<PAGE>
THIS DOCUMENT IS A COPY OF THE 10-Q FILED ON MAY 15, 1996
PURSUANT TO A RULE 201 TEMPORARY HARDSHIP EXEMPTION
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period Ended March 30, 1996
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to ________________
Commission file number 33-97752
VAN DE KAMP'S, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 43-1721518
---------- ----------
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
1000 St. Louis Union Station
St. Louis, Missouri 63103
(Address of Principal Executive Office)
(314) 241-0303
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
_______ ______
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.
Shares Outstanding
March 30, 1996
Common stock, no par value 200
<PAGE>
VAN DE KAMP'S, INC.
BALANCE SHEET
MARCH 30, 1996
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Commencement
of Operations
March 30, September 19,
1996 1995
--------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents $ 6,867 $ 355
Accounts receivable (Net of $60 allowance
as of 03/30/96) 21,199 -
Accounts receivable - other (Note 2) 835 500
Inventories (Note 3) 16,333 19,518
Prepaid expenses 546 585
-------- --------
Total current assets 45,780 20,958
Property, plant and equipment, net 30,254 30,889
Intangible assets and goodwill 140,680 143,434
Other assets 8,768 8,561
-------- --------
$225,482 $203,842
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term obligations $ 2,500 $ 1,250
Senior secured revolving debt facility - 2,000
Accounts payable 6,282 -
Accrued liabilities 14,699 2,422
Income taxes payable 983 -
-------- --------
Total current liabilities 24,464 5,672
Deferred income taxes 1,049 -
Senior secured term debt 27,500 28,750
Senior subordinated notes 100,000 100,000
-------- --------
Total liabilities 153,013 134,422
-------- --------
Stockholders' equity
Common stock, no par value 69,420 69,420
Retained earnings 3,049 -
-------- --------
Total stockholders' equity 72,469 69,420
-------- --------
$225,482 $203,842
======== ========
</TABLE>
See accompanying notes to financial statements
2
<PAGE>
VAN DE KAMP'S, INC.
STATEMENT OF INCOME
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Successor Predecessor
------------ ------------
Three Months Three Months
Ended Ended
March 30, March 31,
1996 1995
------------ ------------
<S> <C> <C>
Net sales $62,978 $57,710
Cost of goods sold 23,630 23,867
------- -------
Gross profit 39,348 33,843
------- -------
Selling, distribution and marketing expenses:
Selling and distribution 6,285 5,767
Trade promotions 15,023 13,942
Consumer marketing 6,280 4,854
------- -------
Total selling, distribution and marketing expenses 27,588 24,563
------- -------
Amortization of goodwill and other intangibles 1,234 826
General and administrative expenses 2,083 2,752
Transition related costs (Note 4) 917 --
------- -------
Total 4,234 3,578
------- -------
Operating income 7,526 5,702
Interest expense 3,665 --
Amortization of deferred financing expense 170 --
------- -------
Income before income taxes 3,691 5,702
Provision for income taxes 1,476 2,754
------- -------
Net income $ 2,215 $ 2,948
======= =======
</TABLE>
See accompanying notes to financial statements
-3-
<PAGE>
VAN DE KAMP'S, INC.
STATEMENT OF INCOME
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Successor Predecessor
------------------ --------------------------
Operating Period Period
September 19, 1995 July 1, 1995 Nine Months
through through Ended
March 30, September 18, March 31,
1996 1995 1995
------------------ ------------- -----------
<S> <C> <C> <C>
Net sales $106,362 $21,061 $125,211
Cost of goods sold 43,304 9,658 51,909
-------- ------- --------
Gross profit 63,058 11,403 73,302
-------- ------- --------
Selling, distribution and marketing expenses:
Selling and distribution 11,657 2,843 13,986
Trade promotions 22,997 3,699 28,300
Consumer marketing 7,875 1,919 8,111
-------- ------- --------
Total selling, distribution and marketing expenses 42,529 8,461 50,397
-------- ------- --------
Amortization of goodwill and other intangibles 2,641 689 2,478
General and administrative expenses 3,557 1,104 7,236
Transition related costs (Note 4) 917 - -
-------- ------- --------
Total 7,115 1,793 9,714
-------- ------- --------
Operating income 13,414 1,149 13,191
Interest expense 7,979 - -
Amortization of deferred financing expense 354 - -
-------- ------- --------
Income before income taxes 5,081 1,149 13,191
Provision for income taxes 2,032 735 6,371
-------- ------- --------
Net income $ 3,049 $ 414 $ 6,820
======== ======= ========
</TABLE>
See accompanying notes to financial statements
-4-
<PAGE>
VAN DE KAMP'S, INC.
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
OPERATING PERIOD SEPTEMBER 19, 1995 THROUGH MARCH 30, 1996
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Common Stock
--------------- Retained
Shares Amount Earnings Total
------ ------- -------- -------
<S> <C> <C> <C> <C>
Balance at September 19, 1995 200 $69,420 - $69,420
Net income $ 91 91
------ ------- ------ -------
Balance at September 30, 1995 200 69,420 91 69,511
Net income 743 743
------ ------- ------ -------
Balance at December 31, 1995 200 69,420 834 70,254
Net income 2,215 2,215
------ ------- ------ -------
Balance at March 30, 1996 200 $69,420 $3,049 $72,469
====== ======= ====== =======
</TABLE>
See accompanying notes to financial statements
-5-
<PAGE>
VAN DE KAMP'S, INC.
STATEMENT OF CASH FLOWS
OPERATING PERIOD SEPTEMBER 19, 1995 THROUGH MARCH 30, 1996
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
Cash flows from operating activities:
Net income $ 3,049
Adjustments to reconcile net income to cash in operating
activities:
Depreciation and amortization 4,504
Deferred income taxes 1,049
Change in assets and liabilities, net of effects of businesses
acquired:
Increase in accounts receivable (21,199)
Increase in accounts receivable - other (335)
Decrease in inventories 3,185
Decrease in prepaid expenses 39
Increase in accounts payable 6,282
Increase in accrued expenses 12,277
Increase in income taxes payable 983
---------
Net cash provided by operating activities 9,834
---------
Cash flows from investing activities:
Additions to property, plant and equipment (872)
Payment for acquisition of businesses (Note 1) (193,287)
---------
Net cash used in investing activities (194,159)
---------
Cash flows from financing activities:
Proceeds from senior secured revolving and term debt 30,000
Proceeds from senior subordinated notes 100,000
Net proceeds from issuance of common stock 69,420
Debt issuance costs (8,583)
---------
Net cash provided by financing activities 190,837
---------
Increase in cash and cash equivalents 6,512
Cash and cash equivalents, beginning of period 355
---------
Cash and cash equivalents, end of period $ 6,867
=========
</TABLE>
See accompanying notes to financial statements
-6-
<PAGE>
VAN DE KAMP'S, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - THE COMPANY
Basis of Presentation
The financial statements of Van de Kamp's, Inc. (the "Company"), included
herein, have not been audited by independent accountants. The statements
include all adjustments, such as normal recurring accruals, which management
considers necessary for a fair presentation of the financial position and
operating results of the Company for the periods presented. Operating results
during the predecessor's prior year periods include certain reclassifications to
conform with the Company's presentation. The statements have been prepared by
the Company pursuant to the rules and regulations of the Securities and Exchange
Commission. Accordingly, certain information and footnote disclosure normally
included in financial statements prepared in conformity with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. The operating results for interim periods are not necessarily
indicative of results to be expected for an entire year.
The prior owners did not operate the Company's product lines as separate
divisions and accordingly, it is not practicable to present a statement of cash
flows during the predecessor period. The Company was granted a waiver by the
Securities and Exchange Commission with respect to the presentation of these
cash flows.
For further information, reference should be made to the predecessor's financial
statements for the fiscal year ended June 30, 1995 and notes thereto included in
the Company's Registration Statement on Form S-4 on file at the Securities and
Exchange Commission.
Acquisition of the Businesses
On September 19, 1995 (commencement of operations), Van de Kamp's, Inc. acquired
the assets of the frozen seafood business (which operated as Van de Kamp's) and
the frozen dessert product lines, (together the "Businesses") from The Pillsbury
Company and Pet Incorporated (collectively, the "Sellers"). The Company
acquired the inventories, property, plant and equipment and intangible assets of
the Businesses for a purchase price of $190 million. The Company paid The
Pillsbury Company $2 million, a contractually agreed upon amount, to retain all
of the current liabilities of the Businesses. The allocation of purchase price
has not been finalized; however, any changes are not expected to be material.
The purchase agreement contains customary representations, warranties and
covenants by each of the Sellers and the Company.
-7-
<PAGE>
NOTE 2 - ACCOUNTS RECEIVABLE - OTHER
Accounts Receivable - Other consist of the following (in thousands):
<TABLE>
<CAPTION>
March 30, 1996 September 19, 1995
-------------- ------------------
<S> <C> <C>
The Pillsbury Company $370 -
Miscellaneous 465 $500
---- ----
$835 $500
==== ====
</TABLE>
The balance due from The Pillsbury Company is comprised of accounts receivable
collected by The Pillsbury Company on Van de Kamp's behalf.
NOTE 3 - INVENTORIES
Inventories are stated at the lower of cost (determined by the first-in, first-
out method) or market. Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
March 30, 1996 September 19, 1995
-------------- ------------------
<S> <C> <C>
Raw materials $ 3,279 $ 4,648
Packaging 1,503 1,358
Finished goods 11,551 13,512
------- -------
$16,333 $19,518
======= =======
</TABLE>
September 19, 1995 inventory balances have been reclassified to accurately
reflect the composition of inventories on that date.
NOTE 4 - TRANSITION RELATED COSTS
Transition related costs consist of what management believes are one-time costs
incurred to establish Van de Kamp's, Inc. operations, including expenditures to
reestablish relationships with customers which had deteriorated during the
transition of the business from The Pillsbury Company to the Company, relocation
expenses, recruiting fees, sales training, computer systems training and other
unique transitional expenses. A portion of these expenses were incurred in
prior quarters and deferred until appropriate accounting treatments were
determined.
-8-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
A. The following table sets forth for the period indicated the percentage which
the items in the Statement of Income bear to net sales and the percentage
change of such items compared to the indicated prior period.
<TABLE>
<CAPTION>
Statement of Income Period to Period
Three Months Ended Increase
March 30, March 31, (Decrease)
1996 1995 1995 to 1996
--------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Net sales $62,978 100.0% $57,710 100.0% 9.1%
Cost of goods sold 23,630 37.5 23,867 41.4 (1.0)
------- ----- ------- -----
Gross profit 39,348 62.5 33,843 58.6 16.3
------- ----- ------- -----
Selling, distribution, and marketing expenses:
Selling and distribution 6,285 10.0 5,767 10.0 9.0
Trade promotions 15,023 23.8 13,942 24.2 7.8
Consumer marketing 6,280 10.0 4,854 8.4 29.4
------- ----- ------- -----
Total selling, distribution and marketing expenses 27,588 43.8 24,563 42.6 12.3
------- ----- ------- -----
Amortization of goodwill and other intangibles 1,234 2.0 826 1.3 49.4
General and administrative expenses 2,083 3.3 2,752 4.8 (24.3)
Transition related costs (Note 4) 917 1.4 -- -- NM
------- ----- ------- -----
Total 4,234 6.7 3,578 6.1 18.3
------- ----- ------- -----
Operating income 7,526 12.0 5,702 9.9 32.0
Interest expense 3,665 5.8 -- -- NM
Amortization of deferred financing expense 170 0.3 -- -- NM
------- ----- ------- -----
Income before income taxes 3,691 5.9 5,702 9.9 (35.3)
Provision for income taxes 1,476 2.4 2,754 4.8 (46.4)
------- ----- ------- -----
Net income $ 2,215 3.5% $ 2,948 5.1% (24.9)%
======= ===== ======= =====
</TABLE>
NM = Not Meaningful
9
<PAGE>
RESULTS OF OPERATIONS
Quarter Ended March 30, 1996 Compared to Quarter Ended March 31, 1995:
Net Sales. Net sales for the quarter were $63.0 million, an increase of $5.3
million or 9.1% over the same quarter last year. Frozen seafood sales increased
$6.1 million or 11.9% over the same quarter last year. Volumes accounted for
$4.7 million of this increase and higher average selling prices accounted for
the remainder. Strong seafood sales were driven by a focused sales effort,
increased promotional spending and increased category awareness. Van de Kamp's,
Inc.'s frozen seafood maintained its number one volume share during the critical
Lent sales period. Dessert sales decreased $.8 million versus the same quarter
last year. The dessert business continues to show weakness due to lack of sales
and marketing support prior to the acquisition of the business by the Company.
Merchandising initiatives on key dessert products are expected to positively
affect sales trends during the upcoming summer sales period.
Cost of Goods Sold. Cost of goods sold decreased from 41.4% of sales in 1995 to
37.5% in 1996. The percentage decrease was mainly attributable to a reduction in
manufacturing overhead costs since the acquisition.
Selling, Distribution and Marketing Expenses. Selling, distribution and
marketing expenses increased 12.3% versus the same quarter last year. Consumer
marketing expenses increased 29.4% due to increased advertising and coupon
activity related to the Company's seafood products. Trade promotions decreased
slightly as a percentage of sales, due primarily to a shift in the dessert
business toward private label products.
Amortization of Goodwill. Amortization of goodwill and other intangibles
increased 49.4% versus the same quarter last year due to the increase in
intangibles resulting from the acquisition of the business during September
1995.
General and Administrative Expenses. General and administrative expenses
decreased from 4.8% of sales during the same quarter in 1995 to 3.3%, in the
current quarter. The expense recorded during the same quarter last year was an
allocation of the predecessor's general and administrative expenses. Current
quarter expenses reflect the more efficient cost structure instituted following
the change in ownership.
Transition Related Costs. Transition related costs consist of what management
believes are one-time costs incurred to establish Van de Kamp's, Inc.
operations, including expenditures to reestablish relationships with customers
which had deteriorated during the transition of the business from The Pillsbury
Company to the Company, relocation expenses, recruiting fees, sales training,
computer systems training and other unique transitional expenses. A portion of
these expenses was incurred in prior quarters and deferred until appropriate
accounting treatments were determined.
Operating Income. Operating income increased 32.0% to $7.5 million. Excluding
the impact of transition related costs, operating income was up 48.1% to $8.4
million.
Interest Expense and Amortization of Deferred Financing Expense. The aggregate
of interest expense and amortization of deferred financing expense was $3.8
million. The predecessor did not separately allocate these respective costs to
the Businesses.
Provision for Income Taxes. The Company anticipates a combined federal and
state tax rate of 40% which has been applied to the quarter ended March 30,
1996. This rate is lower than the rate experienced by the prior owners,
primarily because the Company's amortization of goodwill is deductible for
income tax purposes.
-10-
<PAGE>
B. The following table sets forth for the period indicated the percentage which
the items in the Statement of Income bear to net sales and the percentage
change of such items compared to the indicated prior period. The Statement
of Income column for the nine months ended March 30, 1996 combines both the
successor operating period September 19, 1995 through March 30, 1996 and the
predecessor period July 1, 1995 through September 18, 1995.
<TABLE>
<CAPTION>
Statement of Income Period to Period
Nine Months Ended Increase
March 30, March 31, (Decrease)
1996 1995 1995 to 1996
--------- --------- ----------------
<S> <C> <C> <C> <C> <C>
Net sales $127,423 100.0% $125,211 100.0% 1.8%
Cost of goods sold 52,962 41.6 51,909 41.5 2.0
-------- ----- -------- -----
Gross profit 74,461 58.4 73,302 58.5 1.6
-------- ----- -------- -----
Selling, distribution and marketing expenses:
Selling and distribution 14,500 11.4 13,986 11.2 3.7
Trade promotions 26,696 20.9 28,300 22.6 (5.7)
Consumer marketing 9,794 7.7 8,111 6.5 20.7
-------- ----- -------- -----
Total selling, distribution and marketing expenses 50,990 40.0 50,397 40.3 1.2
-------- ----- -------- -----
Amortization of goodwill and other intangibles 3,330 2.6 2,478 2.0 34.4
General and administrative expenses 4,661 3.7 7,236 5.7 (35.6)
Transition related costs (Note 4) 917 .7 - - NM
-------- ----- -------- -----
Total 8,908 7.0 9,714 7.7 (8.3)
-------- ----- -------- -----
Operating income 14,563 11.4 13,191 10.5 10.4
Interest expense 7,979 6.3 - - NM
Amortization of deferred financing expense 354 0.2 - - NM
-------- ----- -------- -----
Income before income taxes 6,230 4.9 13,191 10.5 (52.8)
Provision for income taxes 2,767 2.2 6,371 5.1 (56.6)
-------- ----- -------- -----
Net income $ 3,463 2.7% $ 6,820 5.4% (49.2)%
======== ===== ======== =====
</TABLE>
NM = Not Meaningful
-11-
<PAGE>
RESULTS OF OPERATIONS
Nine Months Ended March 30, 1996 Compared to Nine Months Ended March 31, 1995:
Net Sales. Net sales increased $2.2 million versus the comparable period last
year, to $127.4 million. Frozen seafood sales increased $5.0 million during the
period as the result of dedicated management and successful strategic
initiatives focused on this segment of the business during the key Lent selling
season. Dessert sales decreased $2.8 million during the period due to lack of
sales and marketing support by the predecessor and competitive pressure in the
whipped topping segment. Several key marketing initiatives are in place which
are expected to improve the performance of this business during the upcoming
summer sales period.
Cost of Goods Sold. Cost of goods sold was 41.6% of sales compared to 41.5% of
sales in the comparable period last year. Lower manufacturing overhead costs in
the current quarter mitigated the impact of material cost increases versus the
comparable period last year. The decrease in manufacturing overhead costs is
expected to continue, which should result in further favorable variances to the
comparable period last year.
Selling, Distribution and Marketing Expenses. Selling, distribution and
marketing expenses decreased slightly as a percentage of sales versus the
comparable period last year. Selling and distribution expenses increased
slightly due to higher freight costs. Trade promotions were down due to a first
quarter drop in trade rates during the predecessor ownership period and a sales
mix shift toward private label whipped toppings in the frozen desserts product
line. Consumer marketing expenses increased 20.7% versus the comparable period
last year due to incremental seafood advertising and coupon spending during the
third quarter.
Amortization of Goodwill. Amortization of goodwill and other intangibles
increased 34.4% versus the same period last year due to the increase in
intangibles resulting from the acquisition of the business during September
1995.
General and Administrative Expenses. General and administrative expenses were
35.6% lower in 1996 than 1995, the comparable period last year. The 1996 expense
was comprised of a first quarter allocation from the predecessor and actual
expenses during Van de Kamp's ownership period. The prior year expense was an
allocation from the predecessor. Current period expenses reflect the more
efficient cost structure instituted following the change in ownership.
Transition Related Costs. Transition related costs consist of what management
believes are one-time costs incurred to establish Van de Kamp's, Inc.
operations, including expenditures to reestablish relationships with customers
which had deteriorated during the transition of the business from The Pillsbury
Company to the Company, relocation expenses, recruiting fees, sales training,
computer systems training and other unique transitional expenses.
Interest Expense and Amortization of Deferred Financing Expense. The aggregate
of interest expense and amortization of deferred financing expense was $8.3
million. The prior owners did not separately allocate these respective costs to
the Businesses.
Provision for Income Taxes. The Company anticipates a combined federal and
state tax rate of 40% which has been applied to the quarter ended March 30,
1996. This rate is lower than the rate experienced by the prior owners,
primarily because the Company's amortization of goodwill is deductible for
income tax purposes.
-12-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
On September 19, 1995, the Company acquired the Businesses for a purchase price
of $190 million (see Note 1). The acquisition was financed by (i) an equity
capital contribution of $70 million from VDK Holdings, Inc., (ii) the borrowing
of $30 million of term debt and $2 million of revolving debt from the Company's
Senior Credit Facility, dated as of September 19, 1995, among VDK Holdings,
Inc., the Company, the lenders' participants thereto, and Chemical Bank as agent
for such lenders, and (iii) the proceeds of the issuance of the senior
subordinated notes of $100 million (see Prospectus filed with the Securities and
Exchange Commission which became effective on November 14, 1995). Total sources
of financing of $202 million were used to fund the acquisition, pay transaction
fees and expenses and provide initial working capital.
The senior secured revolving debt facility commitment is $25 million. No amount
was outstanding at March 30, 1996.
Working capital increased $1.2 million (excluding cash and short term
borrowings) during the period September 19, 1995 through March 30, 1996.
Accounts receivable increased by $21.5 million, which offset a reduction in
inventory levels and increased accounts payable and accrued expenses.
For the year to date period ended March 30, 1996, the Company spent $.9 million
on property, plant and equipment. The Company expects to spend $1 million on
capital equipment during the balance of its fiscal year.
At March 30, 1996, the Company had $6.9 million of cash and cash equivalents and
an unused commitment available under the revolving debt facility of $25 million.
The Company believes that the revolving debt facility, combined with internally
generated cash, is adequate to meet anticipated operating and capital
requirements of the existing business.
Refer to Part II, Item 5 for liquidity and financing information concerning the
Company's acquisition of the Mrs. Paul's frozen food business.
-13-
<PAGE>
VAN DE KAMP'S, INC.
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
On January 17, 1996, the Company entered into an Asset Purchase Agreement (the
"Agreement") to acquire for a purchase price of $72.5 million substantially all
the assets of the Mrs. Paul's frozen food business, which was owned by Campbell
Soup Company. The acquisition, which was completed on May 6, 1996, was an asset
purchase and included trademarks, intangibles, inventories and dedicated
manufacturing equipment. The purchase agreement contains customary
representations, warranties and covenants by the Seller and the Company. The
Company financed the acquisition with an equity contribution by VDK Holdings,
Inc., the Company's parent, of $15 million and increased senior secured bank
debt totaling $60 million.
-14-
<PAGE>
SIGNATURES
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, thereunto duly authorized.
VAN DE KAMP'S, INC.
Dated: May 14, 1996 By: ___________________________
Timothy B. Andersen
Vice President - Finance and
Administration
and Chief Financial Officer and duly
authorized officer
-15-
<PAGE>
INDEX TO EXHIBITS
Exhibit Sequentially
Number Exhibit Numbered Page
- ------- ------- -------------
2.1 Asset Purchase and Sale Agreement, dated
as of January 17, 1996, between Shellfish
Acquisitions Company, LLC and Campbell
Soup Company.
2.2 Asset Purchase Agreement, dated as of
January 17, 1996, between Van de Kamp's Inc.
(the "Company") and Shellfish Acquisition
Company, LLC.
3.1 Certificate of Incorporation of the Company,
with amendments thereto (previously filed
with the Company's Form S-4 filed on
October 4, 1995 (the "S-4")).
3.2 Amended and Restated By-Laws of the Company
(previously filed with the S-4).
10.1 Employment Agreement, dated as of October 11,
1995, between the Company and Timothy B. Andersen.
27 Financial data schedule.
<PAGE>
Execution Copy
================================================================================
ASSET PURCHASE AND SALE AGREEMENT
BETWEEN
SHELLFISH ACQUISITION COMPANY, LLC, AS BUYER
AND
CAMPBELL SOUP COMPANY, AS SELLER
----------------------------
DATED AS OF JANUARY 17, 1996
----------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
LIST OF SCHEDULES............................................ vii
LIST OF EXHIBITS............................................. viii
1. DEFINITIONS........................................... 1
1.1 Specific Definitions.................................. 1
1.2 Other Terms........................................... 6
1.3 Other Definitional Provisions......................... 7
2. PURCHASE AND SALE OF ASSETS........................... 7
2.1 Purchase and Sale of Assets........................... 7
2.2 Excluded Assets....................................... 8
2.3 Nonassignability...................................... 9
2.4 If Waivers or Consents Cannot Be Obtained............. 9
3. ASSUMPTION OF LIABILITIES............................. 9
3.1 Assumed Liabilities................................... 9
3.2 Retained Liabilities.................................. 10
4. PURCHASE PRICE........................................ 11
4.1 Purchase Price........................................ 11
4.2 Purchase Price Adjustment............................. 12
4.3 Allocation of Purchase Price.......................... 14
4.4 Payment of Taxes and Other Charges.................... 15
5. REPRESENTATIONS AND WARRANTIES OF SELLER.............. 15
5.1 Authority............................................. 15
<PAGE>
5.2 Due Incorporation, Qualification...................... 15
5.3 No Violation of Agreements............................ 15
5.4 Subsidiaries.......................................... 16
5.5 Financial Information................................. 16
5.6 Absence of Certain Changes............................ 17
5.7 Taxes................................................. 17
5.8 Title to Purchased Assets............................. 17
5.9 Inventories........................................... 18
5.10 Permits............................................... 18
5.11 Brokers............................................... 18
5.12 Contracts............................................. 18
5.13 Intellectual Property................................. 19
5.14 Consents and Approvals................................ 20
5.15 Litigation............................................ 20
5.16 Compliance With Laws.................................. 20
5.17 Major Customers....................................... 20
5.18 Tangible Personal Property............................ 21
5.19 Trade Deals and Promotions............................ 21
5.20 No Other Representations or Warranties................ 21
6. REPRESENTATIONS AND WARRANTIES OF BUYER............... 21
6.1 Authority............................................. 22
-ii-
<PAGE>
6.2 Due Organization, Qualification....................... 22
6.3 No Violation of Agreements............................ 22
6.4 Consents and Approvals................................ 22
6.5 Purchase Agreement.................................... 22
6.6 Brokers............................................... 23
6.7 Projections........................................... 23
7. PRE-CLOSING COVENANTS................................. 23
7.1 Seller's Covenants.................................... 23
(a) Buyer's Access to Premises and Information........ 23
(b) Conduct of the Mrs. Paul's Business in
Normal Course..................................... 25
(c) Further Covenants................................. 25
(d) Supplements to Disclosure Schedules............... 25
(e) Promotions Liabilities............................ 25
(f) Major Customers................................... 26
7.2 Shared Technology, Etc................................ 26
7.3 Publicity............................................. 27
7.4 Cooperation........................................... 27
7.5 Bulk Transfer Law..................................... 27
7.6 Accounts Receivable................................... 27
7.7 Related Agreements.................................... 28
(a) Transition Services Agreement..................... 28
(b) Co-Pack Agreement................................. 28
(c) MPK Indemnity..................................... 28
7.8 Removal of Tangible Personal Property................. 28
7.9 Acquisition Proposals................................. 29
7.10 Restrictions on Buyer's Activities.................... 29
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8. POST-CLOSING COVENANTS................................ 29
8.1 Further Assurances.................................... 29
8.2 Noncompetition Covenant............................... 30
8.3 Certain Tax Matters................................... 31
8.4 Other Matters......................................... 31
9. CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE........... 32
9.1 Accuracy of Representations and Warranties;
Performance by Seller................................. 32
9.2 Certified Resolutions................................. 32
9.3 Litigation or Proceedings............................. 33
9.4 Consents.............................................. 33
9.5 Transition Services Agreement......................... 33
9.6 Co-Pack Agreement..................................... 33
9.7 MPK Indemnity......................................... 33
9.9 Purchase Agreement.................................... 33
9.11 Waiver of Conditions.................................. 34
10. CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE.......... 34
10.1 Accuracy of Representations and Warranties;
Performance by Buyer.................................. 34
10.2 Certified Resolutions................................. 34
10.3 Litigation or Proceedings............................. 35
10.4 Regulatory Approvals.................................. 35
10.5 Transition Services Agreement......................... 35
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10.6 Co-Pack Agreement..................................... 35
10.7 Legal Opinion......................................... 35
10.8 Waiver of Conditions.................................. 35
11. THE CLOSING........................................... 36
11.1 The Closing........................................... 36
11.2 Items to be Delivered at Closing by Seller............ 36
11.3 Items to be Delivered at Closing by Buyer............. 36
12. TERMINATION........................................... 37
12.1 Termination........................................... 37
12.2 Effect of Termination................................. 37
13. INDEMNITY............................................. 38
13.1 Indemnity by Seller................................... 38
13.2 Indemnity by Buyer.................................... 39
13.3 Indemnification Procedures............................ 39
13.4 Survival of Representations and Warranties............ 41
13.5 Corporate Obligations................................. 41
14. MISCELLANEOUS......................................... 42
14.1 Recovery of Litigation Costs.......................... 42
14.2 Entire Agreement; Modification; Waiver................ 42
14.3 Counterparts.......................................... 42
14.4 Assignment............................................ 42
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14.5 Fees and Expenses..................................... 43
14.6 Notices............................................... 43
14.7 Third Party Beneficiaries............................. 44
14.8 Governing Law......................................... 45
14.9 Effect of Headings.................................... 45
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LIST OF SCHEDULES
-----------------
Schedule 2.1(a) Tangible Personal Property
Schedule 2.1(c) Foreign Trademarks
Schedule 2.1(i) Permits
Schedule 2.2(h) Excluded Assets
Schedule 4.2(a) Inventory
Schedule 5.5 Financial Information
Schedule 5.6 Certain Changes
Schedule 5.8 Title to Purchased Assets
Schedule 5.9 Inventories
Schedule 5.10 Permits
Schedule 5.12 Material Contracts
Schedule 5.13 Intellectual Property
Schedule 5.15 Litigation
Schedule 5.16 Compliance with Laws
Schedule 5.19 Promotions Liabilities
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LIST OF EXHIBITS
----------------
Exhibit 4.1 Buyer's Promissory Note
Exhibit 7.7(a) Terms of Transition Services Agreement
Exhibit 7.7(b) Terms of Co-Pack Agreement
Exhibit 9.8 Opinion of Seller's Counsel
Exhibit 10.7 Opinion of Buyer's Counsel
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ASSET PURCHASE AND SALE AGREEMENT
---------------------------------
This Asset Purchase and Sale Agreement (the "Agreement") is dated as of January
17, 1996. The parties are SHELLFISH ACQUISITION COMPANY, LLC, a Delaware limited
liability company, whose address is c/o Dartford Partnership L.L.C., 801
Montgomery Street, Suite 400, San Francisco, California 94133 ("Buyer"), and
CAMPBELL SOUP COMPANY, a New Jersey corporation, whose address is Campbell
Place, Camden, New Jersey ("Seller").
BACKGROUND
----------
Seller is engaged, directly or through subsidiaries, in the business of
processing, distributing and marketing frozen fried coated seafood and specialty
vegetable products under the Mrs. Paul's brand name (or any of the other brand
names listed on Schedule 5.13 hereto and used in such business by Seller on the
date hereof) (the "Mrs. Paul's Business").
Buyer desires to purchase from Seller and Seller desires to sell to Buyer, on
the terms and conditions set forth herein, certain assets and Buyer desires to
assume certain liabilities relating to the Mrs. Paul's Business.
In consideration of the mutual covenants, agreements, representations and
warranties herein contained, and for other valuable consideration the receipt
and sufficiency of which is hereby acknowledged, Seller and Buyer agree as
follows:
TERMS AND CONDITIONS
--------------------
1. DEFINITIONS
1.1 SPECIFIC DEFINITIONS.
As used in this Agreement, the terms below shall have the following
meanings:
(a) "Accounts Receivable" is defined in Section 2.2(b).
(b) "Agreement" means this agreement and all exhibits and schedules hereto.
(c) "Assignment and Assumption Agreement" is defined in Section 11.2(b).
(d) "Assumed Liabilities" is defined in Section 3.1.
(e) "Bill of Sale" is defined in Section 11.2(a).
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(f) "Buyer Indemnitee" is defined in Section 13.1(a).
(g) "Buyer Note" is defined in Section 4.1.
(h) "Closing" is defined in Section 11.1.
(i) "Closing Date" is defined in Section 11.1.
(j) "Competitive Activity" is defined in Section 8.2(a).
(k) "Competitive Operation" is defined in Section 8.2(a).
(l) "Contracts" means (i) contracts, agreements, orders and instruments
relating to the sale of any assets, services, properties, materials or
products, including customer contracts, distribution contracts and
broker contracts, in each case to the extent exclusively relating to
the Mrs. Paul's Business; (ii) orders, contracts, supply agreements and
other agreements relating to the purchase of any assets, services,
properties, materials or products, in each case to the extent
exclusively relating to the Mrs. Paul's Business; and (iii) all other
contracts, agreements and instruments relating exclusively to the Mrs.
Paul's Business other than all consumer and trade promotion and similar
agreements or arrangements.
(m) "Co-Pack Agreement" is defined in Section 7.7(b).
(n) "Coupon Cut-Off Date" means the closing date set by Seller's coupon
clearing house which falls nearest (either before or after, or if
equal, before (if such date is an odd-numbered date) or after (if such
date is an even-numbered date), the date which is forty-five (45) days
after the date of the last coupon drop immediately preceding the
Closing Date (not counting the day of such coupon drop, but counting
the forty-fifth (45th) day).
(o) "CSC" means CSC Brands, Inc., a Delaware corporation and an affiliate
of Seller.
(p) "Direct Claim" is defined in Section 13.3(c).
(q) "Estimated Inventory Cost" is defined in Section 4.2(a).
(r) "Estimated Purchase Price" is defined in Section 4.2(a).
(s) "Excluded Assets" is defined in Section 2.2.
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(t) "Final Termination Date" is defined in Section 12.1(b).
(u) "Financial Information" is defined in Section 5.5.
(v) "Financing" is defined in Section 6.5.
(w) "Financing Commitments" is defined in Section 6.5.
(x) "Foreign Trademarks" means the foreign trademarks listed on Schedule
2.1(c) hereto.
(y) "GAAP" is defined in Section 4.1
(z) "Governmental Entity" means any federal, state, local or foreign
governmental or regulatory authority (or any department, agency,
authority or political subdivision thereof).
(aa) "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
(ab) "Indemnifiable Losses" means any and all claims, demands, actions or
suits, settlements and compromises relating thereto and reasonable
attorneys' fees and expenses in connection therewith, losses,
liabilities, costs and expenses, but in no event punitive damages, net
of the amount of any Third Party Recovery; provided, that, as to
claims by Buyer (or any successor or assignee) for breaches of
representations and warranties, in no event shall "Indemnifiable
Losses" include any of the foregoing if, and to the extent, they
relate to or affect any business or operation of Buyer (or any
successor or assignee) (or financial condition or prospects thereof)
other than the Mrs. Paul's Business.
(ac) "Indemnifying Party" means any person or entity required to provide
indemnification under this Agreement.
(ad) "Indemnitee" means any person or entity entitled to indemnification
under this Agreement.
(ae) "Indemnity Payment" means any amount of Indemnifiable Losses required
to be paid pursuant to this Agreement.
(af) "Independent Accounting Firm" is defined in Section 4.2(c).
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(ag) "Intellectual Property" means all of the following irrespective of
where any of the same were issued, are pending or exist that are used
exclusively in the running of the Mrs. Paul's Business (except to the
extent any such assets are specifically included in the Excluded
Assets), including without limitation the items listed on Schedule
5.13 hereto: (i) all United States patents of any description and
applications therefor; (ii) all United States (federal and state)
trademarks and other trade names, labels, trade dress, advertising and
package designs and other trade rights, whether or not registered, all
applications therefor and the goodwill of the Mrs. Paul's Business
related thereto; (iii) all United States copyrights, whether or not
registered and all applications therefor; (iv) all know-how, trade
secrets, business leads, research and results thereof, technology,
techniques, data, methods, processes, instructions, drawings,
specifications, inventions, discoveries, improvements, designs,
processes, formulae, recipes, whether patented or patentable or not;
(v) all other proprietary and/or confidential information of Seller
and materials of every kind and character relating to any of the
foregoing; and (vi) all claims and causes of action relating to any of
the foregoing, including claims and causes of action for past
infringement.
(ah) "Interim Financial Information" is defined in Section 7.1(a).
(ai) "Inventory" means all finished goods and work-in-process of the Mrs.
Paul's Business, all raw materials and supplies held exclusively for
the manufacture of products of the Mrs. Paul's Business, packaging,
supply and wrapping materials of the Mrs. Paul's Business, any
warehouse receipts or any other similar documents relating to any of
the foregoing, in each case, owned or possessed by Seller and existing
on the Closing Date.
(aj) "Inventory Cost" is defined in Section 4.2(a).
(ak) "Inventory Schedule" is defined in Section 4.2(a).
(al) "Liabilities" means any direct or indirect liability, indebtedness,
obligation, commitment, expense, claim, deficiency, guaranty or
endorsement of or by any person or entity of any type, whether
accrued, absolute, contingent, matured, unmatured or other.
(am) "Material Adverse Effect" means any material adverse effect on the
financial condition, properties, operations or results of operations
of the Mrs. Paul's Business taken as a whole, provided that a
"Material Adverse Effect" shall not include any such material adverse
effect resulting from or arising out of
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any action by Buyer, VDK or their representatives outside the ordinary
course of business.
(an) "Material Contract(s)" is defined in Section 5.12.
(ao) "Mrs. Paul's Business" is defined in the Preamble.
(ap) "MPK" is defined in Section 2.1(h).
(aq) "MPK Indemnity" is defined in Section 7.7(c).
(ar) "Permits" means all governmental licenses, permits and approvals
issued to Seller with respect to the Mrs. Paul's Business and listed
on Schedule 2.1(i).
(as) "Promotions Liabilities" means Liabilities of the type described in
Section 3.1(d) and (e) hereof.
(at) "Purchase Price" is defined in Section 4.1.
(au) "Purchased Assets" is defined in Section 2.1.
(av) "Related Agreements" means the Buyer Note, the Bill of Sale, the
Trademark Assignments, the Transition Services Agreement, the Co-Pack
Agreement, the MPK Indemnity and the Assignment and Assumption
Agreement.
(aw) "Retained Liabilities" is defined in Section 3.2.
(ax) "Revised Inventory Cost" is defined in Section 4.2(b).
(ay) "Revised Inventory Schedule" is defined in Section 4.2(b).
(az) "Sankyo" means Sankyo Food Kogyo Co., Ltd.
(ba) "Sankyo Contract" means the supply agreement between Seller and
Sankyo.
(bb) "Seller Indemnitee" is defined in Section 13.2.
(bc) "Specified Rate" is defined in Section 13.3(e).
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(bd) "Tangible Personal Property" means the machinery, equipment and other
tangible personal property listed on Schedule 2.1(a).
(be) "Tax" or "Taxes" means any federal, state, local or foreign income,
gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, capital stock, franchise, net worth,
profits, withholding, social security, unemployment, disability, real
property, personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated or other tax of any
kind whatsoever, including any interest, penalty or addition thereto.
(bf) "Third Party Claim" means any claim, action or proceeding made or
brought by any person or entity who or which is not a party to this
Agreement or an affiliate of a party to this Agreement.
(bg) "Third Party Recovery" means any recovery, settlement or otherwise by
the Indemnitee under or pursuant to any insurance coverage or other
indemnification agreement, or pursuant to any claim or recovery
against or settlement with any other person.
(bh) "Threshold" is defined in Section 13.1(a).
(bi) "Trademark Assignments" is defined in Section 11.2(c).
(bj) "Transfer Taxes" is defined in Section 4.4.
(bk) "Transition Services Agreement" is defined in Section 7.7(a).
(bl) "VDK" means Van de Kamp's, Inc., a Delaware corporation.
(bm) "VDK Purchase Agreement" is defined in Section 6.5.
1.2 OTHER TERMS
Other terms may be defined elsewhere in the text of this Agreement and
shall have the meaning indicated throughout this Agreement.
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1.3 OTHER DEFINITIONAL PROVISIONS
(a) The words "hereof", "herein", and "hereunder" and words of similar
import, when used in this Agreement, shall refer to this Agreement as
a whole and not to any particular provision of this Agreement.
(b) The terms defined in the singular shall have a comparable meaning when
used in the plural and vice versa.
2. PURCHASE AND SALE OF ASSETS
2.1 PURCHASE AND SALE OF ASSETS
On the Closing Date, Buyer shall purchase from Seller, and Seller shall, or
shall cause CSC to, sell to Buyer, subject to all of the terms and
conditions of this Agreement and on the basis of the representations,
warranties and covenants herein contained, all of Seller's (or CSC's, as
the case may be) right, title, benefits and interest in and to the assets
that are exclusively used in the Mrs. Paul's Business existing on the
Closing Date (other than the Excluded Assets). The purchased assets
(collectively, the "Purchased Assets") consist of the following:
(a) the Tangible Personal Property;
(b) the Inventory;
(c) the Intellectual Property and the Foreign Trademarks;
(d) subject to Section 2.3, the Contracts;
(e) the books, files, ledgers, records (including computer records) and
other documents pertaining exclusively to the Mrs. Paul's Business;
(f) all refunds of Taxes to the extent that the Taxes being refunded were
an Assumed Liability;
(g) all goodwill associated with the Mrs. Paul's Business as a going
concern;
(h) all of the capital stock of MPK Holdings, Inc., a Delaware corporation
("MPK"), and the books, files, ledgers and records of MPK;
(i) to the extent transferable, the Permits;
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(j) UPC codes;
(k) all of Seller's claims, causes in action or rights of action
pertaining exclusively to the Purchased Assets, other than claims
relating to periods before the Closing under the Contracts; and
(l) all of Seller's rights and benefits pursuant to Seller's insurance
policies with respect to any casualty loss with respect to any of the
Purchased Assets.
2.2 EXCLUDED ASSETS
Seller is not selling, assigning, transferring or conveying to Buyer any
assets, rights or properties of Seller not specifically referred to in
Section 2.1. Without limiting the foregoing, Seller shall retain and the
Purchased Assets shall not include, any of the following assets
(collectively, the "Excluded Assets"):
(a) cash, cash equivalents, marketable securities and similar items on
hand on the Closing Date;
(b) all accounts and notes receivable relating to the Mrs. Paul's
Business, including accounts receivable for any products shipped prior
to the Closing but not yet invoiced (the "Accounts Receivable"), which
products shall be removed from the Inventory Schedule and the Revised
Inventory Schedule;
(c) general books of account and books of original entry that comprise
Seller's permanent accounting or Tax records, provided that Seller
permits Buyer access to such books as provided in Section 8.1, and
Seller's stock records and minute books;
(d) all refunds of Taxes or claims for refund of Taxes of any kind
relating to any period prior to the Closing Date, other than those
specifically included in the Purchased Assets;
(e) except as provided in Section 2.1(l), any rights or benefits pursuant
to any of Seller's insurance policies (intercompany, self-insurance or
otherwise);
(f) all claims, causes in action and rights of action by Seller against
third parties except for those pertaining exclusively to the Purchased
Assets (other than claims relating to periods before the Closing under
the Contracts);
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(g) all assets related to Seller's Swanson frozen food business and any
other assets not used exclusively in the Mrs. Paul's Business; and
(h) those assets listed on Schedule 2.2(h).
2.3 NONASSIGNABILITY
To the extent that any Contract or Permit to be transferred is not capable
of being transferred without the consent, approval or waiver of a third
party (including, without limitation, a Governmental Entity) and such
transfer or attempted transfer would constitute a breach thereof or a
violation of any law, nothing in this Agreement will constitute a transfer
or an attempted transfer thereof. Seller will use its reasonable efforts,
and Buyer will cooperate with Seller, to obtain such consents, approvals
and waivers necessary to transfer to Buyer all such Contracts and Permits;
provided, however, that Seller will not be obligated to pay any
consideration therefor, or to incur any additional liability or obligation
in connection therewith or to remain secondarily liable thereon.
2.4 IF WAIVERS OR CONSENTS CANNOT BE OBTAINED
If such consents, approvals and waivers are not obtained prior to the
Closing, Seller will cooperate in any reasonable arrangement requested by
Buyer to provide Buyer with all of the benefits under such Contract or
Permit as if such Contract or Permit had been assigned to Buyer, including
enforcement for the benefit of Buyer, at Buyer's expense, of any and all
rights of Seller against any other party thereto.
3. ASSUMPTION OF LIABILITIES
3.1 ASSUMED LIABILITIES
At the Closing, Buyer shall, by an appropriate instrument of assumption,
assume and thereafter pay, perform and fully satisfy, in a timely manner
and in accordance with the terms thereof, the following Liabilities of the
Mrs. Paul's Business existing on the Closing Date or arising thereafter
(collectively, the "Assumed Liabilities"):
(a) all of the Liabilities and obligations under or with respect to the
Contracts arising or related to periods on or after the Closing Date;
(b) all of the Liabilities and obligations for Inventory ordered by Seller
in the ordinary course of conduct of the Mrs. Paul's Business prior to
the Closing
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Date and delivered to Buyer after the Closing Date, to the extent not
included in the Revised Inventory Schedule;
(c) Liabilities for one-half (50%) of the Transfer Taxes;
(d) to the extent arising or related to periods on or after the Closing
Date, all of the Liabilities and obligations for trade programs, price
reduction programs, trade allowances and related programs of Seller
offered to distributors or customers of the Mrs. Paul's Business in
the ordinary course of business, whether written or oral, described on
Schedule 5.19 hereof ("Trade Promotions");
(e) all of the Liabilities in respect of all FSI coupons with a sixty (60)
day or shorter life and all in-pack coupons for products of the Mrs.
Paul's Business ("Coupons") which have not been presented to or paid
by Seller prior to the Coupon Cut-off Date and all other consumer
events, refunds and rebates ("Other Promotions") relating to sales of
Mrs. Paul's products on or after the Closing Date, described on
Schedule 5.19 hereto;
(f) all of the Liabilities in respect of product liability claims for
product manufactured on or after the Closing Date;
(g) all of the Liabilities in excess of $125,000 for unsalable products
relating to the Mrs. Paul's Business, if the products are returned or
received by Seller or Buyer on or after the Closing Date; and
(h) all of the Liabilities or obligations incurred by Buyer or arising on
or after the Closing Date in connection with the Mrs. Paul's Business
or operation of the Purchased Assets.
3.2 RETAINED LIABILITIES
Except for the Assumed Liabilities, Buyer shall not assume and Seller shall
retain all of Seller's Liabilities and obligations with respect to the Mrs.
Paul's Business arising prior to the Closing (collectively, "Retained
Liabilities"), including, without limitation:
(a) all Liabilities relating to the Excluded Assets;
(b) all Liabilities that are not related to the Mrs. Paul's Business or
that are not otherwise related to the Purchased Assets;
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(c) any Liability of Seller for any federal, state or local Taxes (or Tax
return), whether incurred, accrued or assessed prior to, on or after
the Closing Date, except for one-half (50%) of the Transfer Taxes;
(d) all Liabilities arising out of product liability claims for product
manufactured prior to the Closing Date, except Liabilities arising out
of Buyer's failure to properly maintain, store or otherwise handle the
product in question;
(e) Liabilities and obligations of Seller consisting of accounts payable
to suppliers arising out of operation of the Mrs. Paul's Business
prior to Closing;
(f) Liabilities relating to any environmental condition that relates to
the conduct by Seller of the Mrs. Paul's Business prior to the Closing
Date;
(g) Liabilities with respect to all actions, suits, proceedings, disputes,
claims or investigations that relate to the conduct by Seller of the
Mrs. Paul's Business prior to the Closing Date;
(h) Liabilities to any employees of Seller;
(i) any Liability related to, arising out of or with respect to the
ownership or operation prior to the Closing Date of MPK;
(j) Liabilities with respect to Trade Promotions to the extent related to
sales of Mrs. Paul's products prior to the Closing Date, with respect
to Coupons presented prior to the Coupon Cut-off Date and with respect
to Other Promotions to the extent related to sales of Mrs. Paul's
products prior to the Closing Date; and
(k) all of the Liabilities up to and including $125,000 for unsalable
products relating to the Mrs. Paul's Business; if the products are
returned or received by Seller or Buyer on or after the Closing Date.
4. PURCHASE PRICE
4.1 PURCHASE PRICE
In addition to the Assumed Liabilities, the purchase price (the "Purchase
Price") for the Purchased Assets shall be Seventy-Two Million Five Hundred
Thousand Dollars ($72,500,000), as adjusted pursuant to Section 4.2 below,
which shall be payable by Buyer's delivery of an interest-bearing
promissory note (the "Buyer Note")
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substantially in the form of Exhibit 4.1, in the original principal amount
of the Estimated Purchase Price, as determined pursuant to Section 4.2(a)
below, and maturing on August 22, 1996. The Buyer Note will be secured
solely by an irrevocable standby letter of credit in form acceptable to
Seller and issued by a financial institution selected by Seller, the cost
of which will be borne by Seller. The Buyer Note and standby letter of
credit and any escrow, defeasance or similar arrangement entered into in
connection therewith shall be in such form as will not require, under
generally accepted accounting principles ("GAAP"), VDK to reflect as debt
the Buyer Note on its financial statements. Buyer and VDK have been
advised by their auditors that as of the date hereof the Buyer Note is not
required to be reflected as debt on the financial statements of VDK. The
Buyer Note and any obligations with respect to the standby letter of credit
and under any escrow, defeasance or similar arrangement entered into in
connection therewith shall be non-recourse to VDK and its assets or any of
the Buyer's assets other than those Buyer may have deposited in the escrow,
defeasance or similar arrangement. In the event that (1) such a standby
letter of credit cannot be obtained or (2) Buyer's auditors, Price
Waterhouse LLP, advise Buyer that in their professional opinion the Buyer
Note would be required to be reflected as debt on VDK's financial
statements, Buyer shall not issue the Buyer Note and shall pay the
Estimated Purchase Price by wire transfer to Seller at Closing. Buyer and
VDK shall not be responsible for any of the costs of the standby letter of
credit or of any escrow, defeasance or similar arrangement entered into in
connection therewith or any tax payable in connection therewith or related
thereto.
4.2 PURCHASE PRICE ADJUSTMENT
(a) Schedule 4.2(a) sets forth a summary schedule of the quantity of each
item of Inventory that is carried on Seller's books relating to the
Mrs. Paul's Business as of July 30, 1995 (the "Inventory Schedule")
and the cost at which such Inventory is carried on Seller's books (the
aggregate of such amounts being collectively referred to herein as the
"Inventory Cost"). Cost is determined using a weighted average method
in accordance with Seller's customary accounting practices, consistent
with GAAP. No later than three (3) business days prior to the Closing
Date, Seller shall deliver to Buyer a written estimate of what the
Inventory Cost would be as of the most recent month-end (the
"Estimated Inventory Cost") prior to the Closing Date. To the extent
the Estimated Inventory Cost is less than Five Million Dollars
($5,000,000), the "Estimated Purchase Price" shall be Seventy-Two
Million Five Hundred Thousand Dollars ($72,500,000) minus the amount
of such deficiency. To the extent the Estimated Inventory Cost is
greater than Five Million Dollars ($5,000,000), the "Estimated
Purchase Price" shall be Seventy-Two Million Five Hundred Thousand
Dollars ($72,500,000) plus the
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amount of such excess. To the extent the Estimated Inventory Cost is
equal to Five Million Dollars ($5,000,000), the "Estimated Purchase
Price" shall be Seventy-Two Million Five Hundred Thousand Dollars
($72,500,000).
(b) During the weekend immediately prior to the Closing Date, Seller will
conduct, and Buyer (or its representative) will observe, a physical
inventory of each item of Inventory located at Seller's plant in
Omaha, Nebraska or otherwise in possession of Seller as of such date.
From the results of such physical inventory and within twenty (20)
business days following the Closing Date, Seller will prepare a
schedule (the "Revised Inventory Schedule"), setting forth the nature
and quantity of the Inventory as of Closing and the cost of each item
of Inventory (using Seller's accounting policies consistent with
preparation of the Inventory Cost as described in Section 4.2(a)).
The amount set forth in the Revised Inventory Schedule shall be equal
to the product of the quantity of each item of Inventory set forth
therein and Seller's cost of each such item (the aggregate of such
amounts being collectively referred to herein as the "Revised
Inventory Cost"), provided, however, that no amount of spare parts
inventory having a book value in excess of $25,000 shall be included
in the Revised Inventory Cost.
(c) Within forty (40) business days following the Closing Date, Buyer
shall deliver to Seller, in writing, notice of any dispute with the
Revised Inventory Schedule (specifying in reasonable detail the basis
therefor). If no such notice is delivered by Buyer within forty (40)
business days following the Closing Date, or prior thereto, all
disputes are resolved by Buyer and Seller, the Revised Inventory
Schedule (including any revisions agreed to by Buyer and Seller) shall
be final, binding and conclusive on Buyer and Seller. In the event
Buyer and Seller cannot agree to the Revised Inventory Schedule within
forty (40) business days following the Closing Date, Buyer and Seller
shall attempt to resolve for a period of ten (10) business days the
items remaining in dispute. If the parties are unable to reach a
resolution within ten (10) business days of all disputed items, the
parties shall together select and submit the items remaining in
dispute for resolution to an independent nationally recognized
accounting firm (the "Independent Accounting Firm"), which shall,
within twenty (20) business days of such submission, determine and
report to Buyer and Seller upon such remaining disputed items, and
such report shall be final, binding and conclusive on Buyer and
Seller. During the period from commencement of the Closing physical
inventory to the resolution of any dispute with respect to the matters
addressed in this Section 4.2, Buyer and Seller shall each cause their
respective accountants to provide the other party, its accountants and
the Independent Accounting
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Firm full access to their respective work papers, as applicable,
relating to the Closing physical inventory and the schedules related
thereto.
(d) To the extent the Revised Inventory Cost as finally determined
pursuant to Section 4.2(c) is less than Five Million Dollars
($5,000,000), the Purchase Price will be decreased, dollar for dollar,
by the amount of such deficiency. To the extent the Revised Inventory
Cost is greater than Five Million Dollars ($5,000,000), the Purchase
Price will be increased, dollar for dollar, by the amount of such
excess.
(e) On the later of August 22, 1996 or five (5) business days after final
determination of the Revised Inventory Schedule pursuant to Section
4.2(c), if the Purchase Price, as adjusted pursuant to Section 4.2(d),
is greater than the Estimated Purchase Price, Buyer shall pay by wire
transfer of immediately available funds to Seller an amount equal to
such difference, or if the Estimated Purchase Price is greater than
the Purchase Price, as so adjusted, Seller shall pay by wire transfer
of immediately available funds to Buyer an amount equal to such
difference. In either case, any payment made pursuant to this Section
shall include simple interest thereon from the Closing Date to the
date of payment at the Specified Rate.
(f) Buyer and Seller shall each pay the fees and disbursements of their
respective accountants. The fees and disbursements of the Independent
Accounting Firm shall be borne equally by Buyer and Seller. Buyer and
Seller shall each bear their respective costs and expenses of
performing and valuing the physical inventory.
4.3 ALLOCATION OF PURCHASE PRICE
The Purchase Price shall be allocated by Seller and Buyer among the
Purchased Assets and Assumed Liabilities as agreed to by Buyer and Seller
prior to the Closing Date. Seller and Buyer agree to report the allocation
of the Purchase Price among the Purchased Assets and Assumed Liabilities in
a manner entirely consistent with such allocation and agree to act in
accordance with such allocation in the preparation of financial statements
and filing of all tax returns (including, without limitation, filing Form
8594 with its Federal income tax return for the taxable year that includes
the date of the Closing) and in the course of any tax audit, tax review or
tax litigation relating thereto.
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4.4 PAYMENT OF TAXES AND OTHER CHARGES
At the Closing, Buyer and Seller shall (a) each pay one-half (50%) of the
sales Taxes, documentary stamp Taxes, recording charges and other Taxes
imposed by any Governmental Entity in connection with the transfer of the
Purchased Assets (the "Transfer Taxes"), and (b) pay all of their other
respective fees and charges in connection with the transactions
contemplated hereby.
5. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
5.1 AUTHORITY
Seller has full corporate power and authority to enter into and perform its
obligations under this Agreement and the Related Agreements. This
Agreement is, and the Related Agreements when executed in accordance with
their respective terms will be, valid, legal and binding agreements of
Seller enforceable against it in accordance with their respective terms.
5.2 DUE INCORPORATION, QUALIFICATION
Seller is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of New Jersey and is qualified to do
business in the jurisdictions in which its ownership of property or conduct
of business legally requires such qualification, except jurisdictions in
which the failure to be so qualified does not have a Material Adverse
Effect. Seller has the full corporate power, authority and legal right to
own its properties and assets included in the Mrs. Paul's Business and to
conduct the Mrs. Paul's Business as presently conducted.
5.3 NO VIOLATION OF AGREEMENTS
Neither the execution and delivery of this Agreement nor compliance by
Seller with its terms and provisions will (a) violate any provision of the
certificate of incorporation or bylaws of Seller or CSC; or (b) assuming
receipt of the consents under Contracts listed on Schedule 5.12, violate,
permit acceleration or termination under or result in the creation of any
lien or other encumbrance on any of the Purchased Assets under any contract
provision, license, franchise or Permit to which Seller or CSC is a party
or by which either of them is or the Purchased Assets are bound; or (c)
conflict with any law, statute or regulation or any
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injunction, order or decree of any Governmental Entity or court to which
Seller or CSC is subject except where, in all of the foregoing cases, such
a violation would not prohibit or materially impair Seller's ability to
perform its obligations under this Agreement or would not have a Material
Adverse Effect.
5.4 SUBSIDIARIES
Other than ownership of the capital stock of MPK, the Purchased Assets do
not include, directly or indirectly, any equity interest or investment in
any corporation, partnership, business, trust or other entity or any
contract or agreement to acquire such an interest or make such an
investment. MPK currently conducts no business, currently owns no assets
and, to Seller's knowledge, has no Liabilities in excess of $5.0 million.
5.5 FINANCIAL INFORMATION
Seller has previously delivered to Buyer (i) the unaudited statements of
Inventory and Tangible Personal Property as of October 29, 1995, (ii) the
unaudited Statements of Brand Contribution and of Product Profit for the
fiscal years ended July 30, 1995 and July 31, 1994, (iii) the unaudited
statements of Brand Contribution for the Traditional Segment, the Specialty
Seafood Segment, the Budget Segment, the Specialty Vegetables Segment and
Discontinued and Other for the fiscal years ended July 30, 1995 and July
31, 1994, and (iv) the unaudited Statement of Brand Contribution for the
three-months ended October 29, 1995, copies of which are attached as
Schedule 5.5 (the "Financial Information"). Except as set forth on
Schedule 5.5, the Financial Information was derived from the internal books
and records of Seller, which have been maintained in a manner consistent
with Seller's accounting practices with respect to the Mrs. Paul's
Business. The Financial Information was derived from Seller's consolidated
financial statements, which were prepared in accordance with GAAP
consistently applied. The Financial Information presents fairly, in all
material respects, the financial information purported to be set forth
therein, subject to the qualifications and limitations set forth therein.
Furthermore, the line items of Net Sales and Trade Promotions contained in
the unaudited statements of Brand Contribution and Product Profit on a
combined basis for the fiscal years ended July 30, 1995 and July 31, 1994
and the line items of Net Sales contained in the unaudited statements of
Brand Contribution for the Traditional Segment, the Specialty Seafood
Segment, the Budget Segment, the Specialty Vegetables Segment and
Discontinued and Other for the fiscal years ended July 30, 1995 and July
31, 1994 present fairly, in all material respects for each of those
separate captions, the financial information purported to be set forth
therein, subject to the qualifications
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and limitations set forth therein. As the Mrs. Paul's Business has
historically operated as part of the frozen foods group within Seller, it
has not been accounted for as a separate legal entity. Accordingly, the
Financial Information does not necessarily represent the financial
information of the Mrs. Paul's Business as if it were to be accounted for
as a separate legal entity. Seller makes no other representations or
warranties with respect to the Financial Information.
5.6 ABSENCE OF CERTAIN CHANGES
Except as set forth on Schedule 5.6 hereto or as otherwise contemplated by
this Agreement, since October 29, 1995:
(a) the Mrs. Paul's Business has been operated only in the ordinary course
and there has not occurred any Material Adverse Effect; and
(b) Seller has not, with respect to the Mrs. Paul's Business, (i)
mortgaged, pledged or subjected to or permitted the imposition of any
encumbrance upon any of the Purchased Assets, (ii) sold or otherwise
disposed of any of the Purchased Assets, except for sales of Inventory
in the ordinary course of business, (iii) disposed of or permitted to
lapse any rights to the use of any Intellectual Property or (iv)
agreed to any action referred to in this Section 5.6.
5.7 TAXES
(a) Seller has filed or caused to be filed all federal, state, local and
foreign Tax reports and returns required to be filed by it that relate
to the Mrs. Paul's Business or the Purchased Assets, and has paid or
caused to be paid all federal, state, local and foreign Taxes or
charges in the nature of Taxes shown on such returns to be due to
federal, state, local or foreign taxing authorities, except those
being contested in good faith or for which adequate reserves have been
taken.
(b) There are no pending claims asserted for unpaid Taxes or assessments
upon the Purchased Assets.
5.8 TITLE TO PURCHASED ASSETS
Seller has (except for assets acquired between the date hereof and the
Closing Date), and will have on the Closing Date (immediately prior to the
Closing), good and marketable title to all of the Purchased Assets (except
for certain of the
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Intellectual Property as to which CSC has such title), free and clear of
all liens and encumbrances, except as set forth on Schedule 5.8.
5.9 INVENTORIES
The Inventory of the Mrs. Paul's Business included in the Purchased Assets
is of a quality, quantity and mix which is substantially usable or saleable
in the ordinary course of the Mrs. Paul's Business, except for Inventories
set forth on Schedule 5.9. Since October 29, 1995, the Inventory has been
replenished in a normal and customary manner consistent with past practice
of the Mrs. Paul's Business and prudent practice prevailing in the industry
for inventory of the type included in the Purchased Assets.
5.10 PERMITS
Except as set forth on Schedule 5.10, Seller possesses all licenses,
Permits and other governmental approvals necessary to enable it to carry on
the Mrs. Paul's Business as currently conducted, except where the lack of
such license, Permit or other approval would not materially adversely
affect Seller's ability to conduct the Mrs. Paul's Business or would not
have a Material Adverse Effect. Each license, Permit or other governmental
approval possessed by Seller with respect to the Mrs. Paul's Business is in
full force and effect, there has been no material default or breach
thereunder, and there is no pending or, to the knowledge of Seller,
threatened proceeding under which any such license, Permit or other
governmental approval may be revoked, terminated or suspended.
5.11 BROKERS
Seller has not employed any broker, finder or financial advisor, or
incurred any liability for any brokerage fee or commission, finder's fee or
financial advisory fee, in connection with the transactions contemplated by
this Agreement other than Lazard Freres & Co. LLC.
5.12 CONTRACTS
Attached hereto as Schedule 5.12, is a list of all Contracts and leases
(each a "Material Contract" and collectively the "Material Contracts") to
which Seller or CSC is a party (except for certain immaterial contracts
which do not require payment of more than $50,000 for any one contract or
$250,000 for all such contracts, which immaterial contracts are also
included in the Purchased Assets and except for Contracts related to
Retained Liabilities), or of which Seller is an assignee, relating
exclusively to the operation of the Mrs. Paul's Business, all of which are
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included in the Purchased Assets. Seller has delivered true and complete
copies of each written Material Contract (or summaries thereof) and
summaries of each oral Material Contract to Buyer. Each Material Contract
is in full force and effect in accordance with its terms and except as set
forth in Schedule 5.12, there have been no material amendments,
modifications or supplements to any Material Contracts. Except as set
forth in Schedule 5.12, there is no default or claim of default under any
Material Contract and no event has occurred that, with the passage of time
or the giving of notice or both, would constitute a default by Seller or,
in the case of the Sankyo Contract, Sankyo, or, to Seller's knowledge, any
other party thereto, under any Material Contract, or would permit
modification, acceleration or termination of any Material Contract, or
result in the creation of any lien on any of the Purchased Assets, other
than such defaults, claims or events the effect of which would not have a
Material Adverse Effect. Other than the brokerage agreements described in
Schedule 5.12, no Contract or other agreement to which the Purchased Assets
are subject imposes any restriction on the territory in which the Mrs.
Paul's Business may be conducted.
5.13 INTELLECTUAL PROPERTY
Seller or CSC owns, or is licensed or otherwise has the right to use, all
Intellectual Property necessary to conduct the Mrs. Paul's Business as
currently conducted and all such Intellectual Property is included within
the Purchased Assets. Schedule 5.13 hereto contains a list of all patents,
registered and unregistered trademarks, trade names and registered and
unregistered copyrights currently used exclusively by the Mrs. Paul's
Business, all pending applications therefor and all licenses and other
agreements relating thereto. Except as set forth on Schedule 5.13 hereto,
no consent of third parties will be required for the use of any
Intellectual Property as a consequence of the consummation of the
transactions contemplated hereby. Except as set forth on Schedule 5.13,
(i) no claims are currently being asserted by any person to the use of any
Intellectual Property or challenging or questioning the validity or
effectiveness of any such license or agreement, and to the knowledge of
Seller, the use of such Intellectual Property by Seller does not infringe
on the rights of any person and no suits or proceedings are pending or to
the knowledge of Seller, threatened against Seller with respect to the
foregoing; and (ii) no claims are currently being asserted and to the
knowledge of Seller, no conditions exist upon which such claims could be
based, that Seller is in default or is not in full compliance with all
licenses and other agreements under which it is using any Intellectual
Property. Notwithstanding anything to the contrary herein, Seller makes no
representations or warranties of any kind whatsoever as to the Foreign
Trademarks, and Buyer is purchasing the Foreign Trademarks on an "AS IS,
WHERE IS" basis.
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5.14 CONSENTS AND APPROVALS
Except as may be required under the HSR Act, no approval, consent, waiver
or authorization or filing or registration with any Governmental Entity is
required to be made in connection with Seller's execution, delivery and
performance of this Agreement, except for those approvals, consents,
waivers, authorizations or filings the failure of which to obtain or make
will not have a Material Adverse Effect.
5.15 LITIGATION
Except as set forth on Schedule 5.15, there is no action, suit, proceeding
or investigation pending or, to the knowledge of Seller, threatened,
against Seller with respect to the Mrs. Paul's Business, before any court,
arbitrator or other Governmental Entity which questions the validity of
this Agreement or which, if adversely determined, would have a Material
Adverse Effect.
5.16 COMPLIANCE WITH LAWS
Except as set forth on Schedule 5.16, to Seller's knowledge, the Mrs.
Paul's Business is not being conducted in violation of any law, ordinance
or regulations of any Governmental Entity, except for possible violations
which would not have a Material Adverse Effect. The products, packaging
and labels with respect to the Mrs. Paul's Business are in all material
respects in compliance with the Federal Food, Drug and Cosmetic Act,
including the Nutrition Labeling and Education Act of 1990, and the
regulations issued thereunder. With respect to the Mrs. Paul's Business,
Seller has not received and, to Seller's knowledge, no conditions exist
which could reasonably be expected to lead to receipt of FDA or other
regulatory notices, or complaints, orders or similar communications from
any Government Entity regarding non-compliance by the Mrs. Paul's Business
with applicable FDA or similar laws or regulations.
5.17 MAJOR CUSTOMERS
Since October 29, 1995, as of the date hereof, Seller has not received
written notice from (nor is the Vice President - Sales of the Frozen Foods
Section of Seller aware of) any customer of the Mrs. Paul's Business which
accounted for more than one percent (1%) of the aggregate gross sales for
the 52-week period ended October 29, 1995 that such customer has terminated
or expects to terminate two-thirds (2/3) or more of such business.
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5.18 TANGIBLE PERSONAL PROPERTY
All items of the Tangible Personal Property material to the conduct of the
Mrs. Paul's Business are in substantially good condition and repair (normal
wear and tear excepted) and are adequate for the uses to which they are
being put in the ordinary course of the Mrs. Paul's Business.
5.19 TRADE DEALS AND PROMOTIONS
Other than as set forth on Schedule 5.19, as of January 3, 1996, Seller has
not, with respect to the Mrs. Paul's Business, offered, become bound by
and/or is not a party to any trade deals, trade promotions or programs,
trade refunds or cooperative programs or any consumer promotions and
programs (including, without limitation, coupon, premiums and rebate
programs), with respect to the period from February 1, 1996 to July 31,
1996, whether oral or written, the Liabilities for which in the aggregate
for all such Liabilities, exceed the amount (or in the case of volume based
amounts, the rate of increase thereof) set forth on Schedule 5.19. Since
January 3, 1996, Seller has incurred Promotions Liabilities only in the
ordinary course of business.
5.20 NO OTHER REPRESENTATIONS OR WARRANTIES
Except for the representations and warranties contained in this Section 5,
neither Seller nor any other person makes any other express or implied
representation or warranty on behalf of Seller, and Seller hereby disclaims
any such representation or warranty whether by Seller or any of its or the
Mrs. Paul's Business' respective officers, directors, employees, agents or
representatives or any other person, with respect to the execution and
delivery of this Agreement and the Related Agreements or the transactions
contemplated hereby or thereby, notwithstanding the delivery or disclosure
to Buyer or any of its officers, directors, employees, agents or
representatives or any other person of any documentation or other
information by Sellers or any of its or the Mrs. Paul's Business'
respective officers, directors, employees, agents or representatives or any
other person with respect to any one or more of the foregoing.
6. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
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6.1 AUTHORITY
Buyer has full limited liability company power and authority to enter into
and perform its obligations under this Agreement and the Related
Agreements. This Agreement is, and the Related Agreements when executed in
accordance with their respective terms will be, valid, legal and binding
agreements of Buyer enforceable against it in accordance with their
respective terms.
6.2 DUE ORGANIZATION, QUALIFICATION
Buyer is a limited liability company duly organized, validly existing and
in good standing under the laws of its state of organization and is
qualified to do business in the jurisdictions in which its ownership of
property or conduct of business legally requires such qualification, except
jurisdictions in which the failure to be so qualified does not have a
material adverse effect on the financial condition, properties or
operations of Buyer. Buyer has the full limited liability company power,
authority and legal right to own its properties and assets and to conduct
its business as presently being conducted.
6.3 NO VIOLATION OF AGREEMENTS
Neither the execution and delivery of this Agreement nor compliance by
Buyer with its terms and provisions will violate (a) any provision of the
limited liability company agreement or bylaws of Buyer; (b) any contract
provision, license, franchise or permit to which Buyer is a party or by
which it is bound; or (c) any law, statute or regulation or, insofar as is
known to Buyer, any injunction, order or decree of any Governmental Entity
or courts to which Buyer is subject except where, in all cases, such a
violation would not prohibit or materially impair Buyer's ability to
perform its obligations under this Agreement.
6.4 CONSENTS AND APPROVALS
Except as may be required under the HSR Act, to Buyer's knowledge, no
approval, consent, waiver or authorization or filing or registration with
any Governmental Entity is required to be made in connection with Buyer's
execution, delivery and performance of this Agreement.
6.5 PURCHASE AGREEMENT
Buyer has provided to Seller a true and complete copy of the Asset Purchase
Agreement between it and VDK (the "VDK Purchase Agreement") and copies of
the commitment letters for the senior bank debt and equity financing (the
"Financing")
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contemplated by VDK to finance its acquisition of assets thereunder (the
"Financing Commitment"). The VDK Purchase Agreement and the Financing
Commitments are in full force and effect. As of the date hereof, Buyer is
not aware of any fact or circumstance which could reasonably be expected to
prevent Buyer from consummating the transactions contemplated by the VDK
Purchase Agreement (including receipt by VDK of the Financing).
6.6 BROKERS
Neither Buyer nor any of Buyer's officers, directors or employees has
employed any broker, finder or financial advisor, or incurred any liability
for any brokerage fee or commission, finder's fee or financial advisory
fee, in connection with the transactions contemplated by this Agreement,
nor is there any basis known to Buyer for any such fee or commission to be
claimed by any person.
6.7 PROJECTIONS
In connection with Buyer's investigation of the Mrs. Paul's Business, Buyer
may have received from Seller or its representatives or advisors certain
projections and other forecasts (including volume forecasts contained in
the information set forth on Schedule 5.19). Buyer acknowledges that there
are uncertainties inherent in attempting to make such projections and other
forecasts, that Buyer is familiar with such uncertainties, that Buyer is
taking full responsibility for making its own evaluation of the adequacy
and accuracy of all projections and other forecasts, and that Buyer will
have no claim against Seller with respect thereto. Accordingly neither
Seller nor its representatives or advisors make any representation or
warranty with respect to such projections and other forecasts, if any.
7. PRE-CLOSING COVENANTS
7.1 SELLER'S COVENANTS
Seller covenants as follows:
(A) BUYER'S ACCESS TO PREMISES AND INFORMATION
Buyer and its representatives shall, prior to Closing, have reasonable
access (subject to reasonable restrictions necessary to comply with
applicable antitrust or related laws and regulations), during normal
business hours and upon reasonable advance notice to the President -
Frozen Foods Group at Seller's headquarters, to such other management
or other
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employees of Seller as Buyer may reasonably request, and to the
Purchased Assets, business and books and records of the Mrs. Paul's
Business, and Seller will furnish Buyer (subject to reasonable
restrictions necessary to comply with applicable antitrust or related
laws and regulations) with such financial and operating data and other
information as to the Mrs. Paul's Business and the Purchased Assets as
Buyer shall from time to time reasonably request for the purpose of
verifying the representations and warranties of Seller hereunder and
in order for Buyer to be able to prepare and timely file such
unaudited and audited financial information relating to the Mrs.
Paul's Business as Buyer or VDK is required to file under the federal
securities laws. In connection with its preparation of any such
financial information, in order to minimize Buyer's need for direct
access, Buyer agrees to use the services of the Philadelphia office of
Price Waterhouse LLP to the fullest extent possible in conducting such
audit, provided that Buyer's regular audit partner based at Price
Waterhouse LLP's San Francisco office will have ultimate
responsibility for such audit and will issue the final report thereon.
Seller shall furnish, or cause to be furnished, to Buyer the monthly
brand contribution statements of the Mrs. Paul's Business (the
"Interim Financial Information") similar in form and content to those
contained in the Financial Information and any other financial and
operating data and other information that is available with respect to
the Business as Buyer shall from time to time reasonably request.
Buyer acknowledges that certain of the information which may be made
available to it is proprietary and includes confidential information.
Buyer shall hold all such information in confidence and shall not
disclose it to any person before the Closing without the prior written
approval of Seller. The foregoing restriction shall not apply to any
information which is or becomes publicly known other than by breach of
this covenant or which is lawfully obtained from a third party, or to
any disclosure required by law. If the transactions contemplated
hereby are not consummated, Buyer shall return to Seller (without
retaining any copies thereof) all documents, work papers and any other
material obtained by Buyer or on its behalf from Seller, the Mrs.
Paul's Business or their respective agents and shall at all times
thereafter maintain the confidentiality of and shall not use for any
purpose any and all confidential information obtained regarding
Seller, the Purchased Assets or the Mrs. Paul's Business. In any
event, all information provided or obtained pursuant to this Section
7.1(a) shall be held by Buyer in accordance with and subject to the
terms of the Confidentiality Agreement dated September 28, 1995
between VDK and Seller which agreement shall remain in full force and
effect following execution of this Agreement and consummation of the
transactions contemplated hereby.
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(B) CONDUCT OF THE MRS. PAUL'S BUSINESS IN NORMAL COURSE
From the date hereof until the Closing, Seller will conduct the Mrs.
Paul's Business in the ordinary course in accordance with past
practice and use commercially reasonable efforts to preserve the Mrs.
Paul's Business and its relationships with suppliers and customers.
(C) FURTHER COVENANTS
From the date hereof until the Closing, and except as otherwise
contemplated by this Agreement or consented to or approved by Buyer,
Seller further agrees that:
(i) it will not (A) subject any of the Purchased Assets to any lien,
other than the liens disclosed in the Schedules hereto, (B) sell
or transfer any material portion of the Purchased Assets, other
than Inventory sold or used, and supplies used, in the ordinary
course of business, or (C) sell, license or transfer any of the
Intellectual Property or the Tangible Personal Property; and
(ii) it will maintain the books and records of the Mrs. Paul's
Business in accordance with good business practices and on a
basis consistent with prior practice and the provisions herein.
(D) SUPPLEMENTS TO DISCLOSURE SCHEDULES
Prior to the Closing, Seller shall deliver to Buyer information that
arises from an event that occurs on or after the date hereof, or from
an event that occurred prior to the date hereof but which was not and
could not have been a matter of Seller's knowledge, supplementing or
amending the representations, warranties and disclosures (including
the Schedules hereto) in order to make such information therein
timely, complete and accurate. Unless as a result of any such
supplemental information the Buyer sends a termination notice under
Section 12.1(c), any covenant, representation or warranty of Seller
affected by such supplemental information shall be deemed to have been
amended accordingly on the tenth (10th) day following Buyer's receipt
of such supplemental information. Delivery of Interim Financial
Information pursuant to Section 7.1(a) shall not be deemed delivery of
supplemental information within the meaning of this Section 7.1(d).
(E) PROMOTIONS LIABILITIES
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Seller will give Buyer notice of any additional increase in Promotions
Liabilities beyond the amounts set forth in Schedule 5.19. At
Closing, Seller will use its best efforts to provide to Buyer copies
of all "deal sheets," customer agreements and other materials that
memorialize the Promotions Liabilities.
(F) MAJOR CUSTOMERS
Prior to the Closing, Seller shall promptly provide Buyer notice if it
receives written notice from (or if the Vice President-Sales of the
Frozen Foods Section of Seller becomes aware of) any customer of the
Mrs. Paul's Business which accounted for more than one percent (1%) of
the aggregate gross sales for the 52-week period ended October 29,
1995 that such customer has terminated or expects to terminate two-
thirds (2/3) or more of such business.
7.2 SHARED TECHNOLOGY, ETC.
(A) Seller hereby acknowledges that certain intellectual property of the
type described in clauses (i) to (iv) of Section 1.1(af) may be used
as of the Closing in both (i) the Mrs. Paul's Business and (ii) a
business or line of business of Seller or its affiliates other than
the Mrs. Paul's Business (the "Shared IP"). Seller hereby waives any
right, remedy or cause of action it might have against Buyer (or any
person to whom Buyer sells or otherwise transfers all or any portion
of the Mrs. Paul's Business) arising out of or related to Buyer's (or
any such person's) use of any Shared IP in the Mrs. Paul's Business
from and after the Closing, other than rights, remedies or causes of
action that arise prior to the Closing or, in the case of any person
to whom Buyer sells or otherwise transfers all or any portion of the
Mrs. Paul's Business, prior to such sale or transfer.
(B) Seller hereby grants to Buyer, as of the Closing, a royalty-free
license to use in the Mrs. Paul's Business the Patent Number 5,266,340
dated November 30, 1993 which license may be assigned by Buyer in
whole or in part, without Seller's consent, in connection with a sale
or transfer of all or a portion of the Mrs. Paul's Business and which
license shall terminate upon expiration of the term of such patent.
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7.3 PUBLICITY
Neither party hereto will issue or cause the publication of any press
release or other public announcement with respect to this Agreement or the
transactions contemplated hereby without the prior consent of the other
party hereto, except as may be required by law or as required by any stock
exchange on which the shares of Seller's stock are listed.
7.4 COOPERATION
Each of Buyer and Seller agrees to cooperate with the other in the
performance of all obligations under this Agreement and to use reasonable
efforts in good faith to fulfill its obligations under this Agreement and
to satisfy or cause to be satisfied, at or before the Closing, the
conditions to each party's performance under this Agreement insofar as such
conditions are within the control of such party, including obtaining any
consents and approvals of any Governmental Entity required to be obtained
by either of them in order to permit the consummation of the transactions
contemplated by this Agreement, or to otherwise satisfy the conditions set
forth in Sections 9 and 10. Buyer and Seller agree to advise the other
party promptly if such party determines that any condition precedent to its
obligations hereunder will not be satisfied in a timely manner. In
addition, Buyer hereby agrees, and agrees to cause its representatives and
VDK and its representatives, to take no action outside the ordinary course
of business reasonably likely to adversely affect the business, properties,
financial condition or results of operation of the Mrs. Paul's Business
(other than affecting competitors as a whole).
7.5 BULK TRANSFER LAW
Seller and Buyer agree to waive compliance with the Nebraska bulk transfer
law and the bulk transfer law of any other jurisdiction in which Purchased
Assets are located, with respect to the sale and purchase of the Purchased
Assets.
7.6 ACCOUNTS RECEIVABLE
Seller shall be entitled to collection and receipt of all Accounts
Receivable, provided that to the extent a customer takes a deduction for
any amount with respect to an Assumed Liability, Seller shall be entitled
to be reimbursed by Buyer for any such deduction. Seller and Buyer shall
cooperate in good faith in order to ensure that Seller receives payment of
the Accounts Receivable outstanding at the end of the day immediately prior
to the Closing with respect to products shipped prior to Closing and that
Buyer receives payment of accounts receivable
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of the Mrs. Paul's Business issued after the Closing with respect to
products shipped on or after the Closing. To the extent that either Buyer
or Seller receives payment of accounts receivable owned by the other party,
or Seller becomes entitled to reimbursement pursuant to the first sentence
of this Section 7.6, Buyer and Seller agree to promptly (within ten (10)
Business Days) remit the proceeds to the designated bank account of Seller
or Buyer, as appropriate. Seller may direct all trade debtors to make
payment on such Accounts Receivable outstanding as of the close of business
on the day immediately preceding the Closing to Seller's specified address
and/or account.
7.7 RELATED AGREEMENTS
(A) TRANSITION SERVICES AGREEMENT
Buyer and Seller shall execute a Transition Services Agreement (the
"Transition Services Agreement") at or prior to Closing which shall
provide for Seller to provide specified transition services to Buyer
upon the terms set forth on Exhibit 7.7(a) hereto.
(B) CO-PACK AGREEMENT
Buyer and Seller shall execute a Co-Pack Agreement (the "Co-Pack
Agreement") at or prior to Closing, which shall provide, among other
things, for Seller to co-pack products produced for the benefit of
Buyer following the Closing upon the terms set forth on Exhibit 7.7(b)
hereto.
(C) MPK INDEMNITY
Seller shall execute and deliver to Buyer at or prior to Closing an
instrument (the "MPK Indemnity") pursuant to which Seller shall agree
to indemnify Buyer with respect to the Liabilities described in
Section 3.2(i) or breach of the last sentence of Section 5.4 on terms
substantially similar to the indemnification for Retained Liabilities
provided in Section 13 hereof, provided that Seller shall be
responsible and shall assume the defense of any claim with respect to
such Liabilities and any notices with respect thereto shall be given
within a reasonable time.
7.8 REMOVAL OF TANGIBLE PERSONAL PROPERTY
Following the Closing and at such time as provided in the Transition
Services Agreement, Seller agrees that it will, at its expense,
disassemble, crate in a manner suitable for shipment and make available to
Buyer at Seller's plant in Omaha,
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Nebraska all of the Purchased Assets required to be moved from Seller's
plant in Omaha, Nebraska. Buyer shall be responsible for, and shall bear
all expense and risk with respect to, loading and transporting such assets
from Seller's plant and installing such assets at Buyer's location. Buyer
and Seller shall cooperate to facilitate transfer of the assets from
Seller's plant to Buyer, including joint scheduling, mutual notices and
other such reasonable efforts.
7.9 ACQUISITION PROPOSALS
From the date hereof until the earlier of (i) the termination of this
Agreement pursuant to Section 12.1 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 or otherwise transfer the Mrs. Paul's
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 with any
party other than Buyer and its representatives.
7.10 RESTRICTIONS ON BUYER'S ACTIVITIES
Other than in connection with the transactions contemplated by this
Agreement and the VDK Purchase Agreement, prior to Closing, Buyer shall not
engage in any operations, enter into any transactions or incur any
liabilities.
8. POST-CLOSING COVENANTS
8.1 FURTHER ASSURANCES
From time to time, at Buyer's request, whether at or after the Closing and
without further consideration, Seller agrees to execute and deliver such
further instruments of conveyance and transfer and to take such other
actions as Buyer may reasonably require to convey and transfer more
effectively to Buyer the Purchased Assets. Buyer agrees that after the
Closing, from time to time, it will promptly execute, acknowledge and
deliver any other assurances or documents reasonably requested by Seller.
In addition, from and after the Closing Seller shall prepare and deliver to
Buyer or otherwise give Buyer and its accountants reasonable access to such
information, data and books and records of Seller as Buyer may reasonably
request in order for Buyer to be able to timely file such audited and
unaudited financial information relating to the Mrs. Paul's Business as
Buyer or VDK is required to file under the federal securities laws. In
connection with the foregoing, in order to minimize Buyer's need for direct
access, Buyer agrees to
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use the services of the Philadelphia office of Price Waterhouse LLP to the
fullest extent possible in conducting such audit, provided that Buyer's
regular audit partner based at Price Waterhouse LLP's San Francisco office
will have ultimate responsibility for such audit and will issue the final
report thereon. Buyer shall pay all fees and expenses associated with
preparing such audited and unaudited financial information.
8.2 NONCOMPETITION COVENANT
(a) For and in consideration of Buyer's purchasing the Purchased Assets,
during the period commencing on the Closing Date and ending thirty
(30) months following the Closing Date, Seller shall not engage in any
Competitive Activity. For purposes of this Agreement, "Competitive
Activity" means participation, without the written consent of Buyer,
in the conduct in North America of any business operation (a
"Competitive Operation"), the business of which is the sale in North
America of frozen fried coated seafood products in a "bulk" or single-
component presentation of the kind sold by Seller in the Mrs. Paul's
Business as of the Closing Date or sale of any product under the Mrs.
Paul's brand name or the trademarks listed on Schedule 5.13.
Competitive Activity shall not include:
(i) the SKUs of Swanson frozen foods which include frozen coated
seafood with a side dish and/or dessert, or any additional SKUs
which include coated or uncoated, cooked or frozen, seafood
which may from time to time be developed by Seller or any of
its affiliates or divisions and sold under the "Swanson" or
another of Seller's brand names provided that no such SKUs
contain frozen fried coated seafood products in other than a
multi-component presentation,
(ii) the ownership of less than 20% of the equity securities or
other interest in any enterprise, provided such ownership is
passive other than the exercise of shareholder rights, or
(iii) participation in the management of any enterprise or any
business operation thereof not owned by Seller, other than
management of a Competitive Operation of such enterprise.
The covenants of Seller set forth above shall not restrict Seller from
acquiring in any manner, and subsequently operating and managing, any
business, organization, company or other entity which, directly or
indirectly,
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manufactures, sells or distributes any frozen fried coated seafood
products so long as the sale of frozen fried coated seafood in North
America represents less than 25% of the total revenues of the entity
acquired. In no event shall this covenant not to compete prohibit
Seller from fulfilling its obligations under the Co-Pack Agreement.
(b) Seller agrees that (i) a breach by it of this Section 8.2 will result
in irreparable harm to Buyer, (ii) Buyer's damages at law would be
inadequate, and (iii) Seller consents to the entry of an immediate
injunction enjoining such breach upon Buyer's proof that Seller has
breached the provisions of this Section 8.2. In the event that this
covenant not to compete shall be determined by any court of competent
jurisdiction to be unenforceable by reason of its extending for too
long a period of time or over too large a geographical area or by
reason of its being too extensive in any other respects, it shall be
interpreted to extend only over the longest period of time for which
it may be enforceable, and/or over the largest geographical area as to
which it may be enforceable and/or to the maximum extent in all other
aspects as to which it may be enforceable, all as determined by such a
court in such action.
8.3 CERTAIN TAX MATTERS
(a) Buyer and Seller will reasonably cooperate with each other in
providing such tax-related certificates and information requested for
purposes of reducing or eliminating Transfer Taxes or other taxes or
assessments arising from the transfer of the Purchased Assets.
(b) As soon as practicable following the Closing, but in no event later
than sixty (60) days after the close of Seller's tax year, Buyer shall
deliver to Seller and otherwise give Seller and its accountants access
to such information and data and books and records as Seller may
reasonably request, including such information required by Seller's
customary Tax and accounting questionnaire, in order to enable Seller
and its affiliates to complete and file all federal, state and local
returns, schedules and other documents that may be required to be
filed by it and to otherwise enable Seller and its affiliates to
satisfy its internal accounting, Tax and other requirements with
respect to the Purchased Assets and the operation of the Mrs. Paul's
Business.
8.4 OTHER MATTERS
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(a) Buyer agrees that it will not give notice of termination under any
brokerage agreement included in the Contracts until the later of (i)
April 15, 1996 and (ii) 30 days after the Closing Date; provided,
however, that Seller may give notice of termination to up to one such
broker as of the Closing Date.
(b) If the Closing shall occur on or before February 29, 1996, Buyer
agrees to pay one-half (50%) of the insertion costs incurred by Seller
in connection with the coupon drop scheduled for February 11, 1996.
(c) From and after the Closing, Buyer and Seller shall cooperate with each
other to have Buyer pay all Assumed Liabilities (or provide
reimbursement to Seller if it pays them) and to have Seller pay all
Retained Liabilities (or provide reimbursement to Buyer if it pays
them).
9. CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE
The obligation of Buyer to purchase the Purchased Assets under this
Agreement is subject to the satisfaction, at or before the Closing, of all
the conditions set out below in this Section 9. Buyer may waive any or all
of these conditions in whole or in part.
9.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES; PERFORMANCE BY SELLER
The representations and warranties of Seller contained in this Agreement
shall be true in all material respects, except for changes permitted or
contemplated by this Agreement, on the Closing Date with the same effect as
if made at that time (except to the extent that they expressly relate to an
earlier date). Seller shall have performed and complied in all material
respects with all covenants, agreements and conditions required by this
Agreement to be performed or satisfied by it prior to or on the Closing
Date. Seller shall have delivered to Buyer a certificate signed by an
authorized officer, dated the Closing Date, certifying to the foregoing
effect.
9.2 CERTIFIED RESOLUTIONS
Buyer shall have received a certificate of an authorized officer of Seller,
satisfactory to Buyer, with respect to the authorization by the board of
directors of Seller of the transactions contemplated hereby.
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9.3 LITIGATION OR PROCEEDINGS
No statute, rule or regulation or order of any court or Governmental Entity
shall be in effect which prohibits the transactions contemplated by this
Agreement or which would have a material adverse effect on Buyer's use or
ownership of the Purchased Assets or conduct of the Mrs. Paul's Business
following the Closing, nor shall there be pending or threatened any
litigation, suit, action or proceeding by any party which will have a
material adverse effect on Buyer's use or ownership of the Purchased Assets
or conduct of the Mrs. Paul's Business following the Closing.
9.4 CONSENTS
All statutory and regulatory consents and approvals required of any
Governmental Entity shall have been obtained; and any waiting period under
the HSR Act shall have expired. The applicable lessor shall have consented
to the assignment to Buyer of the equipment leases listed on Schedule 5.12,
or Seller shall have made available to Buyer the use of the equipment
subject to such leases at the same cost as would apply if they were
assigned to Buyer at Closing.
9.5 TRANSITION SERVICES AGREEMENT
Seller shall have entered into the Transition Services Agreement at or
prior to Closing.
9.6 CO-PACK AGREEMENT
Seller shall have entered into the Co-Pack Agreement at or prior to
Closing.
9.7 MPK INDEMNITY
Seller shall have executed and delivered the MPK Indemnity at or prior to
Closing.
9.8 LEGAL OPINION
Buyer shall have received the opinion of the General Counsel or Deputy
General Counsel of Seller as to the matters set forth on Exhibit 9.8
hereto.
9.9 PURCHASE AGREEMENT
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The conditions precedent to consummation of the transaction contemplated by
the VDK Purchase Agreement shall have been satisfied or waived concurrently
with the consummation of the transactions under this Agreement.
9.10 FAIRNESS OPINION
The Buyer shall have received the opinion of an investment bank mutually
acceptable to Buyer and Seller addressed to Buyer and VDK stating that the
terms of the VDK Purchase Agreement are fair to VDK from a financial point
of view, and Seller shall have paid the fees and expenses related to such
fairness opinion.
9.11 WAIVER OF CONDITIONS
Notwithstanding the failure of any one or more of the foregoing conditions,
Buyer may proceed with the Closing without satisfaction, in whole or in
part, of any one or more of such conditions and upon written waiver. To
the extent that Buyer proceeds with the Closing, Buyer shall be deemed to
have waived for all purposes any rights or remedies it may have against
Seller by reason of the failure of any such conditions.
10. CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE
The obligation of Seller to sell and transfer the Purchased Assets under
this Agreement is subject to the satisfaction, at or before the Closing, of
all the following conditions. Seller may waive any or all of these
conditions in whole or in part.
10.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES; PERFORMANCE BY BUYER
The representations and warranties of Buyer contained in this Agreement
shall be true in all material respects, except for changes permitted or
contemplated by this Agreement, on the Closing Date with the same effect as
if made at that time (except to the extent that they expressly relate to an
earlier date). Buyer shall have performed and complied in all material
respects with all covenants, agreements and conditions required by this
Agreement to be performed or satisfied by it prior to or on the Closing
Date. Buyer shall have delivered to Seller a certificate signed by an
authorized officer of Buyer, dated the Closing Date, certifying to the
foregoing effect.
10.2 CERTIFIED RESOLUTIONS
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Seller shall have received a certificate of an authorized officer of Buyer,
in form and substance satisfactory to Seller, with respect to the
authorization by the board of directors of Buyer of the execution and
delivery of this Agreement and the Related Agreements and the consummation
of the transactions contemplated hereby.
10.3 LITIGATION OR PROCEEDINGS
No statute, rule or regulation or order of any court or Governmental Entity
shall be in effect which prohibits the transactions contemplated by this
Agreement or which would prohibit Seller's consummating the transactions
contemplated hereunder, nor shall there be pending or threatened any
litigation, suit, action or proceeding by any party which could prohibit
Seller's consummation of the transactions contemplated hereby.
10.4 REGULATORY APPROVALS
All statutory and regulatory consents and approvals required of any
Governmental Entity shall have been obtained; and any waiting period under
the HSR Act shall have expired.
10.5 TRANSITION SERVICES AGREEMENT
Buyer shall have entered into the Transition Services Agreement.
10.6 CO-PACK AGREEMENT
Buyer shall have entered into the Co-Pack Agreement at or prior to Closing.
10.7 LEGAL OPINION
Seller shall have received the opinion of Richards & O'Neil, LLP as to the
matters set forth on Exhibit 10.7 hereto.
10.8 WAIVER OF CONDITIONS
Notwithstanding the failure of any one or more of the foregoing conditions,
Seller may proceed with the Closing without satisfaction, in whole or in
part, of any one or more of such conditions and upon written waiver. To
the extent that Seller proceeds with the Closing, Seller shall be deemed to
have waived for all purposes any rights or remedies it may have against
Buyer by reason of the failure of any such conditions or the breach of any
such representations.
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11. THE CLOSING
11.1 THE CLOSING
The closing of the sale and purchase of the Purchased Assets (the
"Closing") shall take place at 10:00 a.m. on February 26, 1996 (or
thereafter on the first business day of a subsequent week as soon as
practicable following satisfaction of all conditions to the Closing) (such
time and date being referred to as the "Closing Date") at the offices of
Richards & O'Neil, LLP, or on such other date or at such other time or
place as may be mutually agreed upon by the parties hereto. Except as
provided in Section 12, failure to consummate the Closing shall not result
in the termination of this Agreement or relieve any person of any
obligation hereunder.
11.2 ITEMS TO BE DELIVERED AT CLOSING BY SELLER
At the Closing, Seller shall deliver to Buyer:
(a) A Bill of Sale in a form reasonably satisfactory to the parties and
their counsel, transferring the Purchased Assets to Buyer;
(b) An Assignment and Assumption Agreement (the "Assignment and Assumption
Agreement") in a form reasonably satisfactory to the parties and their
counsel;
(c) Such other instruments of transfer and conveyance (including
appropriate assignments as to Intellectual Property (the "Trademark
Assignments")) as Buyer shall reasonably deem necessary or desirable
to effectively vest in Buyer good and marketable title to the
Purchased Assets; and
(d) The certificates and agreements referred to in Section 9 hereof.
11.3 ITEMS TO BE DELIVERED AT CLOSING BY BUYER
At the Closing, Buyer shall deliver to Seller:
(a) The Buyer Note, together with appropriate documentation of any and all
collateral securing such Buyer Note as may be requested by Seller;
(b) The Assignment and Assumption Agreement; and
(c) The certificates and agreements referred to in Section 10 hereof.
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12. TERMINATION
12.1 TERMINATION
This Agreement may be terminated prior to the Closing Date:
(a) by mutual consent;
(b) by either Buyer or Seller, if the transactions contemplated hereby are
not consummated on or before March 29, 1996, or if as of such date the
Closing shall not have occurred by reason of the failure to satisfy
the conditions set forth in Sections 9.4 and 10.4 hereof and all other
conditions set forth in Sections 9 and 10 could have been satisfied as
of such date but for such failure, on or before May 17, 1996 (or such
later date as may be agreed upon in writing by the parties hereto)
(the "Final Termination Date"), provided, however, that the right to
terminate this Agreement under this Section 12.1(b) shall not be
available to any party whose failure to fulfill 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; or
(c) by either of Seller or Buyer if there has been a material
misrepresentation or material breach on the part of the other party in
the representations, warranties, covenants or agreements set forth in
this Agreement which is not cured within ten (10) business days after
such other party has been notified in writing of the intent to
terminate this Agreement pursuant to this Section 12.1(c).
12.2 EFFECT OF TERMINATION
In the event of termination of this Agreement pursuant to Section 12.1, all
rights of all parties hereto shall terminate, except for the
confidentiality provisions of Section 7.1(a), which shall survive
indefinitely and except for liability in the event the Closing does not
occur and this Agreement terminates by reason of a default or breach by any
party hereto.
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13. INDEMNITY
13.1 INDEMNITY BY SELLER
(a) Seller shall indemnify and hold Buyer, its successors, assigns,
officers, directors, agents, representatives and employees (each, a
"Buyer Indemnitee") harmless from and against any Indemnifiable Losses
which are suffered by a Buyer Indemnitee arising out of or as a result
of (a) any misrepresentation or breach of any representation, warranty
or covenant of Seller contained in this Agreement or (b) any Retained
Liability. Seller shall not be required to indemnify and hold
harmless Buyer with respect to any loss incurred by Buyer with respect
to a breach of any representation or warranty unless, until and then
only to the extent that the aggregate amount of all such Indemnifiable
Losses exceeds $500,000 (the "Threshold") whereupon Buyer may claim
indemnification only for the amount of such Indemnifiable Losses or
any portion thereof which exceeds the Threshold. Notwithstanding
anything to the contrary contained herein, the aggregate amount
required to be paid by Seller pursuant to this Section 13.1(a) shall
in no event exceed $25,000,000 in respect of Indemnifiable Losses for
breaches of representations and warranties.
(b) The indemnity remedy provided by this Section 13.1, subject to the
limitations set forth herein, shall be Buyer's exclusive remedy for
the recovery of any Indemnifiable Losses, damages, deficiencies,
liabilities, costs and expenses resulting from, relating to or arising
out of any misrepresentation or breach of representation or warranty
made by or on behalf of Seller in this Agreement or in any certificate
delivered by Seller pursuant hereto. In furtherance of the foregoing,
Buyer hereby waives, to the fullest extent permitted under applicable
law, any and all rights, claims and causes of action (including rights
of contribution, if any) with respect to a breach of any
representation or warranty it may have against Seller or any of
Seller's affiliates arising under or based upon any federal, state or
local statute, law, ordinance, rule, regulation or judicial decision
(including, without limitation, any such relating to environmental
matters or arising under or based upon any securities law, common law
or otherwise).
(c) Notwithstanding anything to the contrary contained herein, in no event
shall Buyer be permitted to offset any amount owed by Seller for any
reason (whether or not pursuant to this Section 13) against payments
due under the Buyer Note or any other Related Agreement; provided,
that Buyer may offset amounts due under the MPK Indemnity against any
amount Buyer owes to Seller under the Related Agreements.
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13.2 INDEMNITY BY BUYER
Buyer shall indemnify and hold Seller and its successors, assigns,
officers, directors, agents, representatives and employees (each, a "Seller
Indemnitee") harmless from and against any Indemnifiable Losses which are
suffered by a Seller Indemnitee arising out of or as a result of (a) any
misrepresentation or breach of any representation, warranty or covenant of
Buyer contained in this Agreement, or (b) any Assumed Liabilities.
13.3 INDEMNIFICATION PROCEDURES
(a) If an Indemnitee receives written notice of the assertion or
commencement of any Third Party Claim against such Indemnitee with
respect to which an Indemnifying Party is obligated to provide
indemnification under this Agreement, the Indemnitee will give such
Indemnifying Party reasonably prompt written notice thereof, but in
any event not later than twenty (20) calendar days after receipt of
such notice of such Third Party Claim. Such notice will describe the
Third Party Claim in reasonable detail, will include copies of all
material written evidence thereof and will indicate the estimated
amount, if reasonably practicable, of the Indemnifiable Loss that has
been or may be sustained by the Indemnitee. The Indemnifying Party
will have the right to participate in, or, by giving written notice to
the Indemnitee, to assume, the defense of any Third Party Claim at
such Indemnifying Party's own expense and by such Indemnifying Party's
own counsel (reasonably satisfactory to the Indemnitee), and the
Indemnitee will cooperate in good faith in such defense.
(b) If, within thirty (30) calendar days after giving notice of a Third
Party Claim to an Indemnifying Party pursuant to Section 13.3(a), an
Indemnitee receives written notice from the Indemnifying Party that
the Indemnifying Party has elected to assume the defense of such Third
Party Claim as provided in the last sentence of Section 13.3(a), the
Indemnifying Party will not be liable for any legal expenses
subsequently incurred by the Indemnitee in connection with the defense
thereof. Without the prior written consent of the Indemnitee, the
Indemnifying Party will not enter into any settlement of any Third
Party Claim unless such settlement provides for the full and
unconditional release of the Indemnitee from any and all liabilities
and obligations related to such Third Party Claim. If a firm offer is
made to settle a Third Party Claim and such offer provides for such
release of the Indemnitee and the Indemnifying Party desires to accept
and agree to such offer, the Indemnifying Party will give written
notice to the Indemnitee to that effect. If the Indemnitee fails to
consent to such firm offer within ten (10)
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calendar days after its receipt of such notice, the Indemnitee may
continue to contest or defend such Third Party Claim at its own
expense and, in such event, the maximum liability of the Indemnifying
Party as to such Third Party Claim will not exceed the amount of such
settlement offer, plus costs and expenses paid or incurred by the
Indemnitee through the end of such tenth calendar day period.
(c) Any claim by an Indemnitee on account of an Indemnifiable Loss which
does not result from a Third Party Claim (a "Direct Claim") will be
asserted by giving the Indemnifying Party reasonably prompt written
notice thereof, but in any event not later than twenty (20) calendar
days after the Indemnitee becomes aware of such Direct Claim, and the
Indemnifying Party will have a period of thirty (30) calendar days
within which to respond in writing to such Direct Claim. If the
Indemnifying Party does not so respond within such thirty (30)
calendar day period, the Indemnifying Party will be deemed to have
rejected such claim, in which event the Indemnitee will be free to
pursue such remedies as may be available to the Indemnitee on the
terms and subject to the provisions of this Section 13.
(d) A failure to give timely notice or to include any specified
information in any notice as provided in Sections 13.3(a), 13.3(b) or
13.3(c) will not affect the rights or obligations of any party
hereunder except and only to the extent that, as a result of such
failure, any party which was entitled to receive such notice was
deprived of its right to recover any payment under its applicable
insurance coverage or was otherwise prejudiced as a result of such
failure. A failure to give notice in the time specified in either
Sections 13.3(a) or (c) shall not, in and of itself, prejudice the
party entitled to such notice.
(e) If the amount of any Indemnifiable Loss, at any time subsequent to the
making of an Indemnity Payment, is reduced by a Third Party Recovery,
the amount of such Third Party Recovery, less any costs, expenses or
taxes incurred in connection therewith will promptly be repaid by the
Indemnitee to the Indemnifying Party. If such amount has not been
repaid by the Indemnitee to the Indemnifying Party within five (5)
days of the Indemnitee's receipt of the Third Party Recovery, such
amount will accrue interest from the date of payment thereof to the
date of repayment at a rate of interest equal to Prime Rate, as
publicly announced in the Wall Street Journal and in effect from time
to time during such period, plus 1 1/2%, calculated on the basis of
the actual number of days elapsed over 365 (the "Specified Rate").
The Indemnitee will use all reasonable efforts to pursue any such
claim, recovery, settlement or payment by or against any such insurer
or such other person or entity. Buyer shall use reasonable efforts to
obtain a
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waiver from its insurers of any rights they have to be subrogated to
Buyer's indemnification rights against Seller hereunder unless such
waiver would result in a breach of or termination of any insurance
under Buyer's insurance policies.
(f) Notwithstanding anything to the contrary contained herein, neither
party hereto shall be deemed to have breached any representation,
warranty or covenant if (i) such party shall have notified the other
party hereto in writing (in compliance with Section 7.1(d) if with
respect to a representation and warranty), on or prior to the Closing
Date, of the breach of, or inaccuracy in, or any facts or
circumstances constituting or resulting in the breach of or inaccuracy
in, such representation, warranty or covenant, and (ii) such other
party has permitted the Closing to occur and, for purposes of this
Agreement, is thereby deemed to have waived such breach or inaccuracy;
provided, however, that a disclosure pursuant to this Section 13.3(f)
shall not prejudice the rights of the parties pursuant to Sections 9,
10 or 12, as applicable, not to consummate the transactions
contemplated by this Agreement.
13.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The indemnification for breaches of representations and warranties provided
for in Section 13.1(a) and Section 13.2 shall be limited to claim notices
delivered within eighteen (18) months following the Closing Date (except as
otherwise provided in the MPK Indemnity); provided that indemnification for
a breach of Section 5.12 (Intellectual Property) shall be limited to claim
notices delivered prior to the fourth anniversary of the Closing Date; and
provided, further, that if there is pending at the applicable termination
date any claim for indemnification asserted under this Section 13 (whether
or not formal legal action shall have been commenced upon such claim), such
claim shall continue to be subject to indemnification in accordance with
this Agreement.
13.5 CORPORATE OBLIGATIONS
Buyer and Seller hereby acknowledge that the obligations of the parties to
this Agreement are obligations of such entities and that no shareholder,
director, member or officer of Buyer or Seller, in their capacity as such,
shall be personally liable for monetary damages resulting from any breach
of this Agreement, absent fraud on the part of such person.
-41-
<PAGE>
14. MISCELLANEOUS
14.1 RECOVERY OF LITIGATION COSTS
If any dispute resolution proceeding or legal action is brought for the
enforcement of this Agreement or the MPK Indemnity, or because of an
alleged dispute, breach, default or misrepresentation in connection with
any of the provisions of this Agreement, the successful or prevailing party
or parties shall be entitled to recover reasonable attorneys' fees and
other costs incurred in that action or proceeding, in addition to any other
relief to which it or they may be entitled.
14.2 ENTIRE AGREEMENT; MODIFICATION; WAIVER
This Agreement, together with the Related Agreements, constitutes the
entire agreement between the parties pertaining to the subject matter
contained herein and supersedes all prior and contemporaneous agreements,
representations, and undertakings of the parties. No supplement,
modification or amendment of this Agreement or the Related Agreements shall
be binding unless executed in writing by both parties hereto. No waiver of
any of the provisions of this Agreement shall be deemed, or shall
constitute, a waiver of any other provision, whether or not similar, nor
shall any waiver constitute a continuing waiver. Except as otherwise
provided in this Agreement, no waiver shall be binding unless executed in
writing by the party making the waiver.
14.3 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one
and the same instrument.
14.4 ASSIGNMENT
This Agreement shall be binding on, and shall inure to the benefit of, the
parties hereto and their respective heirs, legal representatives,
successors and assigns, but this Agreement shall not be assignable without
the prior written consent of the other parties hereto; provided that Buyer
may assign to an affiliate of Buyer its rights hereunder to purchase the
capital stock of MPK; and provided further that at or after the Closing
Buyer may assign this Agreement and the Related Agreements to VDK or any
other person reasonably acceptable to Seller provided that, pursuant to an
instrument reasonably acceptable to Seller, VDK or such other person (a
"Permitted Assignee") purchases and assumes the assets and liabilities
purchased and assumed by Buyer pursuant to this Agreement and assumes and
-42-
<PAGE>
agrees to perform all the obligations of Buyer pursuant to this Agreement
and the Related Agreements other than the Buyer Note, as if such Permitted
Assignee originally executed this Agreement and the Related Agreements
(other than the Buyer Note) as "Buyer". Upon assignment to a Permitted
Assignee in compliance with the foregoing sentence, such Permitted Assignee
shall be deemed for all purposes under this Agreement and the Related
Agreements (other than the Buyer Note) to be "Buyer" as if such Permitted
Assignee originally executed this Agreement and the Related Agreements
(other than the Buyer Note) in that capacity.
14.5 FEES AND EXPENSES
Except as otherwise specifically provided in this Agreement, each of Seller
and Buyer shall pay all fees, costs and expenses (including without
limitation legal, investment banking and accounting expenses) incurred or
to be incurred by it in negotiating and preparing this Agreement and in
closing and carrying out the transactions contemplated by this Agreement.
14.6 NOTICES
All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given
on the date of service if served personally by hand delivery to the party
to whom notice is to be given, or on the third day after mailing if mailed
to the party to whom notice is to be given, by first class mail, registered
or certified, postage prepaid, and properly addressed, or upon receipt of
"good" transmission if sent by telecopy, as follows:
If to Campbell:
Campbell Soup Company
Campbell Place
Camden, New Jersey 08103-1799
Attention: Corporate Secretary
With a copy to:
Linda A. Lipscomb, Esquire
Deputy General Counsel
Campbell Soup Company
Campbell Place
Camden, New Jersey 08103-1799
-43-
<PAGE>
If to Buyer:
Shellfish Acquisition Company, LLC
c/o Dartford Partnership L.L.C.
801 Montgomery Street
Suite 400
San Francisco, CA 94133
Attention: President
With a copy to:
Richards & O'Neil, LLP
885 Third Avenue
New York, New York 10022
Attention: Craigh Leonard
Any party may change its address for purposes of this Section by giving the
other party written notice of the new address in the manner set forth above.
-44-
<PAGE>
14.7 THIRD PARTY BENEFICIARIES
Buyer and Seller agree and acknowledge that VDK is intended to be a
beneficiary of the promises, obligations and rights of Seller under this
Agreement and that VDK may enforce this Agreement against Seller in the
same manner and to the same extent as Buyer.
14.8 GOVERNING LAW
This Agreement shall be construed in accordance with and governed by the
laws of the State of New York.
14.9 EFFECT OF HEADINGS
The subject headings in this Agreement are included for purposes of
convenience only, and shall not affect the construction or interpretation
of any of its provisions.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed it on
the day and year first above written.
SHELLFISH ACQUISITION
COMPANY, LLC
By: /s/ James B. Ardrey
--------------------------
Title: Member
CAMPBELL SOUP COMPANY
By: /s/ Keith Lou Donner
--------------------------
Title: President, Frozen Foods Group
-45-
<PAGE>
EXHIBIT 4.1
NON-RECOURSE PROMISSORY NOTE
$____________ ________, 1996
SHELLFISH ACQUISITION COMPANY, LLC ("Maker"), for value received and
intending to be legally bound, hereby promises to pay to the order of CAMPBELL
SOUP COMPANY ("Payee"), at Payee's office at Campbell Place, New Jersey or at
such other office as Payee designates in writing to Maker, the principal sum of
$_______, together with all accrued but unpaid interest, as described below.
Payments of principal and interest hereunder shall be in such coin or currency
of the United States of America as at the time of payment is legal tender for
the payment of public and private debts.
This Note was issued by Maker contemporaneously with the closing of
the purchase and sale of certain assets of Payee under the Asset Purchase and
Sale Agreement dated as of January 17, 1996 between Payee and Maker. As
security for the payment of the principal and interest due and payable
hereunder, Maker has caused to be delivered to Payee an irrevocable standby
letter of credit. Other than its right to draw under such letter of credit,
Payee shall have no recourse against Maker for payment of principal and interest
under this Note, that is, Payee shall look solely to such letter of credit for
the payment of the interest and principal under this Note and no other property
or assets of the Maker or any of the Maker's officers, directors, shareholders
or principals shall be subject to levy, execution or other enforcement procedure
for any payment required to be made under this Note, or for the performance or
observance of any obligations contained herein.
This Note shall be due and payable on August 22, 1996.
Maker promises to pay interest on the unpaid principal amount of this
Note at an annual rate of *%. Such interest shall be due and payable upon
payment of the principal amount hereof.
This Note may not be prepaid prior to maturity.
An "Event of Default" under this Note shall occur if:
(i) Maker fails to pay the accrued interest or principal on this
Note when and as it shall become due and payable, whether at maturity or
otherwise; or
(ii) Maker shall be adjudicated a bankrupt or insolvent, or admit
in writing its inability to pay debts as they mature, or make any assignment for
the benefit of its creditors; or Maker shall apply for or consent to the
appointment of any receiver, trustee, or similar officer for Maker or for all or
any substantial part of its property; or such receiver, trustee or similar
officer shall
- ----------------------------
* Rate payable on Treasury Bills maturing on August 22, 1996, after giving
effect to any premium or discount reflected in the purchase price of such
Treasury Bills on the Closing Date.
<PAGE>
be appointed without the application or consent of Maker and shall continue
undischarged for a period of 30 days; or Maker shall institute (by petition,
application, answer, consent or otherwise) any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, dissolution, liquidation or
similar proceeding relating to Maker under the laws of any jurisdiction; or any
such proceeding shall be instituted (by petition, application or otherwise)
against Maker and an order for relief shall be entered in such proceeding or
such proceeding shall remain undismissed for a period of 30 days; or any
judgement, writ, warrant of attachment or execution or similar process shall be
issued or levied against property of Maker which represents a substantial
portion of its property and such judgement, writ, or similar process shall not
be released, vacated or fully bonded within 30 days after its issue or levy.
If an Event of Default occurs and is continuing, then Payee may
declare the principal of this Note and accrued interest hereunder to be due and
payable immediately by a notice in writing to Maker and upon any such
declaration such principal and accrued interest hereunder shall become
immediately due and payable.
No amendment, modification or waiver of any provision of the Note nor
consent to any departure by Maker therefrom shall be effective unless the same
shall be in writing and signed by Payee and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
Maker hereby waives any requirements of presentment for payment,
notice of dishonor, notice of protest and protests.
Payment of this Note shall not be subject to any counterclaim,
setoff, recoupment or defense of any kind by or in the right of Maker, and Maker
hereby expressly and irrevocably waives any right Maker may now or at any time
in the future have to bring or assert any such counterclaim, setoff, recoupment
or defense. It is the intention of Maker and the Payee in this regard that this
Note shall be paid absolutely according to its terms and that Maker shall pursue
any claims Maker may have by independent action.
This Note shall be deemed to be a contract made under the laws of the
State of New York and shall be construed in accordance with the laws of said
State, without giving effect to principles of conflicts of laws.
The terms hereof shall inure to the benefit of Payee and its
successors and assigns, including subsequent holders hereof.
SHELLFISH ACQUISITION COMPANY, LLC
By: ________________________________
(President)
Attest:
_______________________
Secretary
<PAGE>
EXHIBIT 7.7 (a)
KEY TERMS OF TRANSITION SERVICES AGREEMENT
------------------------------------------
TERM: 90 days. Buyer shall have the option to extend the term for additional
30 day periods, upon 30 days prior notice, as agreed to by Seller and
Buyer.
SERVICES:
a. Purchasing
b. Accounting
c. MIS
d. Engineering
e. Manufacturing Operations Support
f. Working Capital Administration
g. Order entry/Sales Accounting/Credit and Collections
h. Deduction Clearing
SPECIAL REQUESTS: Buyer will pay for any services which exceed the scope of the
day-to-day running of the Mrs. Paul's business.
FEES: To be mutually agreed to by Buyer and Seller.
PAYMENT TERMS: Bi-weekly. Payment due 10 days upon receipt of invoice.
<PAGE>
EXHIBIT 7.7(b)
KEY TERMS OF CO-PACKING AGREEMENT
Term: 90 days. Buyer shall have the option to extend the term for additional 30
day periods, upon 30 days prior notice, as agreed to by Seller and Buyer.
Services:
a. MANUFACTURING
. PRODUCTS - See attached page.
. QUANTITIES
. Minimum quantities to be mutually agreed to by Buyer and
Seller.
. Mechanism and notice requirements relating to Buyer's delivery
of monthly forecasts to be mutually agreed to by Buyer and
Seller.
. FEE - To be agreed to by Buyer and Seller.
. PAYMENT TERMS - Biweekly. Payment due 10 days upon receipt of
invoice.
. PURCHASE REQUIREMENTS: Buyer will be responsible for purchasing and
supplying to Seller any necessary quantities
of depleted inventories.
b. INGREDIENT STORAGE
. FEE - Actual cost incurred by Seller for storage of ingredients and
packaging materials.
. PAYMENT TERMS - Monthly. Payment due 10 days upon receipt of
invoice.
c. DISTRIBUTION
. FEE - To be mutually agreed to by Buyer and Seller.
. PAYMENT TERMS - Monthly. Payment due ten days upon receipt of
invoice.
<PAGE>
MRS. PAUL'S KITCHEN
MOA DESCRIPTION
---------------
10207 C.C. FLT (4) - 8 OZ.
10208 C.C. FLT (7) - 11.9 OZ.
10213 BAT DIP COD FILLETS
10214 C.C. (10) - 6.7 OZ.
10215 C.C. (16) - 10.6 OZ.
10230 C.C. FLT (10) - 19.2 OZ.
10231 C.C. FLT (10)
10232 LT COD
10233 LT FLOUNDER
10234 LT SOLE
10235 LT HADDOCK
10243 C.C. (30) - 20.1 OZ.
10244 C.C. (30) - 8 PACK
10291 MPK FISH SANDWICH
11101 DEV CRABS (2)
11102 FAM DEV CRABS 6
11103 DEV CRAB MIN
11105 FRIED SCALLOPS
11109 FISH CAKES
11116 LT FILLETS & BUTTER SAUCE
11127 MINCED FISH STKS
11128 MINCED FILLETS
11133 CANDIED YAMS
11135 ONION RINGS - 8 OZ.
11137 EGGPLANT PARMIGIANA
11140 CORN FRITTER
11141 APPLE FRITTER
11142 SWEETS & APPLES
11144 FAMILY YAMS
11145 ONION RINGS - 14 OZ.
11189 LT BAT STK - (16)
11198 MINCED FLT
11199 10 COUNT MINCED STK
<PAGE>
Exhibit 9.8
-----------
Issues to be addressed in the
-----------------------------
Opinion of Counsel for Seller
-----------------------------
(i) Seller has full corporate power and authority to enter into and
perform its obligations under the Agreement and the Related Agreements. The
Agreement and the Related Agreements have been duly authorized, executed and
delivered and are valid, legal and binding agreements of Seller enforceable
against it in accordance with their respective terms, except (a) that such
enforceability may be subject to bankruptcy, insolvency, reorganization,
moratorium or other laws, decisions or equitable principles now or hereafter in
effect relating to or affecting the enforcement of creditors rights or debtors'
obligations generally, and (b) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
(ii) Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of New Jersey.
(iii) Seller has the full corporate power, authority and legal right
to own its properties and assets included in the Mrs. Paul's Business and to
conduct the Mrs. Paul's Business as and where presently conducted.
(iv) Neither the execution and delivery of the Agreement and the
Related Agreements nor compliance by Seller with their terms and provisions will
(a) violate any provision of Seller's or CSC's articles of incorporation or
bylaws; (b) violate, permit acceleration or termination under or result in the
creation of any lien or other encumbrance on any of the Purchased Assets under
any contract provision, license, franchise or Permit to which Seller or CSC is a
party or by which either of them is or the Purchased Assets are bound; or (c)
violate or result in the creation of any lien or other encumbrance on any of the
Purchased Assets under any law, statute or regulation or any injunction, order
or decree of any Governmental Entity or court to which Seller or CSC is subject.
(v) Seller has (except for assets acquired between the date hereof
and the Closing Date), and will have on the Closing Date (immediately prior to
the Closing), good and marketable title to all of the Purchased Assets (except
for certain of the Intellectual Property as to which CSC has such title), free
and clear of all liens and encumbrances.
(vi) All regulatory consents, authorizations, approvals and filings
required to be obtained or made by Seller under the Federal laws of the United
States and the laws of the State of New Jersey for the consummation of the
transactions contemplated by the Agreement and the Related Agreement have been
obtained or made.
<PAGE>
(vii) To such counsel's knowledge, there is no action, suit,
proceeding or investigation pending or threatened against Seller with respect to
the Mrs. Paul's Business, before any court, arbitration or other governmental
agency or authority, which questions the validity of the Agreement or any of the
Related Agreements on which, individually, or in the aggregate, would have a
Material Adverse Effect.
<PAGE>
Exhibit 10.7
------------
Issues to be Addressed in the
-----------------------------
Opinion of Counsel of Buyer
---------------------------
(i) Buyer has full limited liability company power to make, execute,
deliver and perform its obligations under the Agreement and the Related
Agreements. The Agreement and the Related Agreements have been duly authorized,
executed and delivered and are valid, legal and binding agreements of Buyer
enforceable against it in accordance with their respective terms, except (a)
that such enforceability may be subject to bankruptcy, insolvency,
reorganization, moratorium or other laws, decisions or equitable principles now
or hereafter in effect relating to or affecting the enforcement of creditors'
rights or debtors' obligations generally, and (b) that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(ii) Buyer is a limited liability company duly organized, validly
existing and in good standing under the laws of Delaware.
(iii) Buyer has the full limited liability company power, authority
and legal right to own its properties and assets and to conduct its business as
currently being conducted.
(iv) Neither the execution and delivery of this Agreement nor
compliance by Buyer with its terms and provisions will violate (a) any contract
provision, license, franchise or permit to which Buyer is a party or by which it
is bound; or (c) any law, statute or regulation or, insofar as is known to
counsel, any injunction, order or decree of any Governmental Entity or courts to
which Buyer is subject except where, in all cases, such a violation would not
prohibit or materially impair Buyer's ability to perform its obligations under
the Agreement.
(v) All regulatory consents, authorizations, approvals and filings
required to be obtained or made by Buyer under the Federal laws of the United
States and the laws of the State of Delaware for the consummation of the
transactions contemplated by the Agreement and the Related Agreement have been
obtained or made.
(vi) To such counsel's knowledge, there is no action, suit,
proceeding or investigation pending or threatened against Buyer, before any
court, arbitration or other governmental agency or authority, which questions
the validity of the Agreement or any of the Related Agreements or which would
prohibit or materially impair Buyer's ability to perform its obligations
thereunder.
(vii) VDK has full corporate power to make, execute, deliver and
perform its obligations under the VDK Purchase Agreement. The VDK Purchase
Agreement has
<PAGE>
been duly authorized, executed and delivered and is a valid, legal and binding
agreement of VDK enforceable against it in accordance with its terms, except (a)
that such enforceability may be subject to bankruptcy, insolvency,
reorganization, moratorium or other laws, decisions or equitable principles now
or hereafter in effect relating to or affecting the enforcement of creditors'
rights or debtors' obligations generally, and (b) that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(viii) VDK is a corporation duly organized, validly existing and in
good standing under the laws of Delaware.
(ix) VDK has the full corporate power, authority and legal right to
own its properties and assets and to conduct its business as currently being
conducted.
(x) Neither the execution and delivery of the VDK Purchase Agreement
nor compliance by VDK with its terms and provisions will violate (a) any
contract provision, license, franchise or permit to which VDK is a party or by
which it is bound; or (c) any law, statute or regulation or, insofar as is known
to counsel, any injunction, order or decree of any Governmental Entity or courts
to which VDK is subject except where, in all cases, such a violation would not
prohibit or materially impair VDK's ability to perform its obligations under the
VDK Purchase Agreement.
(xi) All regulatory consents, authorizations, approvals and filings
required to be obtained or made by VDK under the Federal laws of the United
States and the laws of the State of Delaware for the consummation of the
transactions contemplated by the VDK Purchase Agreement have been obtained or
made.
(xii) To such counsel's knowledge, there is no action, suit,
proceeding or investigation pending or threatened against VDK, before any court,
arbitration or other governmental agency or authority, which questions the
validity of the VDK Purchase Agreement or which would prohibit or materially
impair VDK's ability to perform its obligations thereunder.
<PAGE>
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "AGREEMENT") is dated as of January 17,
1996. The parties are Van de Kamp's, Inc., a Delaware corporation whose address
is 1000 St. Louis Station, St. Louis, Missouri ("Buyer"), and Shellfish
Acquisition Company, LLC, whose address is c/o Dartford Partnership L.L.C., 801
Montgomery Street, Suite 400, San Francisco, California 91433 ("Seller").
W I T N E S S E T H:
-------------------
WHEREAS, Seller has entered into an Asset Purchase and Sale Agreement (the
"PURCHASE AGREEMENT") with Campbell Soup Company, a New Jersey corporation
("CAMPBELL") pursuant to which Seller has agreed to purchase the Purchased
Assets and assume the Assumed Liabilities (capitalized terms used in this
Agreement not otherwise defined herein shall have the meanings ascribed to such
terms in the Purchase Agreement); and
WHEREAS, Buyer desires to buy from Seller the Purchased Assets and to
assume the Assumed Liabilities on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties herein contained, and for other valuable
consideration the receipt and sufficiency of which is hereby acknowledged,
Seller and Buyer agree as follows:
1. PURCHASE AND SALE OF ASSETS AND ASSUMPTION OF LIABILITIES
---------------------------------------------------------
1.1 Purchase and Sale of Assets. On the Closing Date, Buyer shall purchase
from Seller, and Seller shall sell to Buyer, subject to all of the terms and
conditions of this Agreement and on the basis of the representations, warranties
and covenants herein contained, all of Seller's right, title, benefits and
interest in and to the Purchased Assets (other than MPK), the Related Agreements
(other than the Buyer Note and the MPK Indemnity) and the Purchase Agreement.
1.2 Assumption of Assumed Liabilities. At the Closing, Buyer shall, by an
appropriate instrument of assumption, assume and thereafter pay, perform and
fully satisfy, in a timely manner and in accordance with the terms thereof, the
Assumed Liabilities and the obligations of the Seller under the Purchase
Agreement and the Related Agreements (other than the Buyer Note and the MPK
Indemnity).
2. PURCHASE PRICE
--------------
In addition to the Assumed Liabilities, the purchase price (the "PURCHASE
PRICE") for the Purchased Assets shall be $72,500,000, as adjusted pursuant to
Section 4.2 of the Purchase Agreement, which shall be payable at the Closing by
wire transfer of
<PAGE>
immediately available funds to an account specified in writing at least three
days prior to the Closing by Seller to Buyer.
3. REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller represents and warrants to Buyer as follows:
3.1 Due Organization, Authority. Seller is a limited liability company
duly organized, validly existing and in good standing under the laws of its
state of organization. Seller has fully limited liability company power and
authority to enter into and perform its obligations under this Agreement and the
Related Agreements (other than the Buyer Note). This Agreement is the valid,
legal and binding agreement of Seller enforceable against it in accordance with
its terms.
3.2 No Violation of Agreements. Neither the execution and delivery of this
Agreement nor compliance by Seller with its terms and provisions will violate
(i) any provision of the limited liability company agreement or bylaws of
Seller; (ii) any contract provision, license, franchise or permit to which Buyer
is a party or by which it is bound; or (iii) any law, statute or regulation or,
insofar as is known to Seller, any injunction, order or decree of any
Governmental Entity or courts to which Seller is subject except where, in all
cases, such violation would not prohibit or materially impair Seller's ability
to perform its obligations under this Agreement.
3.3 Consents and Approvals. Except as may be required under the
Hart-Scott-Rodino Act (the "HSR Act"), to Seller's knowledge, no approval,
consent, waiver or authorization or filing or registration with any Governmental
Entity is required to be made in connection with Seller's execution, delivery
and performance of this Agreement.
3.4 Brokers. Neither Seller nor any of Seller's officers, directors or
employees has employed any broker, finder or financial advisor, or incurred any
liability for any brokerage fee or commission, finder's fee or financial
advisory fee, in connection with the transactions contemplated by this
Agreement, nor is there any basis known to Seller for any such fee or commission
to be claimed by any person.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Seller as follows:
4.1 Due Incorporation, Authority. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of its state
of incorporation. Buyer has full corporate power and authority to enter into and
perform its obligations under this Agreement and the Related Agreements (other
than the Buyer Note and the MPK Indemnity). This Agreement is the valid, legal
and binding agreement of Buyer enforceable against it in accordance with its
terms. Buyer is qualified to do business in the jurisdictions in which its
ownership or property or conduct of business legally requires such
qualification, except
-2-
<PAGE>
jurisdictions in which the failure to be so qualified does not have a material
adverse effect on the financial condition, properties or operations of Buyer.
Buyer has the full corporate power, authority and legal right to own its
properties and assets and to conduct its business as presently being conducted.
4.2 No Violation of Agreements. Neither the execution and delivery of
this Agreement nor compliance by Buyer with its terms and provisions will
violate (i) any provision of the certificate of incorporation or bylaws of
Buyer; (ii) any contract provision, license, franchise or permit to which Buyer
is a party or by which it is bound; or (iii) any law, statute or regulation or,
insofar as is known to Buyer, any injunction, order or decree of any
Governmental Entity or courts to which Buyer is subject except where, in all
cases, such violation would not prohibit or materially impair Buyer's ability
to perform its obligations under this Agreement.
4.3 Consents and Approvals. Except as may be required under the HSR
Act, to Buyer's knowledge, no approval, consent, waiver or authorization or
filing or registration with any Governmental Entity is required to be made in
connection with Buyer's execution, delivery and performance of this Agreement.
4.4 Financial Capacity. Buyer has provided to Seller true and complete
copies of the commitment letters for the senior bank debt and equity financing
(the "Financing") contemplated by Buyer to finance the acquisition of the
Purchased Assets hereunder (the "Financing Commitments"). The Financing
Commitments have been accepted by Buyer and are in full force and effect. As of
the date hereof, Buyer is not aware of any fact or circumstance which could
reasonably be expected to prevent Buyer from obtaining the Financing on the
terms contained in the Financing Commitments.
4.5 Brokers. Neither Buyer nor any of Buyer's officers, directors or
employees has employed any broker, finder or financial advisor, or incurred any
liability for any brokerage fee or commission, finder's fee or financial
advisory fee, in connection with the transactions contemplated by this
Agreement, nor is there any basis known to Buyer for any such fee or commission
to be claimed by any person.
5. PRE-CLOSING COVENANTS
---------------------
5.1 Cooperation. Each of Buyer and Seller agrees to cooperate with
the other in the performance of all obligations under this Agreement and to use
reasonable efforts in good faith to fulfill its obligations under this Agreement
and to satisfy or cause to be satisfied, at or before the Closing, the
conditions to each party's performance under this Agreement insofar as such
conditions are within the control of such party, including obtaining any
consents and approvals of any Governmental Entity required to be obtained by
either of them in order to permit the consummation of the transactions
contemplated by this Agreement, or to otherwise satisfy the conditions set forth
in Section 6. Buyer and Seller agree to advise the other party promptly if such
party determines that any condition precedent to its obligations hereunder will
not be satisfied in a timely manner. In addition, Buyer
-3-
<PAGE>
hereby agrees, and agrees to cause its representatives, to take no action
outside the ordinary course of business reasonably likely to adversely affect
the business, properties, financial condition or results of operation of the
Mrs. Paul's Business (other than affecting competitors as a whole).
5.2 Financing. Buyer will use its commercially reasonable efforts to
cause the conditions of the lenders and equity investors set forth in the
Financing Commitments to be satisfied as of the Closing or to otherwise obtain
financing, whether from such lenders and investors or other lenders and
investors, required to consummate the transactions contemplated in this
Agreement. Prior to the Closing, Buyer will not take or fail to take any action
outside the ordinary course of business which would substantially risk Buyer's
ability to obtain such financing. Buyer will keep Seller reasonably informed of
the status of negotiations with respect to the Financing (or any alternative
financing) and will promptly notify Seller of any facts or circumstances of
which Buyer becomes aware that present, or indicate that there is, a significant
possibility that Buyer will not be able to obtain the Financing (or any
alternative financing) on the Closing Date.
6. CONDITIONS PRECEDENT
--------------------
The obligation of Buyer to purchase and Seller to sell the Purchased
Assets under this Agreement is subject to the satisfaction, at or before the
Closing, of all the conditions set out below in this Section 6. Buyer or Seller
may waive any or all of these conditions in whole or in part.
6.1 Accuracy of Representations and Warranties; Etc. The
representations and warranties of Campbell under the Purchase Agreement shall be
true in all material respects, except for changes permitted or contemplated by
the Purchase Agreement, on the Closing Date with the same effect as if made at
that time (except to the extent that they expressly relate to an earlier date).
Campbell shall have performed and complied in all material respects with all
covenants, agreements or conditions required by the Purchase Agreement to be
performed or satisfied by Campbell prior to or on the Closing Date.
6.2 Litigation or Proceedings. No statute, rule or regulation or
order of any court or Governmental Entity shall be in effect which prohibits the
transactions contemplated by this Agreement or which would have a material
adverse effect on Buyer's use or ownership of the Purchased Assets or conduct of
the Mrs. Paul's Business following the Closing, nor shall there be pending or
threatened any litigation, suit, action or proceeding by any party which will
have a material adverse effect on Buyer's use or ownership of the Purchased
Assets or conduct of the Mrs. Paul's Business following the Closing.
6.3 Regulatory Approval. All statutory and regulatory consents and
approvals required of any Governmental Entity shall have been obtained; and any
waiting period under the HSR Act shall have expired, in each case as required
under this Agreement and the Purchase Agreement.
-4-
<PAGE>
6.4 Financing. Buyer shall have received the proceeds of the
Financing.
6.5 Purchase Agreement. All the conditions to Seller's obligation to
purchase the Purchased Assets set forth in Section 9 and 11 of the Purchase
Agreement shall have been fulfilled or waived by Seller.
7. THE CLOSING
-----------
7.1 The Closing. The closing of the sale and purchase of the
Purchased Assets (the "Closing") shall take place simultaneously with the
closing of the transactions contemplated by the Purchase Agreement (such time
and date being referred to as the "Closing Date") at the offices of Richards &
O'Neil, LLP, 885 Third Avenue, New York, New York 10022-4873. Except as provided
in Section 8, failure to consummate the Closing shall not result in the
termination of this Agreement or relieve any person of any obligation hereunder.
7.2 Items to be Delivered at Closing by Seller. At the Closing,
Seller shall deliver to Buyer:
(a) a Bill of Sale in a form reasonably satisfactory to the parties
and their counsel, transferring the Purchased Assets (other than MPK) to Buyer;
(b) an Assignment and Assumption Agreement (the "Assignment and
Assumption Agreement") in a form reasonably satisfactory to Buyer, Seller,
Campbell and their counsel; and
(c) such other instruments of transfer and conveyance (including
appropriate assignments as to Intellectual Property) as Buyer shall reasonably
deem necessary or desirable to effectively vest in Buyer good and marketable
title to the Purchased Assets.
7.3 Items to be Delivered at Closing by Buyer. At the Closing, Buyer
shall deliver to Seller:
(a) the Purchase Price; and
(b) the Assignment and Assumption Agreement.
8. TERMINATION
-----------
8.1 Termination. This Agreement may be terminated prior to the
Closing Date:
(a) by Buyer if the transactions contemplated hereby are not
consummated on or before the Final Termination Date (or such later date as may
be agreed upon in writing by the Seller and Campbell); provided, however, that
the right to terminate this Agreement
-5-
<PAGE>
under this Section 8.1(a) shall not be available to Buyer if its failure to
fulfill 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; or
(b) by either Seller or Buyer if the Purchase Agreement is terminated
for any reason.
8.2 Effect of Termination. In the event of termination of this
Agreement pursuant to Section 8.1, all rights of the parties hereto shall
terminate except for liability in the event the Closing does not occur and this
Agreement terminates by reason of a default or breach by either party hereto.
9. MISCELLANEOUS
-------------
9.1 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.2 Notices. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given on the date of service if served personally by hand delivery to the party
to whom notice is to be given or on the third day after mailing if mailed to the
party to whom notice is to be given, by first class mail, registered or
certified, postage prepaid, and properly addressed, or upon receipt of "good"
transmission if sent via facsimile, as follows:
If to the Seller:
Shellfish Acquisition Company, LLC
c/o Dartford Partnership L.L.C.
801 Montgomery Street, Suite 400
San Francisco, CA 94133
Attention: President
Facsimile: 415-982-3023
If to the Buyer:
Van de Kamp's, Inc.
1000 St. Louis Union Station
St. Louis, MO 63103
Attention: President
Facsimile: 314-632-5690
Any party may change its address for purposes of this Section 9.2 by giving the
other party written notice of the new address in the manner set forth above.
-6-
<PAGE>
9.3 Third Party Beneficiaries. Buyer and Seller agree and acknowledge
that Campbell is intended to be a beneficiary of the promises, obligations and
rights of Buyer under this Agreement and that Campbell may enforce this
Agreement against Buyer in the same manner and to the same extent as Seller.
9.4 Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of New York.
9.5 Effect of Headings. The subject headings in this Agreement are
included for purposes of convenience only, and shall not affect the construction
or interpretation of any of its provisions.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed
it on the day and year first above written.
VAN DE KAMP'S, INC.
By /s/ James B. Ardrey
------------------------------
Name: James B. Ardrey
Title: Executive Vice President
SHELLFISH ACQUISITION COMPANY, LLC
By /s/ James B. Ardrey
------------------------------
Name: James B. Ardrey
Title: Member
-7-
<PAGE>
EXHIBIT 10.1
ANDERSEN EMPLOYMENT AGREEMENT
Employment Agreement, dated as of October 11, 1995, by and between Van
de Kamp's, Inc. (the "Company"), a Delaware corporation, and Timothy B. Andersen
(the "Employee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, upon the terms and subject to the conditions of this
Agreement, the Company desires to employ the Employee and the Employee desires
to accept employment by the Company:
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:
1. Employment. Upon the terms and subject to the conditions of this
Agreement, the Company hereby employs the Employee and the Employee hereby
accepts employment with the Company in the capacities hereinafter set forth.
2. Term of Employment. Except as provided in Article 6, the term (the
"Term") of this Agreement shall commence on October 11, 1995 and shall continue
in effect through September 30, 1998, provided that the Term of this Agreement
shall be automatically extended for successive annual periods of 12 months each
commencing on September 30, 1998.
3. Duties: Extent of Services.
(a) Duties. During the Term, the Employee shall serve in such
executive capacity as may be reasonably designated by the board of directors of
the Company (the "Board"), initially as Vice President-Finance of the Company,
and shall, in accordance with and subject to the provisions of the By-laws (as
amended from time to time) of the Company and as set forth in Schedule A hereto,
perform the duties, undertake the responsibilities and exercise the authority
customarily performed, undertaken and exercised by a person in such position in
the business in which the Company is engaged. The Employee shall report to and
carry out the lawful directions of the Board.
(b) Extent of Services. Except for illness and permitted vacation
periods, during the Term the Employee shall (i) devote his full time and
attention during normal business hours to the businesses of the Company and its
subsidiaries and affiliates; (ii) use
<PAGE>
his best efforts to promote the interests of the Company and its subsidiaries
and affiliates; (iii) discharge such executive and administrative duties not
inconsistent with his position as may be assigned to him by the Board; and (iv)
serve, without additional compensation, as a director or officer of any
subsidiary of the Company if elected as such.
4. Compensation.
(a) Base Salary. In consideration of the services rendered by the
Employee hereunder and provided that the Employee has substantially performed
all of his obligations provided for herein, the Company will pay to the Employee
a base salary (the "Base Salary") at the rate of $125,000 per year during the
Term. The Base Salary shall be paid in accordance with the Company's normal
payroll practice and shall be subject to annual review by the Board.
(b) Base Bonus. The Company shall pay the Employee a bonus with
respect to each fiscal year or portion thereof during the Term in accordance
with the following provisions:
(i) If the Financial Results of the Company for a fiscal year
during the Term are at least 90% but less than 95% of the EBITDA
Target for such year, Employee shall be paid an amount equal to 15% of
so much of his Base Salary as was paid with respect to such year.
(ii) If the Financial Results of the Company for a fiscal year
during the Term are at least 95% but less than 100% of the EBITDA
Target for such year, Employee shall be paid an amount equal to 22.5%
of so much of his Base Salary as was paid with respect to such year.
(iii) If the Financial Results of the Company for a fiscal year
equal or exceed 100% of the EBITDA Target for such year, Employee
shall be paid an amount equal to 30% of so much of his Base Salary as
was paid with respect to such year.
(c) Supplemental Bonus. In addition to the Base Bonus, if any, to
which the Employee may be entitled under Section 4(b), the Company shall pay the
Employee a bonus with respect to such fiscal year or portion thereof during the
Term in accordance with the following provisions:
(i) If the Financial Results of the Company for a fiscal year
during the Term are at least 105%, but less than 110% of the EBITDA
Target for
- 2 -
<PAGE>
such year. Employee shall be paid an amount equal to 5% of so much of his
Base Salary as was paid with respect to such year.
(ii) If the Financial Results of the Company for a fiscal year during
the Term are at least 110%, but less than 115% of the EBITDA Target for
such year, Employee shall be paid an amount equal to 10% of so much of his
Base Salary as was paid with respect to such year.
(iii) If the Financial Results of the Company for a fiscal year
during the Term are at least 115% but less than 120% of the EBITDA Target
for such year, the Employee shall be paid an amount equal to 15% of so much
of his Base Salary as was paid with respect to such year.
(iv) If the Financial Results of the Company for a fiscal year during
the Term equal or exceed 120% of the EBITDA Target for such year, the
Employee shall be paid an amount equal to 20% of so much of his Base Salary
as was paid with respect to such year.
(d) For the purpose of this Agreement (1) the term "EBITDA Target" shall
mean the Company's projected earnings before interest, taxes, depreciation and
amortization, as contained in the Company's annual budget which is approved by
the Board (without reference to any adjustments or revision, upwards or
downwards, to such projected earnings which are subsequently approved by the
Board as part of any subsequent revision to such annual budget), (2) the term
"Financial Results" shall mean the Company's annual financial results reflected
in the Company's annual audited financial statements and (3) the Company's
1996 fiscal year shall be deemed to begin as of the date hereof.
(e) The bonus due under Section 4(b) and (c) shall be paid to the Employee
within 30 days of the publication of the Company's annual audited financial
statements for the relevant year.
5. Other Employee Benefits. During the Term, the Employee shall be
entitled (i) to vacation time in accordance with the Company's policy from time
to time in effect; (ii) to participate in all employee insurance and other
fringe benefit programs, including, without limitation, life, health, dental and
accident insurance plans and long term disability now or hereafter maintained by
the Company for senior executive or other salaried personnel for which the
Employee is eligible; (iii) to participate in a pension plan with terms similar
to those applicable to executives of the Company; and (iv) to participate in a
long-term incentive plan that will be adopted by VDK Holdings, Inc., the
Company's parent.
-3-
<PAGE>
6. Termination Provisions.
(a) Termination for Cause. The Board may terminate the Employee's
employment hereunder for Cause, as hereinafter defined, immediately upon written
notice to the Employee. For purposes of this Agreement, "Cause" shall mean (A)
dishonesty of the Employee detrimental to the best interests of either the
Company or any of its subsidiaries or affiliates or conviction of the Employee
of a crime which constitutes a felony, (B) any material act or omission by the
Employee during the Term involving willful malfeasance or gross negligence in
the performance of his duties hereunder, or (C) repeated failure of the Employee
to follow the reasonable instructions of the Board (other than inattention or
neglect resulting from illness or disability of the Employee) which inattention
and neglect does not cease within fifteen days after written notice thereof
specifying the details of such conduct is given by the Board to the Employee.
During the Term, the Employee shall be entitled to only one such notice and
right to cure for any single act or event. If the Employee's employment is
terminated for Cause, the Employee shall be entitled to receive only the unpaid
portion of the Base Salary then in effect which has accrued to the date of
termination.
(b) Termination By Reason of Permanent Disability. If at any time during
the Term the Board reasonably determines that the Employee has been or will be
unable, as a result of physical or mental illness or incapacity, to perform his
duties hereunder for a period of four consecutive months or for an aggregate of
more than six months in any 12-month period (a "Permanent Disability"), the
Employee's employment hereunder may be terminated by the Board upon 30 days'
written notice to the Employee. If the Employee's employment is terminated by
reason of Permanent Disability, the Employee shall be entitled to receive only
the unpaid portion of the Base Salary then in effect which has accrued to the
date of termination plus an amount equal to six months of Employee's Base
Salary.
(c) Termination By Reason of Death. The Employee's employment hereunder
shall automatically terminate on the date of his death. If the Employee's
employment is so terminated by his death, the Company shall pay to the
Employee's estate in addition to the unpaid portion of the Base Salary then in
effect through the date of Employee's death an amount equal to six months of
Employee's Base Salary. Such amount shall be paid within 30 days after the date
of his death if a personal representative has been appointed by the end of such
30-day period or, if a personal representative has not been appointed by the end
of such 30-day period, promptly after a personal representative has been
appointed.
(d) Termination Without Cause. The Board may terminate the Employee's
employment hereunder at any time for any reason without Cause in which case the
Employee shall be entitled to receive an amount (the "Severance Amount") equal
to the greater of (i) one year's Base Salary then in effect, or (ii) the Base
Salary would have been
-4-
<PAGE>
entitled to receive through the end of the Term. The Severance Amount shall be
in lieu of any other severance payment to which Employee may be otherwise
entitled under any other severance plan maintained by the Company. The Severance
Amount shall be paid within 30 days of such termination. If Employee's
employment is terminated without cause after a Change of Control, the Severance
Amount shall be paid within 30 days of such termination. Employee shall be
entitled to receive an amount equal to the greater of (i) one year's Base Salary
then in effect or (ii) the Base Salary the Employee would have been entitled to
receive through the rest of the term. As used herein, "Change of Control"
shall mean a merger, consolidation, sale of all or substantially all of the
assets, or other change of control of the company.
7. Covenants of the Employee.
(a) Non-Competition. Except with respect to a termination described in
Section 6(d) hereof, until the first anniversary of the date of the termination
of the Employee's employment hereunder, the Employee shall not, directly or
indirectly, be associated with any entity which competes with the Company and
whose primary business is, or personally engage in, the same or similar line of
business of the Company, whether as a director, officer, employee, agent,
consultant, partner, owner, independent contractor or otherwise.
(b) Non-Solicitation of Employees of the Employer. Until the first
anniversary of the date of the termination of the employment of the Employee
hereunder, the Employee shall not, and shall cause each business or entity with
which he shall become associated in any capacity not to, solicit for employment
or employ any person who is then, or who was at any time after the date four
months prior to the date of such termination, employed in a professional or
managerial position by the Company, its subsidiaries or affiliates.
(c) Confidentiality. The Employee agrees and acknowledges that the
Confidential Information (as hereinafter defined) of the Company and its
subsidiaries and affiliates, is valuable, special and unique to their business;
that such business depends on such Confidential Information; and that the
Company wishes to protect such Confidential Information by keeping it
confidential for the use and benefit of the Company and its subsidiaries and
affiliates. Based on the foregoing, the Employee agrees to undertake the
following obligations with respect to such Confidential Information:
(i) the Employee agrees to keep any and all Confidential
Information in trust for the use and benefit of the Company and its
subsidiaries and affiliates;
(ii) the Employee agrees that, except as required by applicable
law or as authorized in writing by the Board, he will not at any time
during or after the termination of his employment hereunder, disclose,
directly or indirectly, any Confidential Information of the Company or
any of subsidiaries or affiliates;
-5-
<PAGE>
(iii) the Employee agrees to take all reasonable steps necessary, or
reasonably requested by the Company, to ensure that all Confidential
Information is kept confidential for the use and benefit of the Company and
its subsidiaries and affiliates; and
(iv) the Employee agrees that, upon termination of his employment
hereunder or at any other time the Company may in writing so request, he
will promptly deliver to the Company all materials constituting
Confidential Information (including all copies thereof) that are in his
possession or under his control. The Employee further agrees, that if
requested by the Company, to return any Confidential Information pursuant
to this subparagraph (iv), he will not make or retain any copy or extract
from such materials.
For purposes of paragraph (c) of this Section 7, "Confidential Information"
means any and all information developed by or for the Company or any of its
subsidiaries or affiliates of which the Employee gains or has acquired knowledge
during or prior to the Term by reason of his employment with the Company that is
(A) not generally known in any industry in which the Company or any of its
subsidiaries or affiliates is or may become engaged or (B) not publicly
available. Confidential Information includes, but is not limited to, any and all
information developed by or for the Company or any of its subsidiaries or
affiliates concerning plans, marketing and sales methods, customer lists,
materials, processes, business forms, procedures, devices, plans for development
of products, services or expansion into new areas or markets, internal
operations, and any trade secrets and proprietary information of any type owned
by the Company or any of its subsidiaries or affiliates, together with all
written, graphic and other materials relating to all or any part of the same.
8. Successors; Assignment.
(a) The Company. The Company may assign any of its rights and obligations
hereunder, without the written consent of the Employee, in connection with a
Change of Control. This Agreement shall be binding upon and shall inure to the
benefit of the Company and its successors and assigns.
(b) The Employee. Neither this Agreement nor any right or interest
hereunder may be assigned by the Employee, his beneficiaries, or legal
representatives without the prior written consent of the Board; provided,
--------
however, that nothing in this Section 8 shall preclude (i) the Employee from
- -------
designating a beneficiary to receive any benefit payable hereunder upon his
death, or (ii) the executors, administrators, or other legal representatives of
the Employee or his estate from assigning any rights hereunder to
-6-
<PAGE>
distributees, legatees, beneficiaries, testamentary trustees or other legal
heirs of the Employee.
9. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given when delivered by hand, mailed by
first-class registered or certified mail, postage prepaid and return receipt
requested, or delivered by overnight courier addressed as follows:
(i) If to the Company:
Van de Kamp's, Inc.
1000 St. Louis Union Street
St. Louis, MO 63103
with a copy to:
VDK Foods LLC
c/o Dartford Partnership, L.L.C.
801 Montgomery Street, Suite 400
San Francisco, CA 94133
(ii) If to the Employee:
Timothy B. Andersen
18699 Magenta Bay
Minneapolis, MN 55347
or, in each case, at such other address as may from time to time be specified to
the other party in a notice similarly given.
10. Governing Law: Expenses.
(a) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to the
conflicts of law principles thereof.
(b) Expenses. All costs and expenses (including attorneys' fees) incurred
in connection with any claim, dispute or litigation pertaining to this Agreement
shall be paid by the party incurring such expenses.
-7-
<PAGE>
11. Entire Agreement. This Agreement contains the entire agreement of the
parties and their affiliates relating to the subject matter hereof and
supersedes all prior agreements, representations, warranties and understandings,
written or oral, with respect thereto.
12. Severability. If any term or provision of this Agreement or the
application thereof to any person, property or circumstance shall to any extent
be invalid or unenforceable, the remainder of this Agreement, or the application
of such term or provision to persons, property or circumstances other than those
as to which it is invalid or unenforceable, shall not be affected thereby, and
each term and provision of this Agreement shall remain valid and enforceable to
the fullest extent permitted by law.
13. Remedies.
(a) Injunctive Relief. The Employee acknowledges and agrees that the
covenants and obligations of the Employer contained in subsections (a), (b) and
(c) of Section 7 hereof relate to special, unique and extraordinary matters and
are reasonable and necessary to protect the legitimate interests of the Company
and its subsidiaries and affiliates and that a breach of any of the terms of
such covenants and obligations will cause the Company irreparable injury for
which adequate remedies at law are not available. Therefore the Employee agrees
that the Company shall be entitled to an injunction, restraining order, or other
equitable relief from any court of competent jurisdiction, restraining the
Employee from any such breach.
(b) Remedies Cumulative. The Company's rights and remedies under this
Section 13 are cumulative and are in addition to any other rights and remedies
the Company may have at law or in equity.
14. Withholding Taxes. The Company may deduct any federal, state or local
withholding or other taxes from any payments to be made by the Company hereunder
in such amounts which the Company reasonably determine are required to deduct
under applicable law.
15. Amendments, Miscellaneous, Etc. Neither this Agreement nor any term
hereof may be changed, waived, discharged or terminated except by an instrument
in writing signed by the party against which such change, waiver, discharge or
termination is sought to be enforced. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument. The headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
-8-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the date first written above.
VAN DE KAMPS'S, INC.
By: /s/ T. O. Ellinwood
--------------------------
Name: T. O. Ellinwood
Title: President
/s/ Timothy B. Andersen
-----------------------------
TIMOTHY B. ANDERSEN
-9-
<PAGE>
SCHEDULE A
----------
RESPONSIBILITIES OF VICE PRESIDENT-FINANCE
------------------------------------------
Reporting to the President, the Vice President-Finance [to be completed]
-10-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-29-1996
<PERIOD-START> SEP-19-1995
<PERIOD-END> MAR-30-1996
<CASH> 6,867
<SECURITIES> 0
<RECEIVABLES> 22,094
<ALLOWANCES> 60
<INVENTORY> 16,333
<CURRENT-ASSETS> 45,780
<PP&E> 31,761
<DEPRECIATION> 1,507
<TOTAL-ASSETS> 225,482
<CURRENT-LIABILITIES> 24,464
<BONDS> 100,000
<COMMON> 69,420
0
0
<OTHER-SE> 3,049
<TOTAL-LIABILITY-AND-EQUITY> 225,482
<SALES> 127,423
<TOTAL-REVENUES> 127,423
<CGS> 52,962
<TOTAL-COSTS> 103,892
<OTHER-EXPENSES> 8,908
<LOSS-PROVISION> 60
<INTEREST-EXPENSE> 7,979
<INCOME-PRETAX> 6,230
<INCOME-TAX> 2,767
<INCOME-CONTINUING> 3,463
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,463
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
