to
Infringements:
(i) If an Infringement is attributed to any product in a
country or jurisdiction where both Licensor and Licensee
are selling Aunt Jemima branded products or have sold such
products within the three most recent calendar years, then
Licensor and Licensee shall share the costs of any
Proceeding respecting such Infringement and shall share in
any recovery of damages or other monetary relief relating
thereto, both in proportion to the respective average
annual gross sales minus discounts, returns and allowances
("Net Sales") of each party's products under the Aunt
Jemima brand during the three most recent calendar years
in the relevant country or jurisdiction;
(ii) If an Infringement is attributed to any product in a
country or jurisdiction where Licensee, but not Licensor,
is selling Aunt Jemima branded products, then Licensee
shall bear the costs of any Proceeding respecting such
Infringement and shall be entitled to any recovery of
damages or other monetary relief relating thereto; and
(iii) If an Infringement is attributed to any product in a
country or jurisdiction where Licensee is not selling Aunt
Jemima branded products and has not sold such products
within the three most recent calendar years, then Licensor
shall bear the costs of any Proceeding respecting such
Infringement and shall be entitled to any recovery of
damages or other monetary relief relating thereto.
B. Except as otherwise provided in this Paragraph 9B, Licensor shall
have the right to control the defense and settlement of any
action, suit, opposition or other proceeding (collectively,
"Infringement Defenses") respecting any allegation by a third
party of infringement, dilution, tarnishment, unfair competition
or passing off of rights of such third party by, or with respect
to, any Trademarks (collectively, "Claim") including, without
limitation, the decision whether to undertake an Infringement
Defense, provided however, that in the event Licensor undertakes
any Infringement Defense, Licensor shall promptly (a) notify
Licensee of any material developments with respect to such
Infringement Defense, (b) deliver to Licensee a copy of all
pleadings, correspondence and other material documents respecting
such Infringement Defense, and (c) notify Licensee of any offers
of settlement related to such Infringement Defense which it
receives or
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which it proposes to make. Licensor shall not offer, or accept
any offer of, a settlement that contains any material term or
condition other than the receipt or payment of money by Licensor,
which settlement would have a material adverse impact on the
Trademarks in connection with the Licensed Products, without the
prior written consent of Licensee, which consent shall be not
unreasonably withheld or delayed.
Each party shall promptly notify the other party of any Claim
which comes to its attention. Licensor shall within thirty (30)
days from the date it receives notice from Licensee of a Claim
notify Licensee of its decision as to whether it will undertake
the Infringement Defense respecting such Claim. If Licensor
elects not to undertake the Infringement Defense or does not give
timely notice to Licensee of its decision with regard thereto,
Licensee shall be authorized to undertake the Infringement
Defense at its sole cost and expense; provided however, that
Licensee shall promptly (a) notify Licensor of any material
developments with respect to such Infringement Defense, (b)
deliver to Licensor a copy of all pleadings, correspondence and
other material documents respecting such Infringement Defense and
(c) notify Licensor of any offers of settlement related to such
Claim which it receives or which it proposes to make. Licensee
shall not offer, or accept any offer of, a settlement that
contains any material term or condition other than the receipt or
payment of money by Licensee without the prior written consent of
Licensor, which consent shall not be unreasonably withheld or
delayed.
At any time, upon five (5) days notice to Licensee, Licensor may
elect to assume the control of any Infringement Defense
undertaken by Licensee, provided Licensor is selling Aunt Jemima
branded products in the relevant jurisdiction or country. If
Licensor so elects, the aggregate costs of the Infringement
Defense shall be apportioned in accordance with Subparagraphs (i)
or (iii) of this Paragraph 9B.
Licensor and Licensee shall cooperate to provide documents and
information in connection with any Infringement Defense
respecting a Claim.
Except as otherwise provided in this Paragraph 9B, the following
principles of cost and liability shall apply to Infringement
Defenses:
(i) If a Claim is in a country or jurisdiction where both
Licensor and Licensee are selling Aunt Jemima branded
products or have sold such products within the three most
recent calendar years, then Licensor and Licensee shall
share the costs of any Infringement Defense respecting
such Claim and shall each contribute to any award of
damages or monetary settlement relating to such Claim,
both in proportion to the respective average annual Net
Sales of each party's products under the Aunt Jemima brand
during the three most recent calendar years in the
relevant country or jurisdiction;
(ii) If a Claim is in a country or jurisdiction where Licensee,
but not Licensor, is selling Aunt Jemima branded products,
then Licensee shall bear the costs of any Infringement
Defense or settlement respecting such Claim and shall
indemnify
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and hold Licensor harmless against any award of damages or
other monetary relief relating thereto; and
(iii) If a Claim is in a country or jurisdiction where Licensee
is not selling Aunt Jemima branded products and has not
sold such products within the three most recent calendar
years, then Licensor shall bear the costs of any
Infringement Defense respecting such Claim and shall
indemnify and hold Licensee harmless against any award of
damages or other monetary relief relating thereto,
provided however, that if such Claim arises as a result of
an application for registration or other occurrence
arising from an intention of Licensee to commence the sale
of Licensed Products in such country or jurisdiction then
Licensee shall bear the costs of any Infringement Defense
respecting such Claim and shall indemnify and hold
Licensor harmless against any award of damages or other
monetary relief relating thereto.
C. For the purposes of calculating Net Sales as set forth in
Paragraphs 9(A)(i) and 9(B)(i), during the first three years of
this Agreement, sales of the Licensed Products in any country or
jurisdiction by Licensor shall be attributed to Licensee.
10. NON-CONFORMING OR UNSAFE PRODUCT AND PRODUCT EMERGENCIES.
A. Licensee acknowledges that Licensor has an overriding interest in
protecting the reputation of the Trademarks. Accordingly, if
Licensee, at any time, has a reasonable basis to believe that any
Licensed Product is materially mislabeled or does not otherwise
conform to federal, state or local labeling or manufacturing
requirements, or presents any threat to the public health or
safety, or is otherwise not in full conformity with all
applicable laws and has been released into the stream of commerce
(any of such occurrences being a "Product Event"), Licensee shall
immediately notify Licensor of the facts giving rise to such
belief or suspicion. Similarly, Licensee shall immediately upon
its becoming aware thereof, notify Licensor of any actual,
threatened or proposed action, by any governmental agency,
consumer or environmental group, media or other organization or
any individual(s), directed toward removing any quantity of any
Licensed Products from any markets (a "Third Party Action"). In
all such cases, Licensee shall closely coordinate with Licensor
with respect to any actions Licensee or Licensor might take or
permit, and in respect to all public statements either party
might make regarding the Product Event or Third Party Action.
B. Any and all expenses relating to any Product Event, Third Party
Action, or to any recall or retrieval of Licensed Products shall
be borne by Licensee, including but not limited to, the cost of
labor in removing the Licensed Products from retailers,
wholesalers, distributors and warehouses having possession
thereof, all costs for reimbursement of such parties, all costs
for disposal of the Licensed Products and all other expenses and
costs actually incurred in connection with such Product Event,
Third Party Action, recall or retrieval.
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11. INDEMNIFICATION.
A. Licensor and its officers, directors, employees, agents,
successors and assigns shall be indemnified and held harmless by
Licensee from any and all liabilities, losses, damages, claims,
costs and expenses, interest, awards, judgments and penalties
(including reasonable legal costs and expenses) actually suffered
or incurred by Licensor and actually arising out of or resulting
from:
(i) the breach of any covenant by Licensee contained herein;
or
(ii) any actual or alleged destruction of property, injury,
death, loss or damage arising out of the manufacture,
distribution, advertising, sale or consumption of the
Licensed Products.
B. Licensee and its officers, directors, employees, agents,
successors and assigns shall be indemnified and held harmless by
Licensor from any and all liabilities, losses, damages, claims,
costs and expenses, interest, awards, judgments and penalties
(including reasonable legal costs and expenses) actually suffered
or incurred by Licensee and actually arising out of or resulting
from:
(i) the breach of any covenant by Licensor contained herein;
or
(ii) any actual or alleged destruction of property, injury,
death, loss or damage arising out of the manufacture,
distribution, advertising, sale or consumption of
Licensor's sale of product bearing the Trademarks.
C. Licensor shall not be liable or responsible in any manner to
Licensee, whether for indemnification or otherwise, except for
indemnity as expressly provided in this Paragraph 11 or for
indemnity as expressly provided in the Purchase Agreement.
Licensee acknowledges that Licensor is not making, and has not
made, any representations or warranties except as expressly
provided in the Purchase Agreement including, without limitation,
any implied warranties whatsoever.
12. INSURANCE.
Licensee shall maintain, at its own expense, Commercial General
Liability insurance (including products liability and contractual
liability coverage) with limitations of liability of not less than
$10,000,000 combined single limit for bodily injury, including death,
and property damage, which policy or policies shall name Licensor as
an additional insured. Upon Licensor's reasonable request, Licensee
shall furnish Licensor with certificates of insurance showing
compliance with the foregoing requirements. Such certificates shall
state that the policy or policies will not be canceled or materially
altered without at least thirty (30) days' prior written notice to
Licensor. Maintenance of the above insurance policies by Licensee
will not relieve Licensee of liability under the indemnification
provisions set forth herein. The policy limits specified above may be
satisfied through a combination of the stipulated primary liability
insurance and umbrella and/or excess liability insurance.
14
<PAGE>
13. BREACH AND TERMINATION.
A. Licensee acknowledges and agrees that Licensor would suffer
irreparable harm if Licensee were to materially breach its
obligations under this Agreement and were to continue to produce
or sell Licensed Products after the cure period set forth in this
Paragraph 13 and that monetary damages would be insufficient to
remedy the harm to Licensor. Accordingly, upon receiving notice
from Licensor of a material breach of any of its obligations
under this Agreement, Licensee shall immediately take whatever
steps are necessary to remedy the breach, at its sole cost and
expense or shall contest such notice of breach, in writing to
Licensor, within five (5) days of receipt thereof. If Licensee
does not contest the notice of breach within such five day period
or remedy the breach within sixty (60) days from the date
Licensor gives Licensee notice of such breach, Licensee shall
cease all manufacture and sale of the Licensed Products affected
by the breach until the breach is remedied. If (i) Licensee
contests Licensor's notice of breach within the five day period
or if (ii) after the expiration of the sixty (60) day cure
period, the breach continues, Licensor may apply to a court of
competent jurisdiction for appropriate relief. If such court
determines that a material breach has occurred and is continuing,
then Licensee hereby irrevocably and unconditionally consents to
the entry of an order by a court of competent jurisdiction
granting an injunction against further manufacture or sale of
such Licensed Products until such breach is cured. Without
limitation to Paragraph 23, Licensee also hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction
of the Federal District Court in the Northern District of
Illinois for any actions, suits or proceedings arising out of or
relating to this Paragraph 13 and further agrees that service of
any process, summons, notice or document by U.S. registered mail
to Licensee's address set forth above shall be effective service
of process for any action, suit or proceeding brought against
Licensee in any such court. Nothing herein shall waive
Licensor's rights to other remedies available, either at law or
in equity.
B. Licensor may terminate this Agreement, effective upon one-hundred
and eighty (180) days written notice to Licensee, upon the
cessation, outside of the ordinary course of business, of the
manufacture and sale of the Licensed Products by Licensee, its
sublicensees, its successors and permitted assigns where such
cessation lasts for a period in excess of six (6) consecutive
months and manufacture or sale of the Licensed Products does not
commence during the 180-day notice period.
C. If a final nonappealable judgment of a court of competent
jurisdiction determines that Licensee has repeatedly breached
this Agreement through willful or deliberate acts or omissions
indicating that Licensee is acting in bad faith, then Licensor
may terminate this Agreement upon written notice to Licensee. A
"final nonappealable judgment" shall mean for purposes of this
Paragraph 13C a judgment that is not subject to appeal or a
judgment that is not appealed within 30 days of it being
rendered.
D. This Agreement shall be automatically terminated, without any
further action by Licensor or Licensee in accordance with the
provisions of Paragraph 5B.
15
<PAGE>
14. NO FURTHER USE OF TRADEMARKS.
Upon termination or expiration of this Agreement for any reason,
except as set forth elsewhere herein, Licensee shall discontinue use
of the Trademarks, and shall not register or use any trademark
confusingly similar to any of the Trademarks.
15. WAIVER.
The performance of any covenant under this Agreement by Licensee on
the one hand or Licensor on the other, may be expressly waived in
writing by Licensee or Licensor, as appropriate. Any waiver hereunder
shall be effective only in the specific instance and for the purpose
for which given. No failure or delay on the part of Licensee or
Licensor in exercising any right, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other
right, power or privilege.
16. ASSIGNMENT AND SUBLICENSE.
A. This Agreement may not be assigned, transferred or otherwise
delegated (collectively, an "Assignment") by Licensee without the
prior written consent of Licensor (not to be unreasonably
withheld or delayed) except to a party who purchases or acquires,
as a going concern, the business of Licensee in which the
Trademarks are used and/or to any lenders providing financing to
Licensee; provided, however, that prior to an Assignment (which
for these purposes only shall not include any pledge of this
Agreement to a lender providing financing to Licensee until such
time as the lender exercises its rights under applicable pledge
agreements, security agreements or other collateral documents),
any assignee of this Agreement must agree in writing, delivered
to Licensor, that it shall be bound by the terms and provisions
of this Agreement and that such assignee (if it is other than a
lender providing financing to Licensee) or a sublicensee or
sublicensees of such assignee, as the case may be, shall operate
such acquired business for its own benefit and at its own risk,
or shall provide a guaranty of its obligations under this
Agreement from an entity and in a form both of which are
satisfactory in the reasonable judgment of Licensor; and provided
further, however, that an assignee of this Agreement shall not by
virtue of this Paragraph 16A be required to purchase or acquire
any particular assets utilized by Licensee in connection with
such business prior to such Assignment nor shall an assignee be
restricted from (i) leasing any assets used by it in the conduct
of such business, (ii) subcontracting any function incident to
its operation of such business including, without limitation,
manufacturing, distribution and administrative services, or (iii)
transferring any of its assets for value in an arms-length
transaction to an unaffiliated third party or establishing
security interests in any of its assets in favor of an
unaffiliated third party, provided that any such action does not
constitute an act of fraud against the creditors of such
assignee.
B. This Agreement may be assigned, transferred, sublicensed or
otherwise delegated by Licensor without the prior written
consent of Licensee.
16
<PAGE>
C. This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of, and be enforceable by, the
parties hereto and their respective successors and permitted
assigns.
D. This Agreement may be sublicensed, in whole or in part, by
Licensee, without the prior written consent of Licensor, provided
that Licensee provides prior written notice to Licensor of any
sublicense and provided further, that Licensee provides to
Licensor any sublicense agreement under which a sublicensee has
been granted rights to use the Trademarks.
17. CONFIDENTIALITY.
Any confidential information disclosed by either party to the other
pursuant to this Agreement, except as set forth below, shall be
considered confidential to the disclosing party, and shall be accorded
the same treatment which the receiving party gives to its own
confidential information. The obligation of confidentiality set forth
in the preceding sentence shall not apply to information which (a) was
publicly available at the time of the disclosure to the receiving
party; (b) subsequently becomes publicly available through no fault of
the receiving party; (c) is rightfully acquired by the receiving
party, subsequent to disclosure by the other party, from a third party
who is not in breach of a confidential relationship with regard to
such information; or (d) is independently developed by the receiving
party solely through the efforts of individuals who did not have
access to the confidential information, as evidenced by the receiving
party's written records.
18. ENTIRE AGREEMENT.
This Agreement, the Exhibit hereto, the Purchase Agreement and the
Interim Trademark License Agreement contain the entire understanding
of the parties with respect to the subject matter hereof. This
Agreement supersedes all prior agreements relating to the transactions
contemplated hereunder.
19. SURVIVAL.
The rights and obligations set forth in the following Paragraphs shall
survive termination of this Agreement: Paragraphs 3, 4, 8, 9, 10, 11,
12, 14, 15, 16, 17, 18, 19, 20, 22, 23, and 24.
20. AMENDMENT.
This Agreement may be amended or modified in whole or in part only by
a duly authorized written agreement that refers to this Agreement and
is signed by the parties hereto or by their duly appointed
representatives or successors.
21. COUNTERPARTS; FACSIMILE SIGNATURES.
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and
the same instrument. It shall not be necessary in making proof of
this Agreement to produce or account for more than one such
counterpart. A facsimile copy of a signature hereto shall be fully
effective as if an original.
17
<PAGE>
22. NOTICES.
All notices, claims, certificates, requests, demands and other
communications hereunder shall be in writing and will be deemed to
have been duly given if personally delivered or telecopied or on the
date of receipt indicated on the return receipt if delivered or mailed
(registered or certified mail, postage prepaid, return receipt
requested) as follows:
If to Licensor: The Quaker Oats Company
321 North Clark Street
Chicago, Illinois 60610
Attn: General Corporate Counsel
With a copy to: The Quaker Oats Company of Canada
Limited
Quaker Park
Hunter Street East
Peterborough, Ontario K9J 7B2
Attn: Law Department
If to Licensee: Van de Kamp's, Inc.
1000 St. Louis Union Station
Suite 200
Saint Louis, Missouri 63103
Attn: President
With a copy to: Van de Kamp's, Inc.
801 Montgomery Street
Suite 400
San Francisco, California 94133
Attn: Ian R. Wilson
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth
above.
23. GOVERNING LAW AND JURISDICTION.
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Illinois, U.S.A. without
regard to its provisions concerning conflicts or choice of law.
Except as otherwise agreed in Paragraph 3B, 4C and 5B(iii), the
parties consent to the exclusive jurisdiction of the Federal Court in
the Northern District of Illinois for the resolution of any disputes
as to the construction of this Agreement.
24. SEVERABILITY.
Nothing contained in this Agreement shall be construed as requiring
the commission of any act contrary to law. Wherever there is any
conflict between any provision of this Agreement and any statute, law,
ordinance or regulation contrary to which the parties have no legal
right to contract, the latter shall prevail, but in such event, the
provisions of this Agreement thus affected shall be curtailed and
limited only to the extent necessary to bring it within the
18
<PAGE>
requirement of such law. In the event that any part, section,
paragraph or clause of this Agreement shall be held to be indefinite,
invalid or otherwise unenforceable, the balance of this Agreement
shall continue in full force and effect unless the severance of the
portion thus held unenforceable would unreasonably frustrate the
commercial purposes of this Agreement.
THE QUAKER OATS COMPANY VAN DE KAMP'S, INC.
By: By:
------------------------------- ----------------------------
Title: Title:
---------------------------- ------------------------
Date: Date:
------------------------------ --------------------------
THE QUAKER OATS COMPANY
OF CANADA LIMITED
By:
-----------------------------
Title:
-----------------------------
Date:
------------------------------
19
<PAGE>
LICENSED TRADEMARKS
<TABLE>
<CAPTION>
UNITED STATES
- -------------------------------------------------------------------------------------------
Mark Reg. NO Reg. Date Owner
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AUNT JEMIMA 1575365 January 2, 1990 The Quaker Oats Company
AUNT JEMIMA 1590084 April 3, 1990 The Quaker Oats Company
AUNT JEMIMA 797560 October 12, 1965 The Quaker Oats Company
AUNT JEMIMA 1697862 June 30, 1992 The Quaker Oats Company
& Design
MISCELLANEOUS DESIGN 1699260 July 7, 1992 The Quaker Oats Company
(Aunt Jemima Head)
MISCELLANEOUS DESIGN 1614072 September 18, 1990 The Quaker Oats Company
(Aunt Jemima Head)
- -----------------------------------------------------------------------------------------
<CAPTION>
CANADA
- -----------------------------------------------------------------------------------------
Mark Reg. No. Reg. Date Owner
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
AUNT JEMIMA TMA 164,781 August 15, 1969 The Quaker Oats Company
of Canada Limited
AUNT JEMIMA & TMA 384,601 May 17, 1991 The Quaker Oats Company
DESIGN of Canada Limited
- ------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT K
TO EXHIBIT 2.1
PATENT LICENSE AGREEMENT
THIS AGREEMENT, effective as of July 9, 1996, is by and between VAN DE
KAMP'S, INC., a Delaware corporation (hereinafter "Licensee"), and THE QUAKER
OATS COMPANY, a New Jersey corporation (hereinafter "Licensor").
WHEREAS United States Patent Application No. 08/579,058, filed December 26,
1995, entitled "USE OF CALCIUM CHLORIDE AND MAGNESIUM CHLORIDE AS LEAVENING
ACIDS FOR BATTER AND DOUGH COMPOSITIONS" (hereinafter referred to as the
"Licensed Patent Application") is to be licensed under the terms and conditions
of this Agreement; and
WHEREAS Licensor and Licensee are parties to that certain Asset Purchase
and Sale Agreement dated May 15, 1996, as supplemented by Supplement No. 1
thereto of even date herewith (hereinafter the "Purchase Agreement"); and
WHEREAS under the terms of the Purchase Agreement, Licensee is entitled to
certain rights in the Licensed Patent Application; and
WHEREAS Licensee is desirous of obtaining a license, with a right to
sublicense, to make, use and sell the technology claimed in the Licensed Patent
Application in the Business; and
WHEREAS all capitalized terms used without definition herein shall have the
meaning specified in the Purchase Agreement;
NOW THEREFORE, the parties covenant and agree as follows, both intending to
be legally bound by this License Agreement.
<PAGE>
1. Grant of License
(a) Licensor hereby grants to Licensee under the Licensed Patent
Application, and for the lives of such Licensed Patent
Application, and any patents issuing from such Licensed Patent
Application, a non-exclusive, perpetual, irrevocable, assignable,
royalty-free license, with a right to sublicense, to make, use
and sell products embodying or made in accordance with the
inventions of the Licensed Patent Application. In the event any
patents do not issue from the Licensed Patent Application, or to
the extent any patents issuing from such Licensed Patent
Application do not claim technology disclosed therein, such
technology shall be considered Shared Technology, and Licensee
shall have a license to use such Shared Technology in the
Business, under the Shared Technology License Agreement attached
as Exhibit M to the Purchase Agreement.
2. APPLICATION PROSECUTION
Licensor shall have the sole right and discretion to file, prosecute
(including continuing prosecution) and/or maintain the Licensed Patent
Application, and any patents issuing therefrom. In the event that
Licensor elects to abandon in its entirety the Licensed Patent
Application or discontinue paying the maintenance fees for any patent
that issues from the Licensed Patent Application, Licensor shall offer
to assign such Licensed Patent Application or patent to Licensee prior
to any such abandonment or discontinuance of paying the maintenance
fee.
3. ASSIGNMENT OF AGREEMENT
This Agreement may be assigned by either or both parties, provided
that the proposed assignee shall first deliver to both parties a
written assignment and assumption of all of the rights, duties,
obligations, covenants, terms and conditions of the intended assignor
(it being understood that a pledge of this Agreement to Licensee's
lender shall not be deemed to constitute an assignment until such time
as the lender exercises its rights under applicable pledge agreements,
security agreements or other collateral documents).
4. TERM AND TERMINATION
<PAGE>
This Agreement shall be effective as of its date of execution. The
rights, duties, obligations and covenants set forth herein for the
Licensed Patent Application shall expire upon (i) a decision by
Licensor to cease prosecution of the Licensed Patent Application
before the appropriate patent office, subject to the rights granted in
Article 2 of this Agreement, (ii) a final determination by the
appropriate patent office that the invention claimed in the Licensed
Patent Application is not patentable, or (iii) the expiration or
lapsing of any patent that issues from the Licensed Patent
Application, whichever is later.
5. REPRESENTATIONS AND WARRANTIES
Other than as expressly and specifically set forth in this Agreement
and the Purchase Agreement, neither Licensor nor Licensee make any
representations or warranties or assume any obligations or
liabilities concerning the Licensed Patent Application, or any patents
issued therefrom, and the license granted herein, including without
limitation any representation or warranty as to the validity or scope
of the Licensed Patent Application, or patents issued therefrom.
6. PATENT MARKINGS
Licensee agrees to mark all products made, used or sold under any
patents issued pursuant to the Licensed Patent Application, with the
word "Patent" or "Patents" and the number or numbers of the patent or
patents applicable thereto.
7. FORCE MAJEURE
Each party shall be excused from any non-performance of this Agreement
that is proximately caused by government regulation, war, strike, act
of God, or other similar circumstances normally deemed to be outside
the control of well managed business.
8. NOTICES
Any notice, report, request, or statement either party is required or
permitted to give hereunder shall be in writing, signed by the
notifying party, and shall be hand delivered, sent via facsimile
transmission, sent via overnight courier, or deposited in the United
<PAGE>
States mail, certified or registered mail, return receipt requested,
postage prepaid, addressed as follows:
If to Licensor: The Quaker Oats Company
321 N. Clark Street
Chicago, Illinois 60610-4714
Attention: Law Department
If to Licensee: Van de Kamp's, Inc.
1000 St. Louis Union
Suite 200
Saint Louis, Missouri 63103
Attn.: President
9. RIGHTS AND OBLIGATIONS PURSUANT TO THE PURCHASE AGREEMENT
Nothing herein shall be construed as modifying, terminating, limiting
or otherwise altering Licensor's and Licensee's rights and obligations
set forth in the Purchase Agreement. If any term is deemed by both
parties, an arbitrator, or a court of law to be in conflict with any
term of the Purchase Agreement, the term of the Purchase Agreement
shall supersede any such conflicting term herein.
10. MODIFICATIONS
This Agreement shall be modified only by a writing signed by both
parties.
11. SEVERABILITY
If any part, term, or provision of this Agreement shall be found
illegal or in conflict with any valid controlling law, the validity of
the remaining provisions shall not be affected thereby.
12. USE OF LICENSOR'S NAME
Nothing herein shall be construed as granting Licensee the right to
use Licensor's name in publicizing anything made, used or sold under
this Agreement.
<PAGE>
13. WAIVER
The waiver of a breach hereunder may be effected only by a writing
signed by the waiving party and shall not constitute a waiver of any
other breach.
14. APPLICABLE LAW
This Agreement shall be interpreted in accordance with the laws of the
State of Illinois, United States of America.
IN WITNESS WHEREOF, the parties have caused this instrument to be executed
in duplicate as of the day and year first above written.
THE QUAKER OATS COMPANY VAN DE KAMP'S, INC.
Signature: __________________________ Signature: __________________________
Name (printed) ______________________ Name (printed) ______________________
Title: ______________________________ Title: ______________________________
Date: ______________________________ Date: ______________________________
<PAGE>
STATE OF _____________)
) SS.
COUNTY OF ____________)
On this _____ day of _________________, 19___, and _____ day of _____________,
19_____, before a Notary Public in and for the County and State aforesaid,
appeared, respectively, _________________________________, and
_______________________, to me personally known to be the same persons whose
names are subscribed to the foregoing instrument, and acknowledged that such
persons executed said instrument as a free and voluntary act and for the uses
and purposes therein expressed.
WITNESS my hand and seal the day and year last above given.
________________________________ (SEAL)
Notary Public
<PAGE>
EXHIBIT L
TO EXHIBIT 2.1
MCDONALD'S CO-PACK AGREEMENT
THIS CO-PACK AGREEMENT ("Agreement") made and entered into as of this 9th
day of July, 1996, by and between The Quaker Oats Company, a corporation
organized and existing under the laws of New Jersey (the "Company"), and Van de
Kamp's, Inc., a corporation organized and existing under the laws of Delaware
("Co-Packer").
WITNESSETH:
WHEREAS, all capitalized terms used without definition herein shall have
the meaning specified in a certain Asset Purchase and Sale Agreement dated May
15, 1996 between the Company and Co-Packer, as supplemented by Supplement No. 1
thereto of even date herewith (the "Purchase Agreement");
WHEREAS, this Agreement is entered into in connection with the acquisition
of the Business by Co-Packer pursuant to the terms and conditions of the
Purchase Agreement;
WHEREAS, upon the consummation of the acquisition and related transactions
contemplated by the Purchase Agreement, Co-Packer will carry on the Business
acquired from the Company;
WHEREAS, the Company desires to obtain from Co-Packer certain processing,
packaging and other services for the manufacture of the product specified in
SCHEDULE 1 attached hereto (the "Product");
WHEREAS, Co-Packer desires to furnish such services and manufacture such
Product as hereinafter set forth;
WHEREAS, certain machinery and equipment presently located at the Business'
Jackson, Tennessee facility (the "Facility") associated with the production of
the Product, as described on SCHEDULE 2 attached hereto and made a part hereof
(the "Excluded Assets"), were excluded from the assets acquired by Co-Packer
under the Purchase Agreement;
WHEREAS, during a transition period at the end of which the Company shall
remove the Excluded Assets from the Facility, the Company desires to have Co-
Packer utilize the Excluded Assets and the Other Assets (as hereinafter defined)
for the manufacture of the Product; and
WHEREAS, Co-Packer desires to utilize the Excluded Assets and the Other
Assets for the manufacture of such Product for the Company as hereinafter set
forth.
NOW, THEREFORE, in consideration of the mutual premises and covenants
contained herein and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
<PAGE>
1. The Company shall, from time to time under the terms hereof, place
orders with Co-Packer, and Co-Packer shall process and deliver pursuant to such
orders, the Product in compliance with the standards and specifications attached
hereto as SCHEDULE 3 and made a part hereof (the "Specifications") in quantities
specified by the Company not to exceed in any calender month an aggregate of
18,000 cases unless otherwise agreed by Co-Packer. This is not a requirements
contract and the Company may manufacture the Product itself and/or by contract
with a third party. The Company shall have no minimum order requirement.
2. The term of this Agreement shall commence upon execution of this
Agreement by both parties hereto and shall continue for a period of 365 days
from the date hereof. Notwithstanding the foregoing, this Agreement shall
terminate automatically if the Company fails to order a minimum of 4,000 cases
of Product hereunder for production in any calender month. The Company shall be
entitled to terminate this Agreement at any time by giving Co-Packer 30 days
prior written notice. Upon expiration or termination of this Agreement, the
Company shall be required to pay for all conforming Product ordered and
manufactured by Co-Packer hereunder prior to such expiration or termination.
Co-Packer and the Company agree that ownership and title in the Excluded Assets
shall at all times remain vested in the Company. Following expiration or
termination of this Agreement, the Company at its sole expense shall remove the
Excluded Assets from the Facility within sixty (60) days from such expiration or
termination in a manner which does not unreasonably interfere with Co-Packer's
operations. The Excluded Assets shall be made available by Co-Packer for
removal by the Company in the same condition as exists on the date hereof,
reasonable wear and tear excepted. In addition, upon such expiration or
termination, Co-Packer shall immediately account for and return to the Company,
freight collect, all Specifications, co-pack manuals related exclusively to the
Product, or other confidential processing information owned and/or supplied by
the Company pursuant to this Agreement.
3. Co-Packer shall manufacture and have ready for shipment any and all
Product no later than fifteen (15) days from receipt of an order therefor from
the Company, and Co-Packer will use all reasonable efforts to manufacture and
have ready for shipment orders of Product by any earlier requested shipment
date. The Company shall, on or prior to the fifteenth day of each month,
furnish Co-Packer with estimates of its Product orders for the following month;
however, any such estimates shall not be binding or otherwise limit or obligate
the Company in its orders of Product hereunder. The Co-Packer shall
manufacture, package and supply all of the Company's requirements of Product
during the first month after execution of this Agreement in accordance with the
most recent production plan furnished to it.
4. The Company shall pay Co-Packer $10.55 per case of Product (as
computed per SCHEDULE 4, the "Standard Cost") purchased by the Company
hereunder, which price shall be subject to adjustment as provided in this
SECTION 4, in full and complete consideration for the manufacture of the
Product. Such price is FOB Facility. The Standard Cost assumes a per-case
charge of $3.02 for ingredients and $.8696 for packaging materials
(collectively, the "Assumed Cost"). The ingredients and packaging costs will be
reconciled quarterly, with (i) Company reimbursing Co-Packer to the extent the
actual cost of ingredients and packaging materials ("Actual Cost") used to
manufacture Product exceeds the Assumed Cost, and (ii) Co-Packer
2
<PAGE>
reimbursing Company to the extent the Assumed Cost exceeds the Actual Cost.
Yield losses for materials furnished by Co-Packer in connection with the
manufacture and packaging of Product hereunder shall not exceed historical
levels experienced by the Business, and Co-Packer shall bear the risk of loss
with respect to any yield losses exceeding such historical levels.
5. Co-Packer shall furnish all raw materials, ingredients and packaging
materials (the "Co-Packer Furnished Materials") necessary to manufacture the
Product, and all such Co-Packer Furnished Materials shall comply with the
Specifications. The Company shall furnish Co-Packer a list of authorized
suppliers from whom Co-Packer shall purchase the Co-Packer Furnished Materials,
but Co-Packer shall remain responsible for ensuring that the Co-Packer Furnished
Materials comply with the Specifications. The Company shall retain title to and
a security interest in the Excluded Assets furnished to Co-Packer hereunder. Co-
Packer shall clearly identify and mark the Excluded Assets as the property of
the Company. The Company, at its option, shall record its interest and
ownership of the Excluded Assets and Co-Packer shall execute upon the Company's
request any filing statement or similar document suitable for such recording.
Upon termination of this Agreement, the Company shall (subject to the last
sentence of this Section 5) repurchase from Co-Packer at Co-Packer's cost all
remaining inventories of the following ingredients and packaging materials: hard
spring wheat, sweet cream, texture lite and corrugated cases (collectively, the
"Specified Materials"). Co-Packer agrees to pre-clear all purchases (including
price and quantity) of Specified Materials during the term of this Agreement
with Andy Brookings at the Company's Louisville, Kentucky facility: phone 502-
423-8944. Co-Packer shall not be deemed in breach of this Agreement if it is
unable to perform its obligations hereunder as a result of the Company's failure
to approve one or more Specified Materials purchases proposed by Co-Packer
pursuant to the preceding sentence (hereinafter, a "Proposed Purchase"). In the
event the Company fails to approve a Proposed Purchase, Co-Packer shall purchase
Specified Materials upon such terms and conditions (including quantity, price
and source) as are directed by or otherwise acceptable to the Company, and Co-
Packer shall have no obligation to effect such purchases absent a directive from
the Company. The Company will not be obligated to repurchase any Specified
Materials which do not meet Specifications or are not purchased in accordance
with the pre-clearance procedures established above.
6. The Company shall have the right from time to time, at its sole
option, to modify the formulations for Product included as part of the
Specifications; PROVIDED such modifications do not require material alterations
to the Other Assets and would not unreasonably interfere with Co-Packer's other
business operations. The Company shall bear the cost of any equipment
alterations which are required in order to run such modified formulations. The
price for Product with modified formulations shall be adjusted by mutual
agreement of the parties to reflect the increased or decreased cost of
manufacture by Co-Packer. At the request of the Company, Co-Packer shall furnish
to the Company records, invoices and other data pertaining to the prices for the
Product and/or the costs of Co-Packer for the manufacture thereof.
7. With reasonable advance notice, Co-Packer shall permit the Company to
audit and inspect the books and records of its operations at the Facility to the
extent related to the
3
<PAGE>
manufacture of the Product. Co-Packer will promptly submit to the Company
copies of all quality assurance reports as required by the Specifications.
8. All Product purchased by the Company hereunder shall be delivered to
the Company, F.O.B. Facility. Co-Packer shall furnish to the Company sufficient
information to verify shipment of Product. Co-Packer shall invoice the Company
for Product on the date such Product is shipped from the Facility. Terms of
payment shall be net thirty (30) days from date of such invoice.
9. Co-Packer shall inventory and store at the Facility without charge or
expense to the Company Product until released by Co-Packer's quality assurance
personnel. Upon such release, the Company will issue shipping instructions.
Co-Packer shall maintain inventory of Product at the Facility on a rotating
first-in, first-out basis.
10. The Company shall bear the risk of loss or damage to the Product after
the same has been delivered to the Company's possession, except for loss or
damage caused by the manufacturing, processing, packaging or quality of the
Product, in which case such loss or damage shall be borne solely by Co-Packer.
Co-Packer shall bear the risk of loss or damage to any Co-Packer Furnished
Materials and shall bear the risk of loss or damage to any Product until the
same shall have been delivered to the Company pursuant to the Company's
instructions.
11. All Product manufactured, processed and packaged hereunder will be
usable or salable in the normal and ordinary course of business and will not be
adulterated, misbranded, mispackaged or mislabeled within the meaning of, or in
violation of, any applicable food and drug laws or regulations or any other
applicable laws or regulations. All materials, ingredients, supplies and
packaging materials utilized in the manufacture of Product sold hereunder shall
be merchantable, of good quality, and fit for the purpose intended. Co-Packer
shall conduct periodic ingredient and process tests in order to assure that its
production of Product will comply with the Specifications. Co-Packer agrees
that it will not materially change the practices which were observed by the
Company with respect to the manufacture of Product prior to Co-Packer's purchase
of the Business, including, without limitation, sanitation, pest control,
formula control, product evaluation procedures, hold procedures, product safety
plans and employee training. The normal shelf life of Product delivered
hereunder to the Company shall not be less than the shelf life that is
achievable by compliance with the Specifications. Co-Packer shall not be
responsible for violations of this Section 11 if such violations are directly
caused by (i) the Specifications or (ii) modifications required by the Company
under the terms of Section 6 hereof with respect to processes or formulations
relating to the manufacture of Product.
12. Co-Packer shall indemnify and hold harmless the Company (including its
affiliate, parent and subsidiary companies) from and against any and all claims,
demands, actions, suits, causes of action, damages and expenses (including but
not limited to expenses of investigation, settlement, litigation and attorneys
fees incurred in connection therewith) which are hereafter made, sustained, or
brought against the Company (including its affiliate, parent and subsidiary
4
<PAGE>
companies) by any individual corporation, partnership, limited liability
company, joint venture association, joint-stock company, trust, unincorporated
organization or foreign, federal, state, local or other governmental authority
or regulatory body (each, a "Person") for the recovery of damages for the
injury, illness or death of any Person (i) which arise from or are otherwise
related to a breach by Co-Packer of the terms of this Agreement or (ii) which
are caused or result in any manner by reason of the maintenance, use or
operation of the Excluded Assets, or any other assets, by Co-Packer, including,
but not limited to, injury claims of Co-Packer's employees; except in each case
where such claims, demands, actions, suits, causes of action, damages or
expenses result from defects in the Excluded Assets existing on the date hereof
(including latent defects) or from the Company's negligence.
Co-Packer shall have in effect at all times during the term of this
Agreement commercial general liability insurance including product liability and
property all risk-coverage (including machinery breakdown and earthquake
insurance) covering the Excluded Assets at replacement cost. The commercial
liability insurance including product liability coverage shall be in an amount
not less than U.S. $5,000,000. The commercial liability insurance shall include
a broad form vendor's endorsement. Upon the Company's request, Co-Packer shall
deliver a copy of such insurance policies or certificates of insurance,
whichever the Company shall request, to the Company. At the Company's request,
the Company shall be named as an additional named insured on such insurance
policies.
The Company shall indemnify and hold harmless Co-Packer (including its
affiliate, parent and subsidiary companies) from and against any and all claims,
demands, actions, suits, causes of action, damages and expenses (including but
not limited to expenses of investigation, settlement, litigation and attorneys
fees incurred in connection therewith) which are hereafter made, sustained, or
brought against Co-Packer (including its affiliate, parent and subsidiary
companies) by any Person for the recovery of damages for the injury, illness or
death of any Person caused or alleged to be caused by the negligence of the
Company or by Co-Packer's compliance with the Specifications or by defects in
the Excluded Assets existing on the date hereof (including latent defects).
13. Upon reasonable notice to Co-Packer, representatives of the Company
shall have the right to enter and inspect those portions of the Facility in
which Product is manufactured, packaged, shipped and/or held. Such right of
inspection shall extend to all aspects of Co-Packer's manufacturing techniques,
quality control, sanitation procedures and records relating to the Product. Co-
Packer shall provide the Company with at least five business days advance notice
of production schedules and run times for the Product and shall permit Company
Representatives to be present and to monitor all aspects of production whenever
Product is being manufactured hereunder. Co-Packer shall maintain and make
available to the Company, upon reasonable request, all records of chemical,
physical and microbiological tests of the raw materials and ingredients and of
the finished Product recorded by or at the direction of Co-Packer. Co-Packer
shall conduct chemical, physical and microbiological tests and other quality
assurance procedures as are appropriate to ensure that Product manufactured
hereunder complies with applicable laws and Specifications, consistent with the
Company's procedures and practices prior to the Closing Date. Any inspection by
the Company hereunder shall not (i)
5
<PAGE>
relieve Co-Packer of its obligations under this Agreement or (ii) constitute
acceptance of Product by the Company. It is understood that the Company will
receive the Product subject to inspection and approval by its quality control
personnel within a reasonable time after receipt. Payment for Product received
by the Company shall not constitute approval or acceptance of such Product. If
the Product is defective or does not conform to the Specifications, the Company
is hereby granted the option to reject all such Product, accept all such Product
or accept any commercial unit or units thereof and reject the remainder. The
Company shall be reimbursed by Co-Packer in full for Product rejected and
returned and Co-Packer shall assume all cost of transportation and handling both
ways. Product rejected before delivery or returned as defective may not be
replaced, except upon the Company's written order. Co-Packer shall furnish to
the Company without charge samples of Product which the Company reasonably
requests for quality control testing and evaluation.
14. Co-Packer shall code each Product as outlined in the Specifications
and shall not mix different Product code dates in the same carton and/or case in
order that the Product may be readily identified for recall purposes. Co-Packer
shall make and maintain such other records and reports as may be requested from
time to time by the Company.
15. The Company shall have complete and sole discretion as to the
repacking, use and resale of the Product, including the pricing of the Product,
the advertising, marketing, sales and distribution of the Product and the
expenses it incurs in connection therewith.
16. The parties hereto understand and acknowledge that nothing contained
in this Agreement shall be deemed to give Co-Packer or any other Person any
right, title or interest to the Company's trademarks and trade names, or any
other trademarks, trade names or other intellectual property of the Company and
its affiliates, and the same shall at all times remain in the Company and its
affiliates. Neither Co-Packer nor any other Person shall have any right to use,
adopt or register any of such trademarks or trade names or other intellectual
property, except as authorized in writing by the Company.
17. Co-Packer acknowledges that the Company will be providing Co-Packer
with proprietary technical information and know-how, including but not limited
to the Specifications (including all formulas), all of which information and
know-how are closely guarded secrets and assets of the Company and its
affiliates or customers. Co-Packer shall hold in confidence all such
information and know-how received from the Company and shall use such
information and know-how only for the purpose of manufacturing Product for the
Company hereunder. Upon the termination or expiration of this Agreement, Co-
Packer shall return to the Company all such information and know-how, together
with all copies thereof, and shall retain none for its files. Upon the request
of the Company from time to time, Co-Packer shall request any one or more of Co-
Packer's employees to execute and deliver to the Company an appropriate non-
disclosure agreement. Co-Packer shall be responsible for breaches of the
confidentiality provisions contained herein by its employees, regardless of
whether such employees have signed a non-disclosure document. Co-Packer
acknowledges and agrees that the provisions of the Confidentiality Agreement
dated January 26, 1996, between the Company and Co-Packer
6
<PAGE>
shall be applicable to, and shall apply fully to, the above-described
information delivered or made available to Co-Packer in connection with this
Agreement.
18. In the event of termination of this Agreement, such termination shall
be without prejudice to any rights which may have accrued to Co-Packer or the
Company at the date of termination.
19. Co-Packer will bear the cost of any licenses or permits which it must
obtain in order for manufacturing and packaging services to be supplied under
this Agreement.
20. The Excluded Assets shall at all times remain the property of the
Company and such ownership shall be clearly designated thereon. Co-Packer
shall, at its own cost and expense, maintain the Excluded Assets in at least the
same condition as on the date hereof (reasonable wear and tear excepted) until
expiration or termination of this Agreement. Subject to the first sentence of
SECTION 13, the Company shall have the right during business hours to inspect
the Excluded Assets. Co-Packer shall not, without the written consent of the
Company, (i) add to or remove from any part of the Excluded Assets, any
mechanism, whatsoever, other than substitution of repair parts; (ii) change,
alter, rebuild, or in any way modify the Excluded Assets, or parts thereof; and
(iii) remove, alter or deface any numbers or other markings on or attached in
any way to the Excluded Assets. Notwithstanding the foregoing, minor
adjustments and improvements may be made to the Excluded Assets without the
consent of the Company. Co-Packer shall assume the entire risk of loss or
damage to the Excluded Assets from any cause whatsoever while the Excluded
Assets are in Co-Packer's control and/or possession. Co-Packer shall not, at
any time prior to return to the Company hereunder, remove the Excluded Assets
from the Facility. Except for the Excluded Assets, title to all machinery and
equipment used in the manufacture of the Product (the "Other Assets") was
transferred to Buyer in connection with Buyer's acquisition of the Business.
Co-Packer shall not use the Excluded Assets for the processing or
manufacturing of any product other than the manufacture of the Product for the
Company hereunder.
21. It is understood and agreed that the parties hereto are independent
contractors and engage in the operation of their own respective businesses and
neither Co-Packer nor the Company shall be considered the agent of the other for
any purpose whatsoever, and neither Co-Packer nor the Company has any authority
to enter into any contracts or assume any obligations for the other or to make
any warranties or representations on behalf of the other. Nothing in this
Agreement shall be considered to establish a relationship of co-partners or
joint venturers between Co-Packer and the Company.
Co-Packer shall render the services agreed upon in this Agreement with
its own personnel, and Co-Packer has the necessary and qualified personnel to
perform such services. The parties understand and agree that each and every
obligation and liability that for any reason may exist or arise with respect to
Co-Packer's employees who are performing any services under this Agreement shall
be the obligation and liability of Co-Packer. Co-Packer shall be liable for its
legal obligations with respect to any Person(s) hired to perform any of the
services set forth
7
<PAGE>
herein. Co-Packer shall be liable for all individual or collective complaints
of its employees, and Co-Packer agrees to hold the Company harmless and
reimburse the Company for any expense, including without limitation legal
expenses, incurred by the Company in connection with any such complaint. The
personnel of Co-Packer performing any services hereunder shall be the employees
of Co-Packer, and the Company shall have no labor relationship with such
personnel.
22. It is understood and agreed that if any paragraph or portion of this
Agreement shall be in violation of any applicable law, such paragraph or portion
shall be inoperative, but the remainder of the Agreement shall remain valid and
shall continue to bind the parties.
23. This Agreement shall be binding and inure to the benefit of each of
the parties, their successors and assigns; however, this Agreement may not be
transferred or assigned by either party without the prior written consent of the
other party, except that the Company may assign this Agreement or any portion
hereof to a subsidiary or affiliate of the Company. Notwithstanding the
foregoing, Co-Packer may assign or delegate its rights, obligations or
liabilities under this Agreement in whole or in part as security to its lenders
if so requested, so long as Co-Packer remains fully liable for the fulfillment
of all such obligations and liabilities and such lenders agree in writing to be
bound by the terms and provisions of this Agreement (it being understood that a
pledge of this Agreement to Co-Packer's lender shall not be deemed to constitute
an assignment until such time as the lender exercises its rights under
applicable pledge agreements, security agreements or other collateral
documents).
24. All notices or other communications required or permitted hereunder
shall be in writing and shall be deemed given or delivered when delivered
personally or telecopied or five days after being sent by registered or
certified mail or one business day after being sent by private overnight
courier, addressed as follows:
If to the Company, to:
The Quaker Oats Company
321 N. Clark Street
Chicago, IL 60610
Telefax: 312-222-7342
Attention: Vice President - General Corporate Counsel
If to Co-Packer, to:
Van de Kamp's, Inc.
1000 St. Louis Union Station
Suite 200
Saint Louis, Missouri 63103
Telefax: 314-632-5690
Attention: President
8
<PAGE>
with copy to:
Van de Kamp's, Inc.
801 Montgomery Street
Suite 400
San Francisco, CA 94133
Telefax: 415-982-3023
Attention: Ian R. Wilson
25. This Agreement, together with the Schedules attached hereto, contains
all of the terms, warranties, representations, agreements, covenants, conditions
and provisions agreed upon by the parties with respect to the services described
herein and merges and supersedes all prior agreements, understandings and
representations relating hereto and this Agreement shall not be altered or
changed unless the change shall be in writing and signed by the authorized
officers of both parties.
26. Any term or provision of this Agreement may be waived, or the time for
its performance may be extended, by the party or parties entitled to the benefit
thereof. Any such waiver shall be validly and sufficiently authorized for the
purposes of this Agreement if, as to any party, it is authorized in writing by
an authorized representative of such party. The failure of any party hereto to
enforce at any time any provision of this Agreement shall not be construed to be
a waiver of such provision, nor in any way to affect the validity of this
Agreement or any part hereof or the right of any party thereafter to enforce
each and every such provision. No waiver of any breach of this Agreement shall
be held to constitute a waiver of any other or subsequent breach.
27. Neither party shall be considered in default in the performance of its
obligations under this Agreement to the extent that its performance of such
obligations is prevented or delayed by any cause beyond its reasonable control,
including but not limited to strikes, labor disputes, civil disturbances,
rebellion, invasion, epidemic, hostilities, war, embargo, natural disaster, acts
of God, fire, sabotage, loss and destruction of property, changes in laws,
regulations or orders, other events or situations which the party was unable to
prevent or overcome despite the exercise of due diligence.
28. This Agreement may be executed in one or more counterparts, each of
which shall be considered an original instrument, but all of which shall be
considered one and the same agreement.
29. This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Illinois.
30. Buyer shall not, and Buyer shall cause its Affiliates (excluding
independent activities of Fenway Partners Capital Fund L.P., UBS Capital
Corporation and Tiger Oats Limited and their respective independent Affiliates)
not to, during the term of this Agreement and for a period of six months
following the final date on which Product is manufactured by Co-Packer
hereunder, directly or indirectly as a partner, joint venturer, employer,
contractor,
9
<PAGE>
consultant, shareholder, principal or agent engage in, control, advise with
respect to, manage, act as a consultant to, receive any economic benefit from or
exert any influence upon the marketing, manufacture, sale, distribution,
offering or promoting for sale to McDonald's Corporation (or affiliates thereof)
of frozen hotcakes.
IN WITNESS WHEREOF AND INTENDING TO BE LEGALLY BOUND HEREBY, the parties
hereto have executed this Agreement the day and year first above written.
THE QUAKER OATS COMPANY
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
VAN DE KAMP'S, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
10
<PAGE>
EXHIBIT M
TO EXHIBIT 2.1
SHARED TECHNOLOGY LICENSE AGREEMENT
THIS AGREEMENT, effective as of July 9, 1996, is by and between VAN DE
KAMP'S, INC., a Delaware corporation (hereinafter "Licensee"), and THE QUAKER
OATS COMPANY, a New Jersey corporation (hereinafter "Licensor") (the
"Agreement").
WHEREAS Licensor and Licensee are parties to that certain Asset Purchase
and Sale Agreement dated May 15, 1996, as supplemented by Supplement No. 1
thereto of even date herewith (hereinafter the "Purchase Agreement"); and
WHEREAS under the terms of the Purchase Agreement Licensor retained all
right, title and interest in and to any and all trade secrets, know-how,
technology, mixing instructions and product specifications not used exclusively
in the Business ("Technology"), including without limitation any and all trade
secrets, know-how, technology, mixing instructions and product specifications
used in the Business but which has been, is being, or could be used by Quaker
other than in the Business ("Shared Technology"); and
WHEREAS under the terms of the Purchase Agreement Licensee is entitled to
certain licensing rights in such Shared Technology; and
WHEREAS Licensee is desirous of obtaining a perpetual, irrevocable,
royalty-free license for such Shared Technology for use in the Business, subject
to the terms, conditions, rights, restrictions and obligations of this
Agreement; and
WHEREAS all capitalized terms used without definition herein shall have the
meaning specified in the Purchase Agreement;
NOW THEREFORE, the parties covenant and agree as follows, both intending to
be legally bound by this Agreement.
Page 1 of 6
<PAGE>
1. GRANT OF LICENSE
(a) Licensor hereby grants to Licensee a non-exclusive, perpetual,
irrevocable, royalty-free license, with a right to sublicense, to use
such Shared Technology, subject to the conditions, rights,
restrictions and obligations set forth herein.
(b) Licensee agrees that it, its assigns, successors-in-interest,
licensees and sublicensees shall not make, use or sell the Shared
Technology, nor will Licensee, its assigns, successors-in-interest,
licensees and sublicensees grant any third party, including without
limitation assigns, successors-in-interest, licensees and
sublicensees, the right to make, use or sell the Shared Technology, in
the manufacture, sale, distribution, and/or marketing of any and all
pet food products.
2. ASSIGNMENT OF AGREEMENT
This Agreement may be assigned, in whole or in part, by either party,
provided that the proposed assignee shall first deliver to both parties a
written assignment and assumption of all of the rights, duties,
obligations, covenants, terms and conditions of the intended assignor
(it being understood that a pledge of this Agreement to Licensee's lender
shall not be deemed to constitute an assignment until such time as the
lender exercises its rights under applicable pledge agreements, security
agreements or other collateral documents).
3. CONFIDENTIALITY
(a) Embodied in the Shared Technology is information confidential to
Licensor, including without limitation drawings, data, specifications,
flow sheets, designs, parameters, processes, structures, and any other
confidential information ("Confidential Information"). Confidential
Information shall also include information that when combined with
other information comprises a trade secret but may individually be in
the public domain or duplicative of similar information in the public
domain. Licensee agrees to take all reasonable steps necessary to
maintain in confidence and to treat as confidential all such
Confidential Information.
(b) Notwithstanding the foregoing, Confidential Information shall not
include any information which: (i) was publicly available at the time
of disclosure by
Page 2 of 6
<PAGE>
Licensor; (ii) became publicly available after disclosure by Licensor
through no fault of Licensee; (iii) was in Licensee's possession prior
to disclosure by Licensor, as evidenced by Licensee's written record,
and was not the subject of an earlier confidential relationship with
Licensor; (iv) was rightfully acquired by Licensee from a third party
who was lawfully in possession of the information and was under no
obligation to Licensor to maintain its confidentiality; or (v) is
required to be disclosed by a court subpoena or operation of law.
(c) Licensee shall have the right to disclose any Confidential Information
to any employees and third parties that have a need to know the
Confidential Information other than in connection with the making,
using and/or selling of pet food products, and that agree to not make,
use or sell the Confidential Information in connection with the
making, using and/or selling of pet food products and to maintain the
confidentiality of the Confidential Information to the same standard
of care as set forth in this Agreement. Licensee shall have the right
to disclose any Confidential Information to any assignees, licensees
and sublicensees that have a need to know the Confidential Information
other than in connection with the making, using and/or selling of pet
food products and that will not use the Confidential information to
make, use or sell pet food products, provided that such assigns,
licensees and sublicensees shall have agreed in writing to so limit
the use of the Confidential Information and to maintain the
confidentiality of the Confidential Information to the same standard
of care as set forth in this Agreement. Licensee shall indemnify
Licensor under the provisions of this Agreement for any Licensor
liability caused by the use by Licensee, or any employee, third party,
assignee, licensee or sublicensee, of the Confidential Information to
make, use or sell pet food products.
4. TERM AND TERMINATION
This Agreement shall be effective as of the date set forth above and shall
be perpetual.
Page 3 of 6
<PAGE>
5. REPRESENTATIONS AND WARRANTIES
Other than as expressly and specifically set forth in this Agreement and
the Purchase Agreement, neither Licensor nor Licensee make any
representations or warranties or assume any obligations or liabilities
concerning any of the Shared Technology, and the license granted herein,
including without limitation any representation or warranty that the Shared
Technology does not infringe any valid scope of any patent or know-how
right anywhere in the world.
6. RIGHTS AND OBLIGATIONS PURSUANT TO THE PURCHASE AGREEMENT
Except as specifically provided for, nothing in this Agreement shall be
construed as modifying, terminating, limiting or otherwise altering
Licensor's and Licensee's rights and obligations set forth in the Purchase
Agreement. If any term is deemed by both parties, an arbitrator, or a
court of law to be in conflict with any term of the Purchase Agreement, the
term of the Purchase Agreement shall supersede any such conflicting term
herein.
7. MODIFICATIONS
This Agreement shall be modified only by a writing signed by both parties.
8. FORCE MAJEURE
Each party shall be excused from any non-performance of this Agreement
that is proximately caused by government regulation, war, strike, act of
God, or other similar circumstances normally deemed to be outside the
control of well managed business.
9. SEVERABILITY
If any part, term, or provision of this Agreement shall be found illegal or
in conflict with any valid controlling law, the validity of the remaining
provisions shall not be affected thereby.
Page 4 of 6
<PAGE>
10. USE OF LICENSOR'S NAME
Nothing herein shall be construed as granting Licensee the right to use
Licensor's name in publicizing anything made, used or sold pursuant to this
Agreement.
11. WAIVER
The waiver of a breach hereunder may be effected only by a writing signed
by the waiving party and shall not constitute a waiver of any other breach.
12. APPLICABLE LAW
This Agreement shall be interpreted in accordance with the laws of the
State of Illinois, United States of America.
IN WITNESS WHEREOF, the parties have caused this instrument to be executed
in duplicated as of the day and year first above written.
THE QUAKER OATS COMPANY VAN DE KAMP'S, INC.
Signature: Signature:
----------------------------- ----------------------
Name (printed) Name (printed)
------------------------ ------------------
Title: Title:
-------------------------------- --------------------------
Date: Date:
-------------------------------- --------------------------
Page 5 of 6
<PAGE>
STATE OF _____________)
) SS.
COUNTY OF ___________)
On this _____ day of _________________, 19___, and _____ day of _____________,
19_____, before a Notary Public in and for the County and State aforesaid,
appeared, respectively, _________________________________, and
_______________________, to me personally known to be the same persons whose
names are subscribed to the foregoing instrument, and acknowledged that such
persons executed said instrument as a free and voluntary act and for the uses
and purposes therein expressed.
WITNESS my hand and seal the day and year last above given.
________________________________ (SEAL)
Notary Public
Page 6 of 6
<PAGE>
EXHIBIT 2.2
SUPPLEMENT NO. 1
TO
ASSET PURCHASE AND SALE AGREEMENT
THIS SUPPLEMENT NO. 1 TO ASSET PURCHASE AND SALE AGREEMENT is made on
the 9th day of July, 1996, by and between VAN DE KAMP'S, INC., a Delaware
corporation ("BUYER"), and THE QUAKER OATS COMPANY, a New Jersey corporation
("SELLER").
W I T N E S S E T H :
WHEREAS, Seller and Buyer are parties to that certain Asset Purchase and
Sale Agreement dated May 15, 1996 (the "AGREEMENT"), pursuant to which Seller
has agreed to sell and assign to Buyer and Buyer has agreed to purchase and
assume from Seller certain assets and liabilities of the Business (as defined
in the Agreement) upon the terms and subject to the conditions set forth
therein; all capitalized terms used and not defined in this Supplement No. 1
having the respective meanings assigned to them in the Agreement; and
WHEREAS, by means of the execution and delivery hereof, Seller and Buyer
desire to supplement, clarify and amend certain provisions of the Agreement as
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual premises and covenants
hereinafter set forth and set forth in the Agreement, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. Section 1.1(d) of the Agreement is hereby amended by deleting the text
thereof in its entirety and inserting in lieu and stead thereof the following:
d. INVENTORIES. All raw materials, ingredients, work-in-process,
finished goods and packaging materials inventories owned by Seller, used in
connection with the Business, and located on the Real Property or at
Seller's distribution centers or other facilities listed on SCHEDULE 1.1(d)
hereto (the "DISTRIBUTION CENTERS") as of the Closing Date (the
"INVENTORY"); provided, however, that with respect to those Distribution
Centers located in Canada, the term "Inventory" shall include only those
raw materials, ingredients, work-in-process, finished goods and packaging
materials inventories which are owned by Seller and used exclusively in the
Business. The term "Inventory" also shall be deemed to include the raw
materials, ingredients, finished goods and packaging materials inventories
which are located at the Real Property and used exclusively in the
McDonald's Business.
2. Section 1.2(e) of the Agreement is hereby amended by deleting the existing
clause (iii) set forth in the first sentence thereof and inserting in lieu and
stead thereof the following:
<PAGE>
(iii) bill-back or lump sum allowances (including in-ad coupons, slotting
allowances and other similar deals) paid or reimbursed to the extent
related to shipments made by the Business on or after the Closing Date.
3. Section 1.2(e) of the Agreement is hereby further amended by deleting the
last sentence thereof and inserting in lieu and stead thereof the following:
SCHEDULE 1.2(E) contains a summary of domestic trade deals outstanding as
of April 30, 1996 (or, in the case of in-ad coupons, as of May 9, 1996)
which have been entered into by Seller with respect to the Business.
SCHEDULE 1.2(e) also contains a summary of trade deals outstanding as of
June 26, 1996 which have been entered into by Seller in Canada with respect
to the Business.
4. Section 1.2(f) of the Agreement is hereby amended by deleting the last
sentence thereof and inserting in lieu and stead thereof the following:
SCHEDULE 1.2(f) contains a summary list of all domestic coupons (including
expiration dates) issued by Seller as of May 9, 1996 with respect to the
Business since January 1, 1996. Schedule 1.2(f) also contains a summary
list of coupons (including expiration dates) issued in Canada by Seller as
of June 21, 1996 with respect to the Business since January 1, 1996.
5. The form of Transition Services Agreement to be executed and delivered by
the parties at Closing pursuant to Sections 1.8(i) and 1.9(e) of the Agreement
is hereby amended by deleting the existing Exhibit I to the Agreement in its
entirety and inserting in lieu and stead thereof a new Exhibit I which is
attached hereto as Annex I.
6. The form of McDonald's Co-Pack Agreement to be executed and delivered by
the parties at Closing pursuant to Sections 1.8(l) and 1.9(h) of the Agreement
is hereby amended by deleting the existing Exhibit M to the Agreement in its
entirety and inserting in lieu and stead thereof a new Exhibit M which is
attached hereto as Annex II.
7. Section 1.8(n) of the Agreement is hereby amended by deleting the current
text thereof in its entirety and inserting in lieu and stead thereof the
following:
n. A duly executed counterpart of an agency agreement whereby Seller
and/or The Quaker Oats Company of Canada Limited shall agree to operate
specified facets of the Business in Canada on Buyer's behalf, in the form
of EXHIBIT N hereto (the "CANADIAN AGENCY AGREEMENT").
A copy of said EXHIBIT N is attached hereto as Annex III and by this reference
is incorporated into the Exhibits to the Agreement.
8. Section 1.9 of the Agreement is hereby amended by adding at the end of such
section a new paragraph (l) to read in its entirety as follows:
2
<PAGE>
l. A duly executed counterpart original of the Canadian Agency Agreement.
9. Section 4.1 of the Agreement is hereby amended by adding at the end of such
section a new paragraph (m) to read in its entirety as follows:
m. UPC CODES. Buyer shall be entitled to use existing UPC Codes for the
Products (the "UPC Codes") for a period not to exceed one year following
the Closing Date, but solely to the extent such codes historically were
used by the Business prior to the Closing Date.
10. Section 4.2 of the Agreement is hereby amended by adding at the end of such
section a new paragraph (g) to read in its entirety as follows:
g. UPC CODES. Buyer shall use its reasonable efforts to obtain new UPC
Codes for use on the Products and to discontinue its use of Seller's UPC
Codes as soon as practicable following the Closing Date. Buyer
acknowledges and agrees that it has no ownership interest in any of the
Manufacturer Identification Numbers contained within the UPC Codes. Seller
acknowledges that Buyer shall have the right to use the 5-digit product
codes contained within the UPC Codes on any new UPC Codes obtained by Buyer
for use on the Products.
11. The Schedules to the Agreement are hereby modified and superseded, as
applicable, to the extent set forth in Annex IV attached hereto.
12. All references to the "Agreement" in any document, instrument or agreement
described in, referred to, annexed to, contemplated by or incorporated by
reference in the Agreement or this Supplement No. 1 shall be deemed to mean the
Agreement as supplemented by this Supplement No. 1.
13. This Supplement No. 1 shall be effective as of the date hereof. Except as
expressly modified by this Supplement No. 1, the Agreement shall remain, in all
respects, in full force and effect in accordance with its terms.
14. This Supplement No. 1 may be executed in counterparts, each of which shall
constitute an original, but all of which taken together shall constitute but one
and the same instrument.
15. This Supplement No. 1 shall be governed by and construed and enforced in
accordance with the internal laws of the State of Illinois, applicable to
instruments made, delivered and performed entirely within such state.
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IN WITNESS WHEREOF, the parties have duly executed and delivered this Supplement
No. 1 on the date first above written.
THE QUAKER OATS COMPANY
By:____________________________
Name:
Title
VAN DE KAMP'S, INC.
By:____________________________
Name:
Title:
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The following list briefly identifies the contents of the Annexes to
Supplement No. 1 (the "Supplement"), dated as of July 9, 1996, to the Asset
Purchase and Sale Agreement (the "Agreement"), dated as of May 15, 1996,
between Van de Kamp's, Inc. ("Buyer") and The Quaker Oats Company ("Seller").
In accordance with Regulation S-K under the Securities Act of 1933 the actual
Annexes have not been filed with the Securities and Exchange Commission (the
"Commission"). The Company hereby agrees to furnish supplementally a copy of
any omitted Annex to the Commission upon request.
1. ANNEX I contains a revised version of EXHIBIT I to the Agreement.
2. ANNEX II contains a revised version of EXHIBIT L to the Agreement.
3. ANNEX III contains a form of Agency Agreement relating to Seller's
operation of its Canadian operations used in the Businesses that are
the subject of the Agreement on Buyer's behalf.
4. ANNEX IV contains updates to certain of the Schedules to the
Agreement.
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