SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) March 15, 1999
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B&G Foods, Inc.
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(Exact Name of Registrant as Specified in Charter)
Delaware 333-39813 13-3916496
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(State or Other (Commission File (IRS Employer
Jurisdiction of Number) Identification
Incorporation No.)
426 Eagle Rock Avenue, Roseland, New Jersey 07068
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (973) 228-2500
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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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Item 2 Acquisition or Disposition of Assets
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B&G Foods, Inc. (the "Company") is filing this Form 8-K to report the
acquisition by its wholly-owned subsidiary of the assets of certain brands from
The Pillsbury Company, a Delaware corporation ("Pillsbury"), Indivined B.V., a
company incorporated under the laws of the Netherlands ("Indivined"), and IC
Acquisition Company, a Delaware corporation and an indirect wholly owned
subsidiary of Pillsbury ("IC Acquisition"). The acquired brands include
Underwood meat spreads, B&M baked beans, Ac'cent flavor enhancer, Sa-son Ac'cent
flavor enhancer, Las Palmas Mexican sauces and food products and Joan of Arc dry
bean products businesses (the "Heritage Brands").
On March 15, 1999, Heritage Acquisition Corp. ("Heritage"), an
indirect, wholly-owned subsidiary of the Company, acquired the Heritage Brands
pursuant to an Asset and Stock Purchase Agreement (the "Asset and Stock Purchase
Agreement") dated as of January 28, 1999 among Pillsbury, Indivined, IC
Acquisition, Heritage and, as guarantor, the Company. Pursuant to the Asset and
Stock Purchase Agreement, Heritage purchased the Heritage Brands for $192
million in cash. The Asset and Stock Purchase Agreement has been filed as
Exhibit 2.1 to this report and is incorporated by reference herein.
As part of the acquisition, Heritage acquired a manufacturing and
production facility in Portland, Maine, including the underlying land, all
improvements, buildings and structures thereon and the fixtures and equipment
located thereon and therein, together with all appurtenances thereto, which was
used to produce B&M baked bean products. Heritage intends to continue using the
facility and related assets in such a manner.
The acquisition of the Heritage Brands was financed with borrowings
under the Company's new $280 million senior credit facility entered into on
March 15, 1999, of which (i) $220 million was pursuant to a Term Loan Agreement
(the "Term Loan Agreement") among B&G Foods Holdings Corp ("Holdings"), the
Company, Lehman Brothers Inc. as Arranger, Lehman Commercial Paper Inc., as
Syndication Agent and Administrative Agent, The Bank of New York, as
Documentation Agent, and Heller Financial, Inc., as Co-Documentation Agent, and
the several lenders party thereto, and (ii) $60 million was pursuant to a
Revolving Credit Agreement (the "Revolving Credit Agreement"), among Holdings,
the Company, Lehman Brothers Inc., as Arranger, Lehman Commercial Paper Inc., as
Syndication Agent and Administrative Agent, The Bank of New York, as
Documentation Agent, and Heller Financial, Inc., as Co-Documentation Agent, and
the several lenders party thereto. The proceeds of the Term Loan Agreement and
the Revolving Credit Agreement were used to discharge the Company's obligations
under the Second Amended and Restated Credit Agreement, dated as of August 11,
1997, among the Company, Heller Financial, Inc., as agent and lender, and the
several lenders party thereto. Copies of the Revolving Credit Agreement and the
Term Loan Agreement will be filed as exhibits to the Company's quarterly report
on Form 10-Q for the quarterly period ending on April 3, 1999.
Item 7 Financial Statements, Pro Forma Financial Statements and Exhibits
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* (a) Financial Statements of the Heritage Brands
* (b) Pro Forma Financial Information
(c) Exhibits
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* These items will be filed by a supplementary filing within the time period
specified by the rules promulgated under the Securities Exchange Act of 1934,
as amended.
2
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(2.1) Asset and Stock Purchase Agreement, dated as of January 28, 1999,
by and among The Pillsbury Company, Indivined B.V., IC Acquisition
Company, Heritage Acquisition Corp. and, as guarantor, B&G Foods,
Inc.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
B&G FOODS, INC.
Date: March 30, 1999 By: /s/ Robert C. Cantwell
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Name: Robert C. Cantwell
Title: Executive Vice President
of Finance and Chief Financial
Officer
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EXHIBITS INDEX
Exhibit
Number Description
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*(a) Financial Statements of Heritage Brands
*(b) Pro Forma Financial Information
(c) Exhibits
(1) Asset and Stock Purchase Agreement, dated as of January 28, 1999,
by and among The Pillsbury Company, Indivined B.V., IC Acquisition
Company, Heritage Acquisition Corp. and, as guarantor, B&G Foods,
Inc.
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* These items will be filed by a supplementary filing within the time period
specified by the rules promulgated under the Securities Exchange Act of 1934,
as amended.
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ASSET AND STOCK
PURCHASE AGREEMENT
among
THE PILLSBURY COMPANY,
INDIVINED B.V.,
IC ACQUISITION COMPANY,
HERITAGE ACQUISITION CORP.
and
B&G FOODS, INC.,
as Guarantor
Dated as of January 28, 1999
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TABLE OF CONTENTS
Page
Article I DEFINITIONS
Section 1.1 Specific Definitions.......................................2
Section 1.2 Other Terms................................................13
Section 1.3 Other Definitional Provisions..............................13
Article II PURCHASE AND SALE OF THE BUSINESSES
Section 2.1 Purchase and Sale of Assets................................13
Section 2.2 Excluded Assets............................................15
Section 2.3 Assumption of Liabilities..................................17
Section 2.4 Excluded Liabilities.......................................18
Section 2.5 Purchase Price.............................................18
Section 2.6 Post-Closing Adjustments...................................19
Section 2.7 Closing; Delivery and Payment..............................23
Section 2.8 Taxes and Fees.............................................24
Section 2.9 Allocation of Purchase Price...............................24
Section 2.10 Nonassignability of Assets.................................25
Section 2.11 Certain Expenses and Prepaid Items.........................27
Article III REPRESENTATIONS AND WARRANTIES OF SELLERS
Section 3.1 Organization and Authority of Sellers......................28
Section 3.2 Financial Information......................................29
Section 3.3 Underwood Shares...........................................30
Section 3.4 Absence of Certain Changes or Events.......................31
Section 3.5 Title to and Adequacy of Assets; Absence of Liens and
Encumbrances, etc........................................33
Section 3.6 Condition of Transferred Assets............................35
Section 3.7 Litigation.................................................36
Section 3.8 Compliance with Law........................................36
Section 3.9 Contracts..................................................37
Section 3.10 Consents and Approvals.....................................39
Section 3.11 Collective Bargaining Agreements...........................39
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Section 3.12 ERISA Plans................................................40
Section 3.13 Intellectual Property......................................41
Section 3.14 Brokers and Finders........................................43
Section 3.15 Environmental Matters......................................43
Section 3.16 Taxes of the William Underwood Company.....................44
Section 3.17 Insurance..................................................45
Section 3.18 Customers and Suppliers....................................46
Section 3.19 Promotional Programs.......................................46
Section 3.20 No Other Representations or Warranties.....................46
Article IV REPRESENTATIONS AND WARRANTIES OF BUYER
Section 4.1 Organization and Authority of Buyer........................47
Section 4.2 Brokers and Finders........................................49
Section 4.3 Financing..................................................49
Section 4.4 Consents and Approvals.....................................49
Article V CERTAIN COVENANTS AND AGREEMENTSOF SELLERS AND BUYER
Section 5.1 Access and Information.....................................50
Section 5.2 Registrations, Filings and Consents........................51
Section 5.3 Conduct of Business........................................52
Section 5.4 Post-Closing Obligations of the Business to Certain
Employees................................................53
Section 5.5 Reasonable Best Efforts....................................59
Section 5.6 Books; Records.............................................59
Section 5.7 Financial Information......................................61
Section 5.8 Intellectual Property......................................61
Section 5.9 Further Assurances.........................................64
Section 5.10 Compliance with WARN, etc..................................64
Section 5.11 Transitional Services......................................64
Section 5.12 Antitrust Approval.........................................65
Section 5.13 Relocation of Production Lines.............................65
Section 5.14 Financing..................................................67
Section 5.15 Exclusivity................................................68
Section 5.16 Notices Prior to Closing...................................69
Section 5.17 FIRPTA.....................................................70
Section 5.18 Zoning Letters.............................................70
Section 5.19 Promotional Programs, Coupon Redemptions...................70
Section 5.20 Assistance in Collecting Certain Amounts...................71
Section 5.21 Differentiation Between Products of Sellers and Buyer......72
Section 5.22 Certain Financial Information..............................72
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Section 5.23 Brokers, Distributors and Wholesalers......................73
Section 5.24 Non-Solicitation...........................................74
Section 5.25 Corporate Names............................................75
Section 5.26 Title Insurance............................................76
Section 5.27 Survey.....................................................76
Section 5.28 Up-Dating of Disclosure Schedules..........................76
Section 5.29 Las Palmas Co-Packing Agreement............................77
Section 5.30 Joan of Arc Co-Packing Agreement...........................78
Article VI CONDITIONS TO THE PURCHASE AND SALE
Section 6.1 Conditions to the Purchase and Sale Relating to Buyer......78
Section 6.2 Conditions to the Purchase and Sale Relating to Sellers....80
Article VII AMENDMENT AND WAIVER
Section 7.1 Amendment and Modification.................................82
Section 7.2 Waiver.....................................................82
Article VIII SURVIVAL AND INDEMNIFICATION
Section 8.1 Survival of Representations and Warranties; Knowledge
of Breach................................................83
Section 8.2 Indemnification............................................84
Section 8.3 Notice and Opportunity to Defend...........................85
Section 8.4 Method of Asserting Claims, etc............................89
Section 8.5 Indemnification Amounts....................................90
Section 8.6 Pre-Closing Environmental Liabilities......................92
Section 8.7 Liability for Taxes of the William Underwood Company and
Related Matters..........................................94
Article IX MISCELLANEOUS
Section 9.1 Right to Terminate.........................................99
Section 9.2 Return of Information.....................................100
Section 9.3 Expenses..................................................101
Section 9.4 Public Disclosure.........................................101
Section 9.5 Assignment................................................101
Section 9.6 Entire Agreement..........................................102
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Section 9.7 Schedules.................................................102
Section 9.8 Counterparts..............................................103
Section 9.9 Section Headings..........................................103
Section 9.10 Notices...................................................103
Section 9.11 Governing Law.............................................104
Section 9.12 Bulk Sales Laws...........................................104
Section 9.13 Illegality................................................105
Section 9.14 Dispute Resolution........................................105
SCHEDULES
Schedule 1.1(a): Specified Contracts
Schedule 1.1(b): Permitted Encumbrances
Schedule 1.1(c): Persons Constituting Sellers' Knowledge
Schedule 1.1(d): Persons Constituting Buyer's Knowledge
Schedule 2.1(f): Computer Hardware and Software
Schedule 2.2(f): Excluded Intellectual Property
Schedule 2.2(j): Excluded Assets
Schedule 2.6(a): Required Working Capital Statement
Schedule 2.9: Allocation of Purchase Price
Schedule 3.2: Financial Information; Internal Accounting Practices
Schedule 3.3: Assets of William Underwood Company
Schedule 3.4: Absence of Certain Changes or Events
Schedule 3.5(a): Personal Property
Schedule 3.5(b): Owned Real Property
Schedule 3.5(c): Sufficiency of Transferred Assets
Schedule 3.6(b): Inventory
Schedule 3.7: Litigation
Schedule 3.8: Compliance with Law
Schedule 3.9: Defaults, etc. under Material Contracts
Schedule 3.10: Consents and Approvals
Schedule 3.11: Collective Bargaining Agreements
Schedule 3.12(a): Benefit Plans
Schedule 3.13(a): Registered Intellectual Property
Schedule 3.13(b): Exceptions to Title with respect to Intellectual Property
Schedule 3.13(d): Other Intellectual Property Matters
Schedule 3.15: Environmental Matters
Schedule 3.16: Taxes of the William Underwood Company
Schedule 3.17: Insurance
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Schedule 3.18: Customers and Suppliers
Schedule 3.19: Promotional Programs
Schedule 4.4: Consents and Approvals
Schedule 5.4(a): Non-Union Employees
Schedule 5.4(c): Union Employees
Schedule 5.23: Brokers, Distributors and Wholesalers
Schedule 5.24: Non-Solicitation
Schedule 6.1(e): Material Consents
Schedule 6.1(j): Portland Facility Permits
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ASSET AND STOCK PURCHASE AGREEMENT, dated as of January 28, 1999, among
THE PILLSBURY COMPANY, a Delaware corporation ("Pillsbury"), INDIVINED B.V., a
company incorporated under the laws of the Netherlands ("Indivined"), IC
ACQUISITION COMPANY, a Delaware corporation and an indirect wholly owned
subsidiary of Pillsbury ("IC Acquisition" and together with Pillsbury and
Indivined, "Sellers"), HERITAGE ACQUISITION CORP., a Delaware corporation
("Buyer"), and, as guarantor of all of the debts, liabilities and obligations of
Buyer under this Agreement, B&G Foods, Inc., a Delaware corporation ("B&G").
W I T N E S S E T H:
WHEREAS, Sellers own and operate each of the Businesses (as defined
herein); and
WHEREAS, Sellers desire to sell, transfer and assign to Buyer, and
Buyer desires to purchase from Sellers, substantially all of the assets
comprising the Businesses, defined herein as the Transferred Assets, and Buyer
desires to assume certain of the liabilities of the Businesses, defined herein
as the Assumed Liabilities, as more specifically provided herein;
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and subject to and on the terms and conditions
herein set forth, the parties hereto agree as follows:
Article I
DEFINITIONS
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Section I.1 Specific Definitions. As used in this Agreement, the
following terms shall have the meanings set forth or as referenced below:
"AAA" shall have the meaning set forth in Section 9.14.
"Ac'cent Flavor Enhancer" shall mean the segment of the Sellers'
business comprised of Ac'cent flavor enhancer products.
"Ac'cent Production Line" shall mean all of the assets relating
exclusively to the Ac'cent Flavor Enhancer production line or the Sa-son Ac'cent
Flavor Enhancer production line located at the Hannibal Facility, including but
not limited to, all Inventory and Fixtures and Equipment relating thereto,
excluding the Excluded Assets.
"Ac'cent Relocation" shall have the meaning set forth in Section
5.13(a).
"Ac'cent Relocation Supply Agreement" shall have the meaning set forth
in Section 5.13(b).
"Accounts Payable" shall mean all debts and liabilities of Sellers as
of the Closing that arose in the Ordinary Course of Business, are attributable
to the Businesses and only to the extent that goods, services or other value
will be received subsequent to the Closing.
"Accounts Receivable" shall mean all amounts owed to Sellers as of the
Closing that are attributable to the Businesses, including any notes receivable
from third parties, including employees.
"Adjustment Payment" shall have the meaning set forth in Section 2.6(e).
"Affiliate" shall mean, with respect to any Person, any Person directly
or indirectly controlling, controlled by, or under common control with, such
other Person at any time during the period for which the determination of
affiliation is being made. For purposes of this definition, the term "control"
(including the correlative meanings of the terms "controlled by" and "under
common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of management policies of such Person, whether through the ownership
of voting securities or by contract or otherwise.
"Agreement" shall mean this Agreement and all exhibits and schedules
hereto.
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"Allocation" shall have the meaning set forth in Section 2.9.
"Antitrust Division" shall mean the Antitrust Division of the United
States Department of Justice.
"Assumed Contracts" shall mean the Specified Contracts and all other
agreements, contracts, leases and subleases, purchase orders, arrangements,
commitments and licenses, oral or written, with customers (together with
associated bid and performance bonds), suppliers, sales representatives,
distributors, agents, personal property lessors, personal property lessees,
licensors, licensees, consignors and consignees exclusively related to the
Businesses (excluding the Excluded Assets) which are not otherwise required to
be disclosed on Schedule 3.9 and which arose in the Ordinary Course of Business.
"Assumed Liabilities" shall have the meaning set forth in Section 2.3.
"B&G" shall have the meaning set forth in the Preamble.
"B&M Baked Beans" shall mean the segment of the Sellers' business
comprised of B&M baked bean products, B&M Brown Bread products and Friend's
baked bean products, including any and all actions, effects, changes and results
related to the B&M Restage.
"B&M Restage" shall mean (i) the reformulation and repackaging of B&M
Baked Beans by Sellers, including modifications to product formulas, shipping
cartons, pre-printed labels, advertising and promotional materials, and any
related SKU substitution, and (ii) all capital expenditures, sales, promotional
and market activities made, committed to or undertaken by, or to be made,
committed to or undertaken by, Sellers relating to such reformulation and
repackaging.
"Benefit Plans" shall have the meaning set forth in Section 3.12(a).
"Books and Records" shall mean all books, ledgers, files, reports,
plans and operating records related exclusively to, or maintained exclusively
by, the Businesses including without limitation, tangible data, documents,
disks, files, customer lists, supplier lists, blueprints, specifications,
invoices and sales literature, credit information, cost and pricing information,
business plans, insurance records and advertising and promotional materials but
excluding any such items to the extent (i) they are included in any Excluded
Assets or Excluded Liabilities, (ii) any Law prohibits their transfer or (iii)
any transfer thereof would subject Sellers or any of
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their Affiliates to any material legal or contractual liability.
"BRS" shall have the meaning set forth in Section 4.3.
"BusinessDay" shall mean any day other than a Saturday, a Sunday or a
day on which banks in New York City are authorized or obligated by law or
executive order to close.
"Businesses" shall mean Underwood Meat Spreads, B&M Baked Beans,
Ac'cent Flavor Enhancer, Sa-son Ac'cent Flavor Enhancer, Las Palmas and Joan of
Arc.
"Buyer" shall have the meaning set forth in the Preamble.
"Buyer Indemnified Party" shall have the meaning set forth in Section
8.2(a).
"Buyer Indemnifying Party" shall have the meaning set forth in Section
8.2(b).
"Buyer's Objection" shall have the meaning set forth in Section 2.6(b).
"Claim Notice" shall have the meaning set forth in Section 8.3(a).
"Claim Response" shall have the meaning set forth in Section 8.4.
"Closing" shall have the meaning set forth in Section 2.7(a).
"Closing Date" shall have the meaning set forth in Section 2.7(a).
"Closing Date Interest Rate" shall mean the rate per annum equal to the
prime commercial lending rate quoted as of the Closing Date by Morgan Guaranty
Trust Company of New York.
"Closing Inventory Statement" shall have the meaning set forth in
Section 2.6(a).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral Assignment" shall have the meaning set forth in Section
5.29.
"Collective Bargaining Agreement" shall have the meaning set forth in
Section 5.4(c).
"Commitment Letters" shall have the meaning set forth in Section 4.3.
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"Confidentiality Agreement" shall have the meaning set forth in Section
5.1(b).
"Consents" shall have the meaning set forth in Section 3.10.
"Consolidated Group Liability" shall have the meaning set forth in
Section 8.7(a).
"Co-Packing Agreements" shall mean the Joan of Arc Co-Packing Agreement
and the Las Palmas Co-Packing Agreement.
"CPA Firm" shall have the meaning set forth in Section 2.6(c).
"Deductible" shall have the meaning set forth in Section 8.5.
"Diablitos Intellectual Property" shall mean any trademark, trade name,
service mark or other mark or right which is the same as any of the intellectual
property listed on Schedule 2.2(f).
"Direct Variable Cost" shall mean Pillsbury's direct variable cost,
including any out of pocket expenses to third parties, as agreed between Buyer
and Sellers.
"Employees" shall have the meaning set forth in Section 5.4(c).
"Encroachment" shall mean: (i) any material encroachment onto the Owned
Real Property by any building or other improvement located upon any adjoining
land or right of way, and (ii) any material encroachment onto any adjoining land
or right of way by any building or other improvement constituting a part of the
Owned Real Property.
"Encumbrances" shall mean any liens, charges, encumbrances,
Encroachments, security interests, leases, easements, preemptive rights, rights
of first refusal, pledges, licenses, deeds of trust, mortgages, options, or any
other restrictions or third-party rights of any kind, including any restriction
on use, transfer, receipt of income, or exercise of any other attribute of
ownership.
"Environmental Law" shall mean any applicable law, regulation, code,
license, permit, order, judgment, decree or injunction from any governmental
entity or any common law (a) relating to the protection of the environment
(including air, water, soil and natural resources), or (b) the use, storage,
handling, release or disposal of Hazardous Substances, in each case as presently
in effect.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
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"Excluded Assets" shall have the meaning set forth in Section 2.2.
"Excluded Liabilities" shall have the meaning set forth in Section 2.4.
"Exclusive Underwood Venezuelan IP" shall have the meaning set forth in
the definition of "Underwood Venezuelan Business."
"FFI" shall have the meaning set forth in Section 5.30.
"Final Closing Inventory Statement" shall have the meaning set forth in
Section 2.6(d).
"Financial Information" shall have the meaning set forth in Section
3.2.
"Financing" shall have the meaning set forth in Section 4.3.
"Fixtures and Equipment" shall mean all furniture, fixtures,
furnishings, machinery, vehicles, equipment, supplies and other tangible
personal property exclusively used in the operation of the Businesses, including
the Ac'cent Production Line and the Underwood Meat Spreads Production Line,
other than any Excluded Assets.
"Fleet" shall have the meaning set forth in Section 5.29.
"FTC" shall mean the Federal Trade Commission.
"Fully Allocated Facility Cost" shall mean direct variable cost plus
allocated overhead cost at the Hannibal Facility, calculated in a manner
consistent with the Financial Information.
"Greenhill" shall have the meaning set forth in Section 3.14.
"Hannibal Facility" shall mean the manufacturing and production
facility of Pillsbury located in Hannibal, Missouri, including the underlying
land, all improvements, buildings and structures thereon and the fixtures and
equipment located thereon and therein, together with all appurtenances thereto.
"Hazardous Substances" shall mean any substance to the extent presently
listed, defined, designated or classified as hazardous, toxic or radioactive
under any applicable Environmental Law including petroleum or any derivative or
by-products thereof.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as
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amended.
"IC Acquisition" shall have the meaning set forth in the Preamble.
"Indemnified Party" shall mean the Buyer Indemnified Party or the
Sellers Indemnified Party, as the case may be.
"Indemnifying Party" shall mean the Buyer Indemnifying Party or the
Sellers Indemnifying Party, as the case may be.
"Indivined" shall have the meaning set forth in the Preamble.
"Intellectual Property" shall mean all of the following irrespective of
where any of the same were issued, are pending or exist that are owned or used
by Sellers exclusively for or in the operation of the Businesses, except to the
extent included in the Excluded Assets: patents, patent applications,
applications and registrations of industrial designs, inventions, invention
disclosures, trade secrets, formulas, know-how, registered and unregistered
trademarks, service marks, service names, trade names, trade dress, logos,
copyrights, domain names (excluding the content of any related web site), and
any other proprietary rights related to the foregoing.
"Intercreditor Agreement" shall have the meaning set forth in Section
5.29.
"Inventory" shall mean all inventory held for resale, work in process,
finished products and shipments in transit related to the Businesses and all raw
materials, spare parts, wrapping, supply and packaging items related exclusively
to the Businesses.
"Joan of Arc" shall mean the segment of the Sellers' business comprised
of Joan of Arc dry bean products.
"Joan of Arc Co-Packing Agreement" shall mean that portion of the
Contract Manufacturing Agreement, dated as of April 1, 1998, between Pillsbury
and Faribault Foods, Inc., a Minnesota corporation, which will terminate no
later than April 30, 1999, relating to Joan of Arc.
"Knowledge" or any similar phrase shall mean the collective actual
knowledge as of the date of this Agreement of the persons listed on Schedule
1.1(c) with respect to Sellers or Schedule 1.1(d) with respect to Buyer.
"Las Palmas" shall mean the segment of the Sellers' business comprised
of Las Palmas Mexican sauces and food products.
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"Las Palmas Co-Packing Agreement" shall mean that portion of the Contract
Manufacturing Agreement, dated as of August 1, 1997, between Pillsbury and
Anthony Foods, LLC, a Delaware limited liability company, relating to Las
Palmas.
"Laws" shall mean any applicable foreign, national, federal, state,
provincial or local law, statute, ordinance, rule, regulation, code, order,
judgment, injunction or decree.
"Lehman" shall have the meaning set forth in Section 4.3.
"Litigation Conditions" shall have the meaning set forth in Section
8.3(b).
"Losses" shall have the meaning set forth in Section 8.2(a).
"Material Adverse Effect" shall mean any change or effect that,
individually or collectively is materially adverse to the Transferred Assets,
taken as a whole, or the business, results of operations or condition (financial
or otherwise) of any Business (for purposes of Article III) or the Businesses,
taken as a whole (for purposes of Article VI), as such Business or Businesses,
as the case may be, or Transferred Assets are currently being conducted;
provided, however, that Material Adverse Effect shall not include any change or
effect resulting from (i) any change in economic, business or financial market
conditions generally or in the food industry or market or in the categories of
the food industry or market represented by the Businesses specifically or (ii)
the announcement and performance of this Agreement and the consummation of the
transactions contemplated hereby and in compliance with the covenants set forth
in this Agreement, as such announcement, performance or consummation relates
primarily to the identity of Buyer hereunder.
"Material Contracts" shall have the meaning set forth in Section 3.9.
"Non-Union Employees" shall have the meaning set forth in Section
5.4(a).
"Notice Period" shall have the meaning set forth in Section 8.3(b).
"Ordinary Course of Business" shall mean the conduct of the Businesses
in accordance with the customs, practices and procedures of Sellers consistent
with past practice. Any and all actions, effects, changes and results related to
the B&M Restage shall be deemed to be in the Ordinary Course of Business.
"Owned Real Property" shall mean the Portland Facility.
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"Pension Plan" shall have the meaning set forth in Section 3.12(c).
"Permits" shall mean, collectively, all licenses, permits, approvals,
variances and authorizations of any national, federal, state, provincial or
local governmental entity necessary for the conduct of the Businesses as
currently conducted and for the use, occupancy and operation of the Transferred
Assets as currently used, occupied and operated.
"Permitted Encumbrances" shall mean (i) any Encumbrances set forth on
Schedule 1.1(b); (ii) any nonmonetary Encumbrances which do not, individually or
in the aggregate, materially affect the value of or materially restrict or
impair the use by the Businesses of the property subject thereto or affected
thereby; (iii) any Encumbrances for Taxes, assessments and other governmental
charges not delinquent or which are being contested in good faith by appropriate
proceedings; (iv) any workmen, repairman, warehousemen and carriers liens and
Encumbrances arising in the Ordinary Course of Business; or (v) in addition, in
the case of the Owned Real Property, (A) Encroachments, easements, flowage
easements, quasi-easements, public roads and rights-of-way, rights of third
parties to minerals lying in or under the real property, covenants or
restrictions, if any, and other minor restrictions, defects, irregularities and
clouds on title, in any case, which, individually or in the aggregate, do not
materially interfere with the current use of the Owned Real Property and the
exercise of rights or claims under or pursuant to which would not materially
impair the conduct of B&M Baked Beans thereon as it is currently conducted and
(B) the provisions of all zoning laws, building codes and similar Laws
applicable to the Owned Real Property.
"Person" shall mean an individual, corporation, partnership, limited
liability company, association, trust or unincorporated organization, a
government or any agency or political subdivision thereof or any other entity or
organization.
"Pet Plans" shall have the meaning set forth in Section 5.4(e).
"Pillsbury" shall have the meaning set forth in the Preamble.
"Plans" shall have the meaning set forth in Section 3.12(b).
"Portland Facility" shall mean the manufacturing and production
facility of Pillsbury for B&M Baked Beans located in Portland, Maine, including
the underlying land, all improvements, buildings and structures thereon and the
Fixtures and Equipment located thereon and therein, together with all
appurtenances thereto.
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"Pre-Closing Environmental Liabilities" shall mean (i) all violations
of Environmental Laws occurring prior to the Closing Date and any Release of
Hazardous Substances prior to the Closing Date in, on, under, from, or at the
Owned Real Property, that require remediation or other investigation or response
activities (including any required post-Remediation sampling or monitoring)
pursuant to an order by a government authority or otherwise expressly required
under any applicable Environmental Law ("Remediation"); or (ii) the offsite
Release, transportation, disposal, recycling, treatment or storage of any
Hazardous Substances by the Businesses prior to the Closing Date. Pre-Closing
Environmental Liabilities shall be subject to the indemnification provisions of
Section 8.6.
"Promotional Programs" shall mean contracts, arrangements or
understandings with wholesalers, retailers, third-party suppliers of
advertising, consumer promotion and other sales promotion materials or any
Person other than Sellers or a subsidiary of Sellers regarding offers of special
purchase allowances, other off-invoice discounts, or other promotional
allowances, in each case with respect to finished goods of the Businesses.
"Purchase Price" shall have the meaning set forth in Section 2.5.
"Registered Intellectual Property" shall have the meaning set forth in
Section 3.13(a).
"Release" shall mean the disposing, discharging, injecting, spilling,
leaking, leaching, dumping, emitting, escaping, emptying, seeping, placing and
the like of any Hazardous Substances other than any emissions or discharges
allowed under any applicable Environmental Law which do not require Remediation
under Environmental Laws.
"Remediation" shall have the meaning set forth in the definition for
"Pre-Closing Environmental Liabilities."
"Report" shall have the meaning set forth in Section 5.12(a).
"Required Working Capital Statement" shall have the meaning set forth
in Section 2.6(a).
"Response Period" shall have the meaning set forth in Section 8.4.
"Sa-son Ac'cent Flavor Enhancer" shall mean the segment of Sellers'
business comprised of Sa-son Ac'cent flavor enhancer products.
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"Securities Act" shall have the meaning set forth in Section 3.3.
"Sellers" shall have the meaning set forth in the Preamble.
"Sellers Indemnified Party" shall have the meaning set forth in Section
8.2(b).
"Sellers Indemnifying Party" shall have the meaning set forth in
Section 8.2(a).
"Specified Contracts" shall mean the agreements, contracts, leases and
subleases, purchase orders, arrangements, commitments and licenses, oral or
written, with customers, suppliers, sales representatives, distributors, agents,
personal property lessors, personal property lessees, licensors, licensees,
consignors and consignees of the Businesses listed on Schedule 1.1(a).
"Statements" shall have the meaning set forth in Section 2.6(a).
"Survey" shall have the meaning set forth in Section 5.27.
"Tax" or "Taxes" shall mean all taxes of any kind whatsoever, including
all federal, state, local or foreign income, capital gains, gross receipts,
transfer, windfall profits, value added, severance, property, production, sales,
use, license, excise, franchise, employment, withholding or similar taxes,
together with any interest, additions or penalties with respect thereto and any
interest in respect of such additions or penalties.
"Tax Package" shall have the meaning set forth in Section 8.7(h).
"Tax Returns" shall mean all reports and returns required to be filed
with respect to Taxes.
"Title Commitment" shall have the meaning set forth in Section 5.26.
"Title Company" shall have the meaning set forth in Section 5.26.
"Transfer Taxes" shall have the meaning set forth in Section 2.8.
"Transferred Assets" shall have the meaning set forth in Section 2.1.
"Transferred Employees" shall have the meaning set forth in Section
5.4(c).
"Transferred Non-Union Employees" shall have the meaning set forth in
Section 5.4(a).
"Transitional Services Agreement" shall have the meaning set forth in
Section 5.11.
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"Underwood Intellectual Property" shall mean any intellectual property
relating to the preparation, manufacture, production, packaging, promotion or
sale of the Underwood Meat Spreads and Underwood Venezuelan Business products,
including any trade secret, know-how, formula, instruction, recipe, trademark,
trade name, service mark or other similar mark or similar right which is related
to products sold under the "Underwood" marks; provided, however, that the term
Underwood Intellectual Property shall exclude the Intellectual Property set
forth on Schedule 2.2(f) and the Exclusive Underwood Venezuelan IP.
"Underwood Meat Spreads" shall mean the segment of Sellers' business
comprised of Underwood canned meat products, Underwood sardine products and
Sell's liver pate products, but shall exclude the Underwood Venezuelan Business.
"Underwood Meat Spreads Production Line" shall mean all of the assets
relating exclusively to the Underwood Meat Spreads filling line, retorting
process and wrapping line located at the Hannibal Facility, including but not
limited to, all Inventory and Fixtures and Equipment relating thereto, excluding
the Excluded Assets.
"Underwood Relocation" shall have the meaning set forth in Section
5.13(a).
"Underwood Relocation Supply Agreement" shall have the meaning set
forth in Section 5.13(c).
"Underwood Shares" shall mean all of the issued and outstanding capital
stock of the William Underwood Company.
"Underwood Venezuelan Business" shall mean the segment of Sellers'
business dedicated to the production and sale of Underwood canned meat products,
Underwood sardine products, Sell's liver pate products and any other products
marketed under the "Underwood" marks in Venezuela only, including all tangible
assets (such as fixtures and equipment, contracts and books and records) located
in Venezuela or exclusively related to such production and sale and the
Underwood Intellectual Property in Venezuela in accordance with Section 5.8; it
being understood that all formula, instructions, recipes and manufacturing
processes exclusively used by the production facility of Sellers in Venezuela in
connection with the production of such products shall be deemed exclusively
related to the Underwood Venezuelan Business ("Exclusive Underwood Venezuelan
IP") and an Excluded Asset.
"Union" shall have the meaning set forth in Section 5.4(c).
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"Union Employees" shall have the meaning set forth in Section 5.4(c).
"WARN" shall mean the Worker Adjustment and Retraining Notification
Act.
"William Underwood Company" shall mean the William Underwood Company, a
Massachusetts voluntary association.
Section I.2 Other Terms. Other terms may be defined elsewhere in the
text of this Agreement and, unless otherwise indicated, shall have such meaning
throughout this Agreement.
Section I.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.
(c) Whenever the word "include," "includes," or "including" is used in
this Agreement, it shall be deemed to be followed by the words "without
limitation."
Article II
PURCHASE AND SALE OF THE BUSINESSES
-----------------------------------
Section II.1 Purchase and Sale of Assets. Upon the terms and subject to
the conditions set forth in this Agreement, at the Closing, Sellers agree to
sell, convey, transfer, assign and deliver to Buyer, or to cause their
respective subsidiaries to sell, convey, transfer, assign and deliver to Buyer,
and Buyer agrees to purchase from Sellers,
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free and clear of all Encumbrances, other than Permitted Encumbrances, all of
Sellers' right, title and interest in, to and under the assets and properties of
Sellers of every type and description that are owned, used or held for use by
Sellers exclusively in the operation of the Businesses, whether tangible or
intangible, real, personal or mixed, wherever located, except for the Excluded
Assets (the "Transferred Assets"), including all of Sellers' right, title and
interest in, to and under the following:
(a) Owned Real Property and no other real property;
(b) Fixtures and Equipment;
(c) Intellectual Property, including those trademarks listed on
Schedule 3.13(a);
(d) Assumed Contracts;
(e) Books and Records;
(f) all computer hardware, stored data, owned and licensed computer
software, and owned computer software documentation, including source code and
systems documentation, listed on Schedule 2.1(f);
(g) Inventory;
(h) any government licenses, permits and approvals issued to Sellers
with respect to the Businesses to the extent their transfer is permitted by law;
(i) all refunds of Taxes to the extent that the Taxes being refunded
were an Assumed Liability;
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(j) all credits, prepaid expenses, deferred charges, advance payments,
security deposits, bid and performance bonds relating to the Assumed Contracts,
prepaid items and duties to the extent exclusively related to the Businesses;
(k) all goodwill and going concern value exclusively related to the
Businesses; and
(l) the Underwood Shares; it being understood that the transfer to
Buyer of the Intellectual Property for Ac'cent Flavor Enhancer and Sa-son
Ac'cent Flavor Enhancer and the Underwood Intellectual Property (excluding, in
accordance with Section 5.8, the Underwood Intellectual Property in Venezuela)
shall be effected through the transfer of the Underwood Shares and not pursuant
to Section 2.1(c). Notwithstanding anything to the contrary contained in this
Agreement, Sellers may retain copies of any Assumed Contract, Books and Records
or any other document or materials to the extent that (i) Sellers are required
to retain it by Law, (ii) Sellers may reasonably require such copies for tax
purposes or in connection with product liability claims or in connection with
Excluded Liabilities or Excluded Assets, in which case, Sellers only shall use
such copies in connection therewith or (iii) Sellers reasonably may need such
copies to fulfill their obligations under this Agreement; provided, however,
that books and records that are not Transferred Assets in accordance with the
definition of Books and Records and are, therefore, retained by Sellers or any
of their Affiliates, may be used for any purpose.
Section II.2 Excluded Assets. Notwithstanding anything herein to the
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contrary, from and after the Closing, Sellers shall retain all of their right,
title and interest in and to, and there shall be excluded from the sale,
conveyance, assignment or transfer to Buyer hereunder, and the Transferred
Assets shall not include, the following assets and properties (such retained
assets and properties being herein collectively referred to as the "Excluded
Assets"):
(a) (i) all Accounts Receivable, (ii) cash, including bank balances and
bank accounts, monies in possession of any banks, savings and loans or trust
companies and similar cash items on hand on the Closing Date, (iii) investment
securities and other short- and medium-term investments of the Businesses and
(iv) that portion of all credits, prepaid expenses, deferred charges, advance
payments, security deposits, prepaid items and duties not related the
Businesses;
(b) all refunds of Taxes to the extent that the Taxes being refunded
were an Excluded Liability;
(c) all Tax Returns of Sellers;
(d) all licensed software and any computer hardware, stored data, owned
computer software, and owned computer software documentation, including source
code and systems documentation, not listed on Schedule 2.1(f);
(e) the Hannibal Facility, excluding the Ac'cent Production Line and
the Underwood Meat Spreads Production Line;
(f) the Intellectual Property set forth on Schedule 2.2(f);
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(g) the Underwood Venezuelan Business;
(h) any rights or benefits pursuant to any of Sellers' insurance
policies (intercompany, self-insurance or otherwise) that relate to the
Transferred Assets or the Businesses on or prior to the Closing for which
Sellers have incurred an unreimbursed Loss or cost or which do not relate to
Transferred Assets or the Businesses;
(i) any causes of action, lawsuits, judgments, claims and demands of
any nature that (a) arose out of or relate to events that occurred on or prior
to the Closing that are related to any of the Businesses or the Transferred
Assets for which Sellers have incurred an unreimbursed Loss or cost or (b) arose
or arise or relate to events that occur prior to or following the Closing Date
if related to any of the Excluded Assets or Excluded Liabilities, in each case
(i) and (ii), whether arising by way of counterclaim or otherwise; and
(j) those assets listed on Schedule 2.2(j) hereto.
Section II.3 Assumption of Liabilities. Subject to the terms and
provisions of this Agreement, and except as otherwise provided by this Section
2.3, Buyer shall assume no debts, liabilities or obligations of Sellers except
that Buyer agrees at the Closing to assume and discharge or perform when due the
following (the "Assumed Liabilities"):
(a) all debts, liabilities and obligations that Buyer has expressly
assumed or agreed to assume pursuant to this Agreement, including pursuant to
Sections 5.4, 5.10, 5.19, 5.20, 5.23 and 5.29;
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(b) all debts, liabilities and obligations of Sellers under the Assumed
Contracts to the extent such debt, liability or obligation relates to or arises
following the Closing;
(c) all Accounts Payable;
(d) all debts, liabilities and obligations that arise out of or relate
to the Transferred Assets or the Businesses to the extent attributable to
occurrences or circumstances arising following the Closing and any obligations
to deliver finished case goods following the Closing under purchase orders of,
or commitments to, Persons other than Affiliates of Sellers entered into by
Sellers after the date hereof and prior to the Closing Date in the Ordinary
Course of Business;
(e) all liabilities for state and local real and personal property
taxes which relate to the period subsequent to the Closing; and
(f) all liabilities with respect to all actions, suits, proceedings,
disputes, claims or investigations to the extent attributable to occurrences or
circumstances that relate to the Businesses or the ownership or operation of the
Transferred Assets, at law, in equity or otherwise, following the Closing.
Section II.4 Excluded Liabilities. Sellers shall retain and be
responsible for all debts, liabilities and obligations of Sellers other than the
Assumed Liabilities (the "Excluded Liabilities").
Section II.5 Purchase Price. Upon the terms and subject to the
conditions set forth herein, at the Closing Buyer shall (i) pay to Sellers the
aggregate
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purchase price of $192 million in cash (the "Purchase Price"), subject to
adjustment as set forth in Section 2.6, and (ii) assume the Assumed Liabilities.
Section II.6 Post-Closing Adjustments.
(a) Schedule 2.6(a) is a
statement setting forth the average net working capital of the Businesses for
the twelve month period ended September 30, 1998 (the "Required Working Capital
Statement"). At the Closing, Sellers shall credit to Buyer against the Purchase
Price the net amount of total "Trade Debtors" minus total "Trade Creditors" as
set forth on the Required Working Capital Statement. Within 60 days following
the Closing Date, Sellers shall prepare and deliver to Buyer a statement setting
forth the value of the Inventory of the Businesses, as of the Closing Date,
which statement shall be derived from a physical taking of the Inventory of the
Businesses as of the Closing Date and shall be prepared in a manner consistent
with the Financial Information and the Required Working Capital Statement as
such relate to the valuation of Inventory (the "Closing Inventory Statement" and
together with the Required Working Capital Statement, as such relates to the
value of Inventory, the "Statements"). Buyer shall provide Sellers and their
accountants full access to the Books and Records, any other information,
including working papers of its accountants, and to any employees of Buyer
necessary for Sellers to prepare the Closing Inventory Statement, to respond to
Buyer's Objection and to prepare materials for presentation to the CPA Firm in
connection with Section 2.6(c).
(b) Buyer shall, within thirty (30) days after the delivery by Sellers
of the Closing Inventory Statement, complete their review thereof. Buyer and its
representatives shall have the opportunity to observe the taking of inventory
(which may begin prior to the Closing Date) in connection with the calculation
of the Closing Inventory Statement, and, after delivery of the Closing Inventory
Statement, Sellers shall make available to Buyer all books, records, work
papers, personnel (including their accountants and employees) and other
materials and sources used by Sellers to prepare the Closing Inventory
Statement. The Closing Inventory Statement shall be binding and conclusive upon,
and deemed accepted by, Buyer unless Buyer shall have notified Sellers in
writing within thirty (30) days after delivery of the Closing Inventory
Statement of any good faith objection thereto (the "Buyer's Objection"). The
Buyer's Objection shall set forth a specific description of the basis of Buyer's
Objection and the adjustments to the value of Inventory reflected on the Closing
Inventory Statement which Buyer believes should be made. Any items not disputed
during the foregoing thirty (30) day period shall be deemed to have been
accepted by Buyer.
(c) If Sellers and Buyer are unable to resolve all of their disputes
with respect to the Closing Inventory Statement within thirty (30) days
following Sellers' receipt of Buyer's Objection to such Closing Inventory
Statement pursuant to Section 2.6(b), they shall refer their remaining
differences to PricewaterhouseCoopers LLP or another internationally recognized
firm of independent public accountants as to which Sellers and Buyer mutually
agree (the "CPA Firm") for decision,
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which decision shall be final and
binding on the parties. The procedure and schedule under which any dispute shall
be submitted to the CPA Firm shall be as follows:
(i) Within thirty (30) days following Buyer's Objection under Section
2.6(b) above, Buyer shall submit any unresolved elements of its objection to the
CPA Firm in writing, supported by any documents and/or affidavits upon which it
relies. Failure to do so without reasonable cause shall constitute a withdrawal
by Buyer of Buyer's Objection with respect to any unresolved element to which
such failure relates.
(ii) Within thirty (30) days following Buyer's submission of the
unresolved elements of Buyer's Objection as specified in sub-clause (i) above,
Sellers shall submit their response to the CPA Firm in writing, supported by any
documents and/or affidavits upon which it relies.
(iii) The CPA Firm shall deliver its written opinion within twenty (20)
days following its receipt of the information provided for in sub-clauses (i)
and (ii) above, whichever shall be later, or such longer period of time as the
CPA Firm determines is necessary. Buyer and Sellers shall make readily available
to the CPA Firm all relevant books and records and any work papers (including
those of the parties' respective accountants) relating to the Statements and all
other items reasonably requested by the CPA Firm.
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Any expenses relating to the engagement of the CPA Firm shall be shared equally
by Sellers, on one hand, and Buyer, on the other hand. Sellers and Buyer shall
each bear the fees of their respective auditors incurred in connection with the
determination and review of the Statements.
(d) The Closing Inventory Statement shall become final and binding on
the parties upon the earliest of (i) if no Buyer's Objection has been given, the
expiration of the period within which Buyer must make its objection pursuant to
Section 2.6(b) hereof, (ii) agreement in writing by Sellers and Buyer that the
Closing Inventory Statement, together with any modifications thereto agreed by
Sellers and Buyer, shall be final and binding and (iii) the date on which the
CPA Firm shall issue its written determination with respect to any dispute
relating to such Closing Inventory Statement. The Closing Inventory Statement,
as submitted by Sellers if no timely Buyer's Objection has been given or as
adjusted pursuant to any agreement between the parties or as determined pursuant
to the decision of the CPA Firm, when final and binding on all parties, is
herein referred to as the "Final Closing Inventory Statement." Notwithstanding
anything in this Agreement to the contrary, the final, binding or conclusive
nature of the Final Closing Inventory Statement shall not abrogate, prejudice or
in any way limit the provisions of Article VIII of this Agreement, including the
ability of Buyer to assert a claim pursuant to Sections 3.6(b) and 3.6(c).
(e) Within 10 Business Days following issuance of the Final Closing
Inventory Statement, the net adjustment payment payable pursuant to this Section
2.6(e) (the "Adjustment Payment") and interest thereon shall be paid by wire
transfer of immediately available funds to a bank account designated by Sellers
or Buyer,
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as the case may be. The Adjustment Payment shall be the difference, if any,
between (x) the value of Inventory, as reflected on the Final Closing Inventory
Statement, and (y) the value of Inventory, as reflected on the Required Working
Capital Statement. The Adjustment Payment shall be payable by Buyer to Sellers,
if positive, and by Sellers to Buyer, if negative. The Adjustment Payment shall
bear interest from the Closing Date to the date of payment at the Closing Date
Interest Rate, which interest shall be calculated on the basis of a 365-day year
and the actual number of days elapsed and such interest shall be paid on the
same date and in the same manner as such Adjustment Payment.
Section II.7 Closing; Delivery and Payment.
(a) Closing Date. The closing of the transactions contemplated by this
Agreement shall take place at the offices of Sullivan & Cromwell, 125 Broad
Street, New York, New York at 10:00 A.M., New York City time, on February 26,
1999 or on such other date or at such other time as may be mutually agreed upon
in writing by Buyer and Sellers (the "Closing Date") and the effective time of
such closing shall be 11:59 p.m. on the Closing Date (the "Closing").
(b) Delivery and Payment. On the Closing Date:
(i) Buyer shall pay the Purchase Price (less any amount to be credited
to Buyer pursuant to the second sentence of Section 2.6(a)) to Sellers in
immediately available funds by wire transfer to an account which shall be
designated by Sellers not less than two Business Days prior to the Closing;
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(ii) Sellers shall deliver to Buyer (A) a limited warranty deed in
recordable form conveying good and marketable fee simple title to the Owned Real
Property free and clear of all Encumbrances, except Permitted Encumbrances, and
(B) such other instruments of transfer, assignment, conveyance and other
instruments sufficient to convey, transfer and assign to Buyer free and clear of
all Encumbrances, except Permitted Encumbrances, all right, title and interest
in and to the Transferred Assets together with possession of such Transferred
Assets, all in form and substance reasonably satisfactory to Buyer;
(iii) Buyer shall deliver to each Seller such instruments of assumption
sufficient to assume, discharge or perform when due, all of the Assumed
Liabilities, all in form and substance reasonably satisfactory to Sellers; and
(iv) Sellers and Buyer shall deliver, each to the other, such documents
as are required pursuant to Article VI hereof.
Section II.8 Taxes and Fees. Sales taxes, transfer taxes and recording
fees, if any, imposed upon the transfer of the Transferred Assets hereunder and
the filing of any instruments (the "Transfer Taxes") shall be paid by Buyer.
Section II.9 Allocation of Purchase Price. Sellers and Buyer agree that
the Purchase Price, subject to adjustment as set forth in Section 2.6, shall be
allocated among the Transferred Assets, tangible and intangible, in accordance
with Schedule 2.9 hereto (the "Allocation"). Seller and Buyer agree to report,
pursuant to Section 1060 of the Code and the regulations promulgated thereunder,
if and when required, the Allocation
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of the Purchase Price among the Transferred Assets in a manner entirely
consistent with such Allocation in the preparation and filing of all Tax Returns
(including IRS form 8594). Neither Sellers nor Buyer will take any action that
would call into question the bona fides of such Allocation.
Section II.10 Nonassignability of Assets. Sellers shall use all
reasonable efforts to obtain and deliver to Buyer on the Closing Date, where
necessary, assignments and consents authorizing the transfer and assignment to
Buyer of, or the substitution of Buyer for Seller under, all Transferred Assets.
Notwithstanding the foregoing, however, to the extent that the sale, assignment,
transfer, conveyance or delivery or attempted sale, assignment, transfer,
conveyance or delivery to Buyer, of any Transferred Asset or any claim or right
or any benefit arising thereunder or resulting therefrom is prohibited by any
applicable law or would require any governmental or third-party authorizations,
approvals, consents or waivers, and such authorizations, approvals, consents or
waivers shall not have been obtained prior to the Closing, the Closing shall
proceed without the sale, assignment, transfer, conveyance or delivery of such
asset and this Agreement shall not constitute a sale, assignment, transfer,
conveyance or delivery of such asset or an attempt thereof; provided, however,
if such failure causes a failure of any of the conditions to the Buyer's
obligations as set forth in Article VI, the Closing shall proceed only if Buyer
elects, in its sole discretion, to waive such conditions. In the event that the
Closing proceeds without the transfer or assignment of any such asset, then
following the Closing, Sellers shall, or shall cause their Affiliates to, hold
such asset for the benefit of Buyer and
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the parties shall use their reasonable efforts, and cooperate with each other,
to obtain promptly such authorizations, approvals, consents or waivers. Pending
such authorization, approval, consent or waiver, the parties shall cooperate
with each other in any mutually agreeable, reasonable and lawful arrangements
designed to provide to Buyer the full benefits of use of such asset and to
Sellers the full benefits, including any indemnities, that they would have
obtained had the asset been conveyed to Buyer at the Closing. To the extent that
Buyer is provided the full benefits pursuant to this Section 2.10 of any Assumed
Contract, Buyer shall perform for the benefit of the other Persons that are
parties thereto the obligations of Sellers thereunder and any related
liabilities that, but for the lack of an authorization, approval, consent or
waiver to assign such obligations or related liabilities to Buyer, would be
Assumed Liabilities. Once authorization, approval, consent or waiver for the
sale, assignment, transfer, conveyance or delivery of any such asset not sold,
assigned, transferred, conveyed or delivered at the Closing is obtained, Sellers
shall assign, transfer, convey and deliver such asset to Buyer at no additional
cost to Buyer. Other than those authorizations, approvals, consents or waivers
required to be obtained by Buyer, Sellers shall pay and discharge and shall
indemnify and hold Buyer harmless from and against all reasonable consideration
paid to obtain any such authorization, approval, consent or waiver whether
before or after the Closing; provided, however, that Sellers must consent to or
approve the amount of consideration to be paid prior to such payment, which
approval or consent cannot be unreasonably withheld. To the extent that any such
asset cannot be transferred within a
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period of one year following the Closing and the full benefits of use of any
such asset cannot be provided to Buyer following the Closing pursuant to this
Section 2.10, then Buyer and Sellers shall enter into such arrangements
(including subleasing, sublicensing or subcontracting) to provide to the parties
the economic (taking into account Tax costs and benefits) and operational
equivalent, to the extent permitted, of obtaining such authorization, approval,
consent or waiver and the performance by Buyer of the obligations thereunder. In
such event, if no reasonably satisfactory arrangement regarding the asset can be
made, Sellers and Buyer shall negotiate in good faith a reduction in the
Purchase Price based upon the limited benefits of use of such asset which are
being provided to Buyer. Sellers shall hold in trust for and pay to Buyer
promptly upon receipt thereof, all income, proceeds and other monies received by
Sellers in connection with their use of any asset (net of any Taxes and any
other costs imposed upon Sellers for which and to the extent Buyer receives a
credit or is otherwise relieved from liability by Sellers' payment) in
connection with the arrangements under this Section 2.10. Subject to the terms
and conditions of this Agreement, nothing in this Section 2.10 shall be deemed a
waiver by Buyer of its right to receive an effective assignment of all of the
Transferred Assets nor shall this Section 2.10 be deemed to constitute an
agreement to exclude from the Transferred Assets any assets described in Section
2.1.
Section II.11 Certain Expenses and Prepaid Items. With respect to (a)
state and local real and personal property taxes imposed or to be imposed on the
Transferred Assets and (b) water, sewer, electricity, gas, telephone and other
utility
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charges related to the Owned Real Property, for the period commencing before and
ending after the Closing Date, Sellers and Buyer shall make such arrangements as
may be necessary to prorate such expenses so that Sellers will bear such
expenses to the extent they relate to the period on or prior to the Closing and
Buyer will bear such expenses to the extent they relate to the period after the
Closing. Such arrangements will include a net payment from Sellers to Buyer or
vice versa, as the case may be, on, or as soon as practicable following, the
Closing Date.
Article III
REPRESENTATIONS AND WARRANTIES OF SELLERS
-----------------------------------------
Sellers, jointly and severally, represent and warrant to Buyer as
follows:
Section III.1 Organization and Authority of Sellers. Each Seller has
been duly incorporated, is validly existing and is in good standing under the
laws of its jurisdiction of incorporation, and is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction where the
conduct of the Businesses makes such qualification necessary, except where the
failure to be so duly qualified and in good standing would not have a Material
Adverse Effect. Sellers have full corporate power and authority to own, lease
and operate the Transferred Assets, to collectively carry on the Businesses as
currently conducted and to enter into this Agreement and to perform their
obligations hereunder. This Agreement has been duly authorized, executed and
delivered by each Seller and constitutes a legal, valid and binding agreement of
each Seller, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent
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conveyance, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles, and
no other proceedings on the part of either Seller is necessary to authorize this
Agreement and the transactions contemplated hereby. The execution, delivery and
performance by Sellers of this Agreement and the consummation of the
transactions contemplated hereby do not and will not (a) violate any provision
of the organizational documents of Sellers, (b) assuming the receipt of all
consents, approvals, waivers and authorizations required to be obtained by
Sellers (as set forth on Schedule 3.10) or Buyer, and the giving or making of
notices and filings required to be given or made by Sellers (as set forth on
Schedule 3.10) or Buyer, conflict with, or result in the breach of, or
constitute a default under, or result in the termination, cancellation or
acceleration (whether after the filing of notice or the lapse of time or both)
of any right or obligation of Sellers under, any Assumed Contract, (c) result in
the creation of any Encumbrance upon any of the Transferred Assets, or (d)
assuming the receipt of all consents, approvals, waivers and authorizations
required to be obtained by Sellers (as set forth on Schedule 3.10) or Buyer and
the giving or making of all notices and filings required to be given or made by
Sellers (as set forth on Schedule 3.10) or Buyer, violate or result in a breach
of or constitute a default under any Law to which Sellers or the Businesses are
subject, other than, in the cases of clauses (b), (c) and (d), conflicts,
breaches, terminations, defaults, cancellations, accelerations, violations or
Encumbrances that would not have a Material Adverse Effect or materially impair
or delay Sellers' ability to perform their obligations under this Agreement.
Section III.2 Financial Information. Set forth on Schedule 3.2 are the
Combined Statements of Direct Revenue and Direct Expenses (Unaudited) for the
years ending September 30, 1998, 1997, and 1996, Combined Statements of Net
Assets to be Sold (Unaudited) for the years ended September 30, 1998 and 1997,
and Notes to such Combined Financial Statements (collectively, the "Financial
Information"). The Financial Information was derived from the internal books and
records of Sellers and such books and records are, and during the periods
covered by the Financial Information, were, correct and complete in all material
respects, fairly and accurately present the income, expenses and net assets of
the Businesses and provided a fair and accurate basis for the preparation of
Financial Information. The Financial Information has been prepared, in all
material respects, in accordance with generally accepted accounting principles
in the United States, and is in conformity with Sellers' internal accounting
practices (as described in the Financial Information), applied consistent with
past practice, and presents fairly, in all material respects, the combined net
assets and combined direct revenues over direct expenses of the Businesses.
Sellers make no other representations with regard to the Financial Information.
Section III.3 Underwood Shares. The authorized capital stock of the
William Underwood Company consists solely of 1,000,000 shares of common stock,
of which the Underwood Shares are the only issued and outstanding shares, and
none of which are held in treasury. IC Acquisition is the sole record and
beneficial owner
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of the Underwood Shares and, at and as of Closing, will be the sole record and
beneficial owner of the Underwood Shares, in each case, free and clear of any
Encumbrances. At Closing, IC Acquisition will transfer and deliver to Buyer good
and valid title to the Underwood Shares free and clear of any Encumbrances. All
of the Underwood Shares (i) have been duly authorized and are validly issued,
fully paid and nonassessable, (ii) have not been issued in violation of any
preemptive rights of stockholders and (iii) have been offered and sold pursuant
to a valid exemption from registration under the Securities Act of 1933, as
amended (the "Securities Act"), and otherwise in compliance with the Securities
Act and the rules and regulations thereunder. There are no outstanding
securities convertible into or exchangeable for or carrying the right to acquire
any equity security of the William Underwood Company, and there are no
outstanding options, warrants or other agreements or commitments that relate to
or require the issuance, sale or disposition of any equity securities of the
William Underwood Company. Except as set forth on Schedule 3.3, the William
Underwood Company conducts no business and holds no assets other than the
Intellectual Property for Ac'cent Flavor Enhancer and Sa-son Ac'cent Flavor
Enhancer, the Underwood Intellectual Property and the Intellectual Property set
forth on Schedule 2.2(f). The William Underwood Company has no liabilities or
obligations other than liabilities or obligations (a) for executory obligations
under license agreements for its intellectual property assets, or (b) for unpaid
Taxes on income or assessed as a franchise or similar Tax by its jurisdiction of
incorporation.
Section III.4 Absence of Certain Changes or Events. Except as set forth
in Schedule 3.4 hereto, since September 30, 1998, there has not been any
Material
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Adverse Effect or, to the Knowledge of Sellers, any change or occurrence which
is reasonably likely to have a Material Adverse Effect. Without limiting the
foregoing, except as set forth in Schedule 3.4 hereto, since September 30, 1998,
Sellers have conducted the Businesses in the Ordinary Course of Business and,
other than in the Ordinary Course of Business, have not, with respect to the
Businesses: (i) sold, leased, assigned, pledged or otherwise transferred any
material amount of assets that would constitute Transferred Assets; (ii)
terminated or materially amended any Assumed Contract that is material to any of
the Businesses; (iii) created, assumed or suffered the creation of any
Encumbrance on any Transferred Assets, except for Permitted Encumbrances; (iv)
suffered any damage, destruction or other casualty loss (not covered by
insurance) which has had or would have a Material Adverse Effect; (v) except as
described in Section 3.9 or Section 3.12, increased the compensation payable or
to become payable by Sellers to any of the Employees or increased any bonus,
insurance, pension or other employee benefit plan, payment or arrangement made
by Sellers, for or with any such Employees or made any agreement or commitment
to pay any severance or similar compensation; (vi) written down the value of any
assets (including write-downs by reason of shrinkage or mark-down); (vii)
disposed of or permitted to lapse any rights to the use of any of the Registered
Intellectual Property; (viii) made or revoked any election for Tax purposes (or
had any election made or revoked on its behalf) or changed a method of
accounting for tax purposes related to the William Underwood Company; (ix)
instituted, settled or agreed to settle any material litigation, action or
proceeding
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directly relating to any of the Businesses or the Transferred Assets; (x)
incurred any liability or obligation in an aggregate amount in excess of
$250,000; (xi) entered into any lease or sublease of the Owned Real Property;
(xii) increased, or experienced any change in any assumptions underlying or
methods of calculating, any bad debt reserve, contingency reserve, tax reserve
or other reserves relating to the Businesses or changed its accounting
practices, methods or assumptions relating to the Businesses; (xiii) made any
single capital expenditure or commitment in excess of $100,000 or made aggregate
capital expenditures and commitments in excess of $250,000; or (xiv) entered
into an agreement to do any of the foregoing.
Section III.5 Title to and Adequacy of Assets; Absence of Liens and
Encumbrances, etc.
(a) Set forth in Schedule 3.5(a) is a list of all of the Fixtures and
Equipment located at the Hannibal Facility as of December 31, 1998. Except as
set forth in Schedule 3.5(a), Sellers have good title to the personal property
included in the Transferred Assets, free and clear of all Encumbrances except
for Permitted Encumbrances.
(b) (i) Schedule 3.5(b) sets forth a list of the Owned Real Property,
including the street addresses and legal descriptions of the Owned Real
Property. Pillsbury has good, valid and marketable fee simple title to, and is
in actual possession of, the Owned Real Property, free and clear of all
Encumbrances except for Permitted Encumbrances. To the best of Sellers'
Knowledge, the legal description
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included in Schedule 3.5(b) is accurate, current and complete. Sellers have made
available to Buyer the most recent survey for the Owned Real Property, if any,
in possession of Sellers.
(ii) The water, gas, electricity and other utilities serving the Owned
Real Property are adequate to service the operations of the Businesses currently
conducted thereon.
(iii) The Owned Real Property has physical vehicular and pedestrian
access to and from public roadways.
(iv) Except as set forth on Schedule 3.5(b), no portion of the Owned
Real Property is subject to an agricultural use or other special ad valorem tax
valuation or rate.
(v) The Owned Real Property and the use thereof by Sellers in
connection with B&M Baked Beans complies with all material covenants, easements
and restrictions of record affecting the Owned Real Property.
(c) The Transferred Assets constitute all of the material assets used
in and necessary for the operation of the Businesses as presently operated by
Sellers except for those assets, rights or agreements which are set forth on
Schedule 3.5(c) and are the subject of Sections 5.11, 5.13, and 5.23 and the
Excluded Assets. To the Knowledge of Sellers, the Businesses are not conducted
under any restriction imposed upon Sellers (but not imposed upon other Persons
conducting similar businesses or operating similar assets for similar purposes
in the localities where their businesses and assets are located) by any
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Law.
Section III.6 Condition of Transferred Assets.
(a) All items of machinery, equipment, buildings and other tangible
assets (other than Inventory) of the Businesses which are Transferred Assets (i)
are in working condition (subject to ordinary wear and tear) and have been
maintained in a reasonable manner in the Ordinary Course of Business and (ii)
are adequate and fit to be used for the purposes for which, and in the manner
that, they are currently used, except for items currently under or scheduled for
repair or construction which items, individually or in the aggregate, do not
impair the operations of the Businesses in any material respect.
(b) The Inventory is current and saleable or usable in the Ordinary
Course of Business and is of consistent and merchantable quality, of the grade
specified, was produced in accordance with the Businesses' standards, meets the
usual standards of the trade and is suitable for use in the Businesses. Subject
to sales to the government or the military, none of the Inventory will, as of
the Closing, be consigned inventory, and no Seller is under any material
liability or obligation with respect to the return of Inventory. Schedule 3.6(b)
sets forth, to the best of Sellers' Knowledge, the location of all Inventory,
the type and, as of December 31, 1998, the amount (in quantity) of such
Inventory at each such location.
(c) Excluded from the representations and warranties of Section 3.6(b)
are ingredients, packing materials, spare parts and supplies not meeting the
quality standards of the Businesses due to shrinkage, spoilage or deviation from
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purchasing specifications; provided, however, that the cost basis of such amount
is not greater than past experiences in the Businesses and is not in excess of
$100,000. Also excluded from the representations and warranties of Section
3.6(b) are those products placed on "hold" (not to be shipped or sold) while the
quality is evaluated, with a total cost basis not in excess of $250,000.
Section III.7 Litigation. Except as set forth on Schedule 3.7, there is
no civil, criminal, condemnation, eminent domain or administrative action, suit,
proceeding, claim or arbitration or negotiation or agreement for any conveyance
in lieu of condemnation or eminent domain, or inquiry or investigation of which
Sellers have received notice, pending or, to Sellers' Knowledge, threatened
against Sellers with respect to the Businesses or the Transferred Assets, at
law, in equity or otherwise, in, before, or by, any court or governmental agency
or authority which, individually or in the aggregate, would have a Material
Adverse Effect. Except as set forth in Schedule 3.7 hereto, there are no
unsatisfied judgments or outstanding orders, consents, settlements, injunctions,
decrees, stipulations or awards (whether rendered by a court, an administrative
agency or by an arbitrator), of any nature, against any of the Transferred
Assets or against Sellers with respect to the Businesses which, individually or
in the aggregate, would have a Material Adverse Effect.
Section III.8 Compliance with Law. Except as set forth in Schedule 3.8,
the Businesses have been since December 31, 1995 and currently are being
conducted and all of the Transferred Assets have been since December 31, 1995
and currently are being
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used in compliance with all applicable Laws (including those relating to
occupational safety and health practices, the Federal Food, Drug and Cosmetic
Act, as amended, including the Food Additive Amendment of 1958, and state or
local pure food or drug laws), and Sellers have not received, since December 31,
1995, written notice from any governmental entity alleging that the Businesses
or any of the Transferred Assets are in violation of any applicable Permit or
Law which violation is currently outstanding, except for such conduct,
non-compliance or violations which, individually or in the aggregate, would not
have a Material Adverse Effect or materially impair or delay Sellers' ability to
perform their obligations under this Agreement. Except as set forth in Schedule
3.8, all Permits are in full force and effect and are being complied with in all
material respects except for such Permits the failure of which to have,
individually or in the aggregate, would not have a Material Adverse Effect or
materially impair the use or operation of the Transferred Assets.
Section III.9 Contracts. Set forth on Schedule 3.9 are, and Sellers
have, except as otherwise noted on Schedule 3.9, provided Buyer with true and
complete copies of the contracts, agreements, leases, arrangements or
understandings to which any Seller is a party which relate exclusively to the
Businesses and (a) have a term of one year or more except for any contract
entered into in the Ordinary Course of Business involving payments or
obligations which do not exceed $100,000 in the aggregate, (b) has a term of
less than one year and involves payments over the term thereof which exceed
$50,000 in the aggregate, (c) which constitutes a consulting or similar
agreement having a term
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greater than twelve (12) months, (d) which constitutes an agreement that
restricts in any material respects any of the Businesses from carrying out its
business anywhere in the world or from competing with any other Person or which
is a confidentiality or non-disclosure agreement, (e) which constitutes a
franchising, partnership, joint venture or similar agreement, (f) which is a
license, sublicense or similar agreement for the Registered Intellectual
Property, whether as licensee or licensor, (g) which constitutes a written
agreement to pay an Employee compensation (including any bonus but excluding any
benefits made available to Employees generally) at the annual rate of more than
$50,000, (h) which constitutes a material agreement with a Seller or any
Affiliate thereof, (i) which deals with any material environmental
investigations, remediations or similar matters, (j) which deals with the
provision of material services by or for any of the Businesses on a copacking,
contracting or subcontracting basis, (k) where the consequences of a breach or
default thereunder, or the termination, expiration or cancellation thereof,
would have a Material Adverse Effect, (l) which is a lease or purchase and sale
agreement relating to the Owned Real Property or (m) which relates to
indebtedness for borrowed money or guarantees by the Businesses for borrowed
money (collectively, the "Material Contracts"). Each Material Contract is legal,
valid and subsisting and is in full force and effect, and assuming the due
authorization, execution and delivery by any other party thereto are enforceable
by and against a Seller in accordance with the terms of such Material Contract,
subject to bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and
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to general equity principles. Except as set forth in Schedule 3.9, there is no
default or claim of default under any Material Contract and no event or
condition has occurred that, with the passage of time or the giving of notice or
both, would constitute a default by Sellers or, to the best of Sellers'
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 an Encumbrance on any of the Transferred Assets, other than
such defaults, claims, events, conditions or creations the effect of which would
not have a Material Adverse Effect. Except as set forth on Schedule 3.9, without
limiting the foregoing, there has not been, as of the date hereof, any
notification of materially adverse pricing developments in Sellers' business
relationship with any co-packer under any Co-Packing Agreement, or, to Sellers'
Knowledge, any threat thereof.
Section III.10 Consents and Approvals. Set forth in Schedule 3.10 is a
list of each approval, consent, waiver or authorization that is required to be
obtained by Sellers from, and each notice and filing that is required to be
given by Sellers or made by Sellers with, any (a) federal, provincial, state or
local governmental authority of any country, in connection with the execution,
delivery and performance by Sellers of this Agreement or (b) other Person in
connection with the execution, delivery and performance by Sellers of this
Agreement, except where the failure to obtain such approval, consent, waiver or
authorization or to make or give such notice or filing would not have a Material
Adverse Effect (collectively, the "Consents").
Section III.11 Collective Bargaining Agreements. Except as set forth on
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Schedule 3.11, Sellers are not a party to or bound by any material labor
agreement or collective bargaining agreement respecting the Employees, nor is
there pending, or to the Knowledge of Sellers, threatened, any strike, walkout
or other work stoppage or any union organizing effort by or respecting the
Employees.
Section III.12 ERISA Plans.
(a) All benefit plans, contracts or arrangements covering Employees,
including, but not limited to, "employee benefit plans" within the meaning of
Section 3(3) of ERISA, and plans of deferred compensation (the "Benefit Plans"),
are listed in Schedule 3.12(a). True and complete copies of all Benefit Plans,
including, but not limited to, any trust instruments and insurance contracts
forming a part of any Benefit Plans, and all amendments thereto have been
provided or made available to Buyer.
(b) All Benefit Plans, other than "multiemployer plans" within the
meaning of Section 3(37) of ERISA, covering Employees (the "Plans"), to the
extent subject to ERISA, are in substantial compliance with ERISA. There is no
material pending or threatened litigation relating to the Plans. The Sellers
have not engaged in a transaction with respect to any Plan that, assuming the
taxable period of such transaction expired as of the date hereof, could result
in taxes or penalties imposed by either Section 4975 of the Code or Section
502(i) of ERISA which in the aggregate would have a Material Adverse Effect.
All contributions required to be made under the terms of any Plan have
been timely made or reflected in the Financial Information.
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(c) Schedule 3.12(a) hereto identifies each Plan which is an "employee
pension benefit plan", as such term is defined in Section 3(2) of ERISA
("Pension Plan"). Each Pension Plan that is intended to be qualified under
Section 401(a) of the Code has received a favorable determination letter from
the IRS that it is a qualified plan for purposes of Section 401(a) of the Code
and any amendments to any such Plan subsequent to such determination letter do
not adversely affect such qualified status. No Pension Plan has an "accumulated
funding deficiency", as such term is defined in Section 302 of ERISA and Section
412 of the Code (whether or not waived). Sellers have not incurred any liability
to the Pension Benefit Guaranty Corporation under Title IV of ERISA with respect
to the Businesses, other than for the payment of premiums, all of which have
been paid when due. Sellers have not incurred any withdrawal liability to a
multiemployer plan with respect to the Businesses under Subtitle E of Title IV
of ERISA.
Section III.13 Intellectual Property.
(a) Set forth in Schedule 3.13(a) hereto is a list of all patents,
trademarks, trade names, service marks, service names, registered copyrights,
industrial designs, trade dress or domain names or applications for any of the
foregoing included in the Intellectual Property (the "Registered Intellectual
Property").
(b) Except as set forth in Schedule 3.13(b), Sellers own all right,
title and interest in and to, or have a license, sublicense or otherwise have
permission to use, all of the Intellectual Property material to, and currently
being used in the conduct of, the Businesses, and such Intellectual Property is
free and clear of all Encumbrances other than
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Permitted Encumbrances.
(c) To the Knowledge of Sellers, the operation of the Businesses as
currently conducted does not infringe on the patents, industrial design rights,
trademarks, service marks, trade names, trade dress, copyrights, mask works,
trade secrets or other registered intellectual property rights of any third
party, and, within one year prior to the date hereof, no written notice has been
received or, to Sellers' Knowledge, a dispute arisen to that effect.
(d) Except as set forth on Schedule 3.13(d), all material Registered
Intellectual Property is subsisting and in full force, is held in the record
name of Sellers or a Subsidiary of Sellers, has not been abandoned and, to the
Knowledge of Sellers, is not the subject of any cancellation or re-examination
proceeding challenging its validity. Except as set forth on Schedule 3.13(d),
Sellers or a Subsidiary of Sellers are the applicant of record for any
applications for Registered Intellectual Property and, to the Knowledge of
Sellers, such applications are pending with the applicable governmental
entities, have not been finally rejected on any grounds, and no opposition,
extension of time to oppose, interference, rejection or refusal to register has
been received in connection with any such application.
(e) To the Knowledge of Sellers, none of the material trade secrets,
know-how or other confidential or proprietary information which is part of the
Intellectual Property has been disclosed to any Person unless such disclosure
was necessary, and was made pursuant to an appropriate confidentiality
agreement.
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(f) Other than the intellectual property set forth on Schedule 2.2(f)
which is registered in Venezuela, the intellectual property set forth on
Schedule 2.2(f) is not currently used in any material respects in connection
with the sale or promotion of any product of Sellers or its Affiliates outside
of Venezuela.
Section III.14 Brokers and Finders. Other than Greenhill & Co., LLC
("Greenhill"), the costs, fees and expenses of which will be paid by Sellers,
Sellers have not employed any broker, finder, consultant or intermediary in
connection with the transactions contemplated by this Agreement who would be
entitled to a broker's, finder's or similar fee or commission in connection
therewith or upon the consummation thereof. Sellers agree to bear all costs they
incur in connection with the transactions contemplated by this Agreement unless
otherwise expressly provided herein.
Section III.15 Environmental Matters. Except as disclosed on Schedule
3.15 or as would not have a Material Adverse Effect, the Owned Real Property and
the operations of the Businesses (i) are in compliance with all applicable
Environmental Laws, (ii) are not the subject of any pending written or, to the
Knowledge of Sellers, threatened notice from any governmental entity or any
third party alleging the violation of or liability under any applicable
Environmental Laws, (iii) are not currently subject to any court order,
administrative order or decree arising under any Environmental Law, (iv) have
not been used for the disposal of Hazardous Substances, and (v) have not had or
resulted in any Releases of Hazardous Substances or disposed or arranged for the
disposal thereof (on-site or off-site), except Releases or disposals as allowed
under
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applicable Environmental Laws. Sellers have made available to Buyer copies of
all material environmental audits conducted within five years prior to the date
of this Agreement in its possession or control relating to the Owned Real
Property or the operation of the Transferred Assets or the Businesses. Other
than Section 3.10, this Section 3.15 constitutes the Sellers' sole
representation with respect to any Hazardous Substance or any Environmental Law.
Section III.16 Taxes of the William Underwood Company. Except as set
forth on Schedule 3.16, (i) all Tax Returns that are required to be filed by or
with respect to the William Underwood Company have been duly filed, (ii) all
Taxes required to be paid by or with respect to the William Underwood Company
have been paid in full, (iii) the Tax Returns referred to in clause (i) above
(A) accurately reflect the taxable income of the William Underwood Company in
all material respects and (B) have been examined by the Internal Revenue Service
or the appropriate state, local or foreign taxing authority or the period for
assessment of the Taxes in respect of which such Tax Returns were required to be
filed has expired, (iv) all deficiencies asserted or assessments made as a
result of such examinations have been paid in full, (v) no issues that have been
raised by the relevant taxing authority in connection with the examination of
any of the Tax Returns referred to in clause (i) are currently pending, and (vi)
no waivers of statutes of limitation have been given by or requested with
respect to any Taxes of the William Underwood Company. Except as disclosed on
Schedule 3.16, the William Underwood Company has never (a) filed any consent
agreement under Section 341(f) of the Code, (b) joined in or
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been required to join in filing a consolidated or combined federal, state or
local income Tax Return, (c) been the subject of a Tax ruling that has
continuing effect, (d) been the subject of a closing agreement with any taxing
authority that has continuing effect or (e) granted a power of attorney with
respect to any Tax matters that has continuing effect. The William Underwood
Company has not agreed to make nor is it required to make any adjustment under
Section 481 of the Code by reason of a change in accounting method or otherwise.
Section III.17 Insurance. Set forth on Schedule 3.17 is a list of the
insurance policies or binders currently insuring the Transferred Assets. All
such insurance policies or binders are in full force and effect, and such
insurance policies or binders (or similar policies or binders) will be kept in
effect up to the Closing (so long as such insurance is available at commercially
reasonable rates); it being understood that Buyer shall obtain its own insurance
policies or binders with respect to the Businesses and the Transferred Assets
from and after the Closing. Except as set forth on Schedule 3.17, there are no
material claims pending or, to the Knowledge of Sellers, threatened that relate
primarily to the Businesses or the Transferred Assets under any such policies or
binders or disputes with the insurers thereof as to which the insurers have
denied liability. The insurance policies and binders are in the aggregate
reasonable in scope and amount in light of the risks attendant to the
Businesses.
Section III.18 Customers and Suppliers. Except as set forth on Schedule
3.18, since January 1, 1998, no change has occurred in the relationship between
Sellers
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and any customer of the Businesses or any supplier of goods or services to the
Businesses, including on a co-packing basis, has had or that would have a
Material Adverse Effect. Sellers have not received any written notice that a
material supplier of any Business, including on a co-packing basis, will not
sell raw materials, supplies, merchandise or other goods to, or that any
material customer of any Business will not purchase products from, Sellers on
terms and conditions similar to those used in current sales to and purchases
from the Businesses. Sellers will notify Buyer if any material supplier or
customer of any Business, including on a co-packing basis, threatens to take any
of the actions described in the preceding sentence as a result of the execution,
delivery or performance of this Agreement.
Section III.19 Promotional Programs. Schedule 3.19 describes the
material current Promotional Programs of Sellers.
Section III.20 No Other Representations or Warranties. Except for the
representations and warranties contained in this Article III, neither Sellers
nor any other Person makes any other express or implied representation or
warranty on behalf of Sellers, and Sellers hereby disclaim any such
representation or warranty whether by Sellers or any of their or the Businesses'
respective officers, directors, employees, agents or representatives or any
other person, with respect to the execution and delivery of any of this
Agreement or the transactions contemplated hereby, notwithstanding the delivery
or disclosure to Buyer or any of its officers, directors, employees, agents or
representatives or any other person of any documentation (other than Sellers'
deliveries under Article VI
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hereof) or other information by Sellers or any of their or the Businesses'
respective officers, directors, employees, agents or representatives or any
other person with respect to any one or more of the foregoing.
Article IV
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Sellers as follows:
Section IV.1 Organization and Authority of Buyer. Buyer has been duly
incorporated, is validly existing and is in good standing under the laws of its
jurisdiction of incorporation, and is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the conduct of
its business makes such qualification necessary, except where the failure to be
so duly qualified and in good standing would not materially impair Buyer's
ability to perform its obligations under this Agreement. Buyer has full
corporate power and authority to own, lease and operate the assets used in its
business, to carry on its business as currently conducted and to enter into this
Agreement and perform its obligations hereunder. This Agreement has been duly
authorized, executed and delivered by Buyer and constitutes a legal, valid and
binding obligation of Buyer, enforceable in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles, and no other proceedings on the part of Buyer
are necessary to authorize this Agreement and the consummation of transactions
contemplated hereby. The execution, delivery and
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performance by Buyer of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (a) violate any provision of the
organizational documents of Buyer, (b) assuming the receipt of all consents,
approvals, waivers and authorizations required to be obtained by Buyer (as set
forth on Schedule 4.4) or Sellers and the giving or making of notices and
filings required to be given or made by Buyer (as set forth on Schedule 4.4) or
Sellers, conflict with, or result in the breach of, or constitute a default
under, or result in the termination, cancellation or acceleration (whether after
the filing of notice or the lapse of time or both) of any right or obligation of
Buyer under, any contract, provision, license, franchise or permit to which
Buyer is a party or by which it is bound, or (c) assuming the receipt of all
consents, approvals, waivers and authorizations required to be obtained by Buyer
(as set forth on Schedule 4.4) or Sellers and the giving or making of notices
and filings required to be given or made by Buyer (as set forth on Schedule 4.4)
or Sellers, violate or result in a breach of or constitute a default under any
Law to which Buyer is subject, other than, in the case of clauses (b) and (c),
conflicts, breaches, terminations, defaults, cancellations, accelerations or
violations that would not materially impair or delay Buyer's ability to perform
its obligations under this Agreement.
Section IV.2 Brokers and Finders. Other than Goldsmith, Agio, Helms &
Company and Lehman Brothers, Inc., the costs, fees and expenses of which will be
paid by Buyer, Buyer has not employed any broker, finder, consultant or
intermediary in connection with the transactions contemplated by this Agreement
who would be entitled to a broker's, finder's or similar fee or commission in
connection therewith or upon the
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consummation thereof. Buyer agrees to bear all costs it incurs in connection
with the transactions contemplated by this Agreement unless otherwise expressly
provided herein.
Section IV.3 Financing. Buyer has previously delivered to Pillsbury
true, correct and complete copies of the commitment letters (the "Commitment
Letters") for financing of the Purchase Price and the payment of the costs and
expenses of Buyer in consummating the transactions contemplated by this
Agreement (the "Financing") from Lehman Brothers Inc. ("Lehman") and Bruckmann,
Rosser, Sherrill & Co., L.P. ("BRS"). The Commitment Letters have been duly
executed and delivered by Buyer and are valid, binding, and in full force and
effect, and Buyer has paid all fees and expenses required thereby or in
connection therewith to the extent required to be paid on the date hereof. Buyer
believes it is capable of satisfying all conditions to financing described in
the Commitment Letters which are within its exclusive control.
Section IV.4 Consents and Approvals. Set forth in Schedule 4.4 is a
list of each approval, consent, waiver or authorization that is required to be
obtained by Buyer from, and each notice and filing that is required to be given
by Buyer or made by Buyer with, any (a) federal, provincial, state or local
governmental authority of any country, in connection with the execution,
delivery and performance by Buyer of this Agreement or (b) other Person in
connection with the execution, delivery and performance by Buyer of this
Agreement, except where the failure to obtain such approval, consent, waiver or
authorization or to make or give such notice or filing would not materially
impair or delay Buyer's ability to perform its obligations under this Agreement.
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Article V
CERTAIN COVENANTS AND AGREEMENTS
OF SELLERS AND BUYER
----------------------
Section V.1 Access and Information.
(a) Sellers shall permit Buyer (and any Person providing financing in
connection with the transactions contemplated hereby) and their representatives
(including accountants, environmental auditors, surveyors and legal counsel)
after the date of this Agreement to have access, during regular business hours
and upon reasonable advance notice, to the assets of the Businesses that will be
Transferred Assets (for, among other things, the conduct of Phase I
environmental examinations or audits), and those portions of the Hannibal
Facility related to the Ac'cent Production Line and the Underwood Meat Spreads
Production Line, subject to Sellers' reasonable rules and regulations, and shall
furnish, or cause to be furnished, to Buyer any financial and operating data and
other information that is available and exclusively relates to the Businesses
and, on a redacted basis, information that does not relate exclusively to the
Businesses, but is relevant to the Businesses and is for reasonable business
purposes, as Buyer shall from time to time reasonably request (it being
understood that in no event shall Buyer have access to any of Sellers' or their
Affiliates' Tax Returns or any books, records or working papers related thereto
except so far as they relate to the William Underwood Company). In the event of
the termination of this Agreement, Buyer shall promptly deliver (without
retaining any copies thereof) to Sellers, or certify to Sellers that it has
destroyed, all documents, work
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papers and any other material obtained by Buyer or on its behalf from Sellers or
created by Buyer, the Businesses, or any of their respective agents, employees
or representatives as a result hereof or in connection herewith, whether so
obtained before or after the execution hereof.
(b) All information provided or obtained pursuant to clause (a) above
shall be held by Buyer in accordance with and subject to the terms of the
Confidentiality Agreement, dated July 6, 1998, between BRS and Greenhill, on
behalf of Sellers (the "Confidentiality Agreement").
Section V.2 Registrations, Filings and Consents. Subject to Buyer's
additional obligations under Section 5.12, Sellers and Buyer will cooperate and
use their respective reasonable best efforts to make all registrations, filings
and applications, to give all notices and to obtain the Consents or any
governmental transfers, approvals, orders, qualifications and waivers necessary
or desirable for the consummation of the transactions contemplated hereby,
including the Portland Facility permits set forth on Schedule 6.1(j).
Section V.3 Conduct of Business.
(a) Prior to the Closing, and except as expressly contemplated by this
Agreement or consented to or approved by Buyer in writing, Sellers covenant and
agree that:
(i) they shall operate the Businesses only in the Ordinary Course of
Business and use reasonable best efforts to preserve their properties, business
and relationships with suppliers and customers of the Businesses; and
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(ii) Pillsbury shall maintain insurance coverage with respect to the
Businesses and the Transferred Assets at presently existing levels (so long as
such insurance is available at commercially reasonable rates).
(b) Notwithstanding anything to the contrary contained in this
Agreement, it is understood that prior to the Closing, the William Underwood
Company shall transfer to Sellers or any Affiliate thereof any and all assets
held by the William Underwood Company (including, in accordance with Section
5.8, the Underwood Intellectual Property in Venezuela and the Intellectual
Property set forth on Schedule 2.2(f)) other than the Intellectual Property for
Ac'cent Flavor Enhancer and Sa-son Ac'cent Flavor Enhancer and the Underwood
Intellectual Property (excluding, in accordance with Section 5.8, the Underwood
Intellectual Property in Venezuela), and such assets transferred by the William
Underwood Company to Sellers or their Affiliates pursuant to this Section 5.3(b)
shall not be included in the Transferred Assets.
Section V.4 Post-Closing Obligations of the Business to Certain
Employees.
(a) Schedule 5.4(a) identifies all non-union employees of Sellers and
their Affiliates who are actively employed (including employees on short-term
disability) as of the date of this Agreement in connection with B&M Baked Beans
(other than the person listed on Schedule 5.24) by name, location, title or
function, current base salary or hourly wage, date of hire, social security
number and current vacation pay entitlement (the "Non-Union Employees"). Sellers
shall update Schedule 5.4(a) as of the day prior to
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Closing. Effective as of the Closing, Buyer shall extend offers of employment to
all of the Non-Union Employees listed on the updated Schedule 5.4(a). Such
offers of employment shall be at the salary or hourly wage specified on the
updated Schedule 5.4(a) and shall provide for substantially similar employee
benefits as those provided to similarly situated employees of the Buyer. Such
offers of employment shall be for employment at the Portland Facility. All
Non-Union Employees who accept such offer of employment are hereinafter referred
to as the " Transferred Non-Union Employees."
(b) Except as otherwise specifically provided in Section 5.4(j), the
Sellers shall be solely responsible for any liability, claim or expense to the
extent attributable to events occurring on or prior to the Closing with respect
to employment, termination of employment, compensation or employee benefits of
any nature (including, but not limited to the benefits to be provided under the
Benefit Plans) owed to any Non-Union Employee or former non-union employee of
any Seller or its Affiliates (or the beneficiary of any Non-Union Employee or
non-union former employee) whether or not such Non-Union Employee or former
non-union employee becomes a Transferred Non-Union Employee, that arises out of
or relates to the employment relationship between any Seller or its Affiliates
and any such Non-Union Employee or former non-union employee or the termination
of such relationship. Without limiting the foregoing, Sellers shall be
responsible for the payment of any severance payment or benefits that become due
to any Non-Union Employee as a result of the termination of such Non-Union
Employee by Sellers or their Affiliates on or prior to the Closing. Buyer agrees
that it will indemnify
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Sellers for any and all Losses and claims against Sellers for severance benefits
under The Portland Maine Salaried Employee Severance Plan brought by any
Transferred Non-Union Employee who is terminated by the Buyer within six months
following the Closing Date. Except as specifically provided for in Section
5.4(j), Buyer and its Affiliates shall not be obligated to continue or assume
any employee benefit plan or program of Sellers or their Affiliates applicable
to Non-Union Employees (including, but not limited to the Benefit Plans) or
responsible for any obligation or liability thereunder.
(c) Schedule 5.4(c) identifies all employees of Sellers and their
Affiliates who are actively employed as of the date of this Agreement in
connection with B&M Baked Beans and whose terms and conditions of employment are
subject to the Agreement (the "Collective Bargaining Agreement") between
Pillsbury and the Bakery, Confectionary and Tobacco Workers International Union
A.F.L. - C.I.O. Local No. 334 (the "Union") by name, location, title or
function, hourly wage, seniority date, social security number and current
vacation pay entitlement (the "Union Employees" and collectively with the
Non-Union Employees the "Employees"). Sellers shall update Schedule 5.4(c) as of
the day prior to Closing. Except as otherwise specifically provided in Sections
5.4(d), (e), (f), (g), (h) and (j), effective as of the Closing Date, Buyer
shall assume all of Pillsbury's post-Closing rights, obligations and duties
under the Collective Bargaining Agreement. All Union Employees who become
employed by Buyer are hereinafter referred to as the Transferred Union Employees
and collectively with the Transferred Non-Union Employees the "Transferred
Employees." Sellers shall notify the
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Union of the sale of B&M Baked Beans at least 21 days prior to the Closing Date
and Sellers shall negotiate with the Union with respect to the effects of the
sale of B&M Baked Beans if the Union so requests.
(d) Notwithstanding any provision of this Agreement to the contrary,
Sellers shall be solely responsible for any liability, claim or expense with
respect to employment, termination of employment, compensation or employee
benefits of any nature (including, but not limited to the benefits to be
provided under the Benefit Plans) owed to any Union Employee or former union
employee of Sellers or their Affiliates (or the beneficiary of any Union
Employee or former union employee) who does not become a Transferred Union
Employee and that arises out of or relates to the employment relationship
between any Seller or its Affiliates and any such Union Employee or former union
employee or the termination of such relationship.
(e) Effective as of the Closing Date, all Employees shall cease to
actively participate in the Pet Incorporated Retirement Plan for Hourly
Employees, The Pillsbury Retirement Plan, and the Pillsbury 401(k) Savings Plan
(hereinafter referred to collectively as the "Pet Plans"). The benefits of such
Employees under the Pet Plans shall be paid to the Employees in accordance with
the terms of such plans. Notwithstanding any provision of this Agreement to the
contrary, Sellers shall retain all liability with respect to the retirement and
pension benefits earned by the Union Employees through the Closing Date under
the Pet Incorporated Retirement Plan for Hourly Employees.
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(f) Except as otherwise specifically provided in this Section 5.4,
effective as of the Closing, all Employees shall cease to be covered by Sellers'
employee welfare benefit plans, including plans, programs, policies and
arrangements which provide medical and dental coverage, life and accident
insurance, disability coverage, and vacation and severance pay. Sellers shall be
responsible for all legally mandated continuation coverage for Employees and
former employees of any Seller or its Affiliates and their covered dependents
who had or have a loss of coverage due to a "qualifying event" (within the
meaning of Section 603 of ERISA) which occurred on or prior to the Closing Date.
The Buyers shall be responsible for all legally mandated continuation coverage
for Transferred Employees and their covered dependents who have a loss of
coverage due to a "qualifying event" (within the meaning of Section 603 of
ERISA) which occurred at any time following the Closing Date.
(g) Sellers shall retain liability for all claims incurred by Employees
(and their dependents) under Sellers' employee welfare benefit plans on or prior
to the Closing Date. Buyer shall be liable for all claims incurred by the
Transferred Employees (and their dependents) under the employee welfare benefit
plans of Buyer after the Closing. For purposes of this paragraph, a claim shall
be deemed to have been incurred on the date on which the medical or other
treatment or service was rendered and not the date of the inception of the
related illness or injury or the date of submission of a claim related thereto.
Notwithstanding the foregoing, a claim shall be deemed to have been incurred on
the date of the occurrence of death or dismemberment in the case of claims under
life
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insurance and accidental death and dismemberment benefits. Notwithstanding any
provision of this Agreement to the contrary, Sellers shall retain all liability
with respect to the post-retirement medical coverage and benefits to which any
Union Employee (whether or not such individual becomes a Transferred Union
Employee) may be entitled to under the Collective Bargaining Agreement.
(h) Sellers shall retain any liability for payment of long or
short-term disability claims arising from disabilities that occurred on or prior
to the Closing Date and up until such time as an Employee returns to work. Buyer
shall be responsible for payment of long-term and short-term disability claims
that arise from disabilities that occur after the Closing, or any claims of a
Transferred Employee after the Employee has returned to work with Buyer, on a
full-time, unrestricted basis for at least 30 days. A claim shall be deemed to
be incurred on the date of the initial disability in the case of claims under
disability benefits.
(i) If a Transferred Employee becomes eligible to participate in 1999
in a medical, dental or health plan of Buyer (or its affiliates), Buyer shall
cause such plan to (i) waive any preexisting condition limitations for
conditions covered under the applicable medical, dental or health plans of
Seller and (ii) honor any deductible and out-of-pocket expenses incurred by the
Transferred Employee and his dependents under the applicable Seller medical,
dental or health plans during the portion of 1999 preceding the Closing Date. If
an Transferred Employee becomes eligible to participate in 1999 in a group term
life insurance plan maintained by Buyer or its affiliates, Buyer shall cause
such
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plan to waive any medical certification for such Transferred Employee up to the
amount of coverage the Transferred Employee had under the life insurance plan of
Seller (but subject to any limits on the maximum amount of coverage under
Buyer's life insurance plan).
(j) At the Closing, Sellers shall pay to Buyer in cash an amount equal
to fifty percent of the earned but unused vacation pay entitlement disclosed on
Schedules 5.4(a) and 5.4(c) with respect to the Transferred Employees. Subject
to the preceding sentence, effective as of the Closing Date, Buyer shall assume
and pay in the ordinary course to the Transferred Employees the vacation pay
entitlement disclosed on Schedules 5.4(a) and 5.4(c) in accordance with the
Sellers' vacation policy.
(k) For purposes of eligibility and vesting in any employee benefit
plans or policies of the Buyer or its Affiliates for which a Transferred
Employee otherwise becomes eligible, such Transferred Employee shall be given
credit under such plan or policy for all service prior to the Closing with
Sellers or their Affiliates.
(l) Nothing contained in this Agreement shall confer upon any Non-Union
Employee any right with respect to employment by Buyer or its Affiliates, nor
shall anything herein interfere with the right of Buyer or its Affiliates,
following any employment of any Transferred Non-Union Employee, to terminate the
employment of any such Transferred Non-Union Employee at any time, with or
without cause, or restrict Buyer or its Affiliates in the exercise of their
independent business judgment in modifying any of the terms and conditions of
the employment of any such Transferred Non-Union Employee.
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Section V.5 Reasonable Best Efforts. Each of the parties hereto shall
use its respective reasonable best efforts to fulfill or obtain the fulfillment
of the conditions of the Closing, including, without limitation, the execution
and delivery of all agreements or other documents contemplated hereunder to be
so executed and delivered.
Section V.6 Books; Records. (a) For a period of six years after the
Closing Date, (i) Buyer agrees to, or cause the Businesses to, make available
all Books and Records in its possession for inspection and copying by Sellers or
its agents (with reimbursement of Buyer's reasonable out-of-pocket expenses,
which are reasonably documented, incurred to comply with such request), upon
reasonable request and upon reasonable notice, to the extent necessary for
reasonable business purposes such as defense of claims, tax preparation or
employee benefit matters and (ii) no such Books and Records shall be destroyed
by Buyer without first advising Sellers in writing and giving Sellers a
reasonable opportunity to obtain possession thereof.
(b) For a period of six years after the Closing Date, (i) Sellers agree
to make available all materials and information relating to the Businesses, in a
redacted form, that would be Books and Records included in the Transferred
Assets but for their non-exclusive relation to the Businesses, for inspection
and copying by Buyer or its agents (with reimbursement of Sellers' reasonable
out-of-pocket expenses, which are reasonably documented, incurred to comply with
such request), upon reasonable request and upon reasonable notice, to the extent
necessary for reasonable business purposes and (ii) no such materials or
information shall be destroyed by Sellers without first advising Buyer in
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writing and giving Buyer a reasonable opportunity to obtain possession thereof,
in a redacted form; provided, however, that Sellers shall not have to make
available any such material or information or provide prior notice of
destruction of such material or information if such material or information
contains or would convey, on a redacted basis, proprietary or confidential
information of Sellers or any other Person not related to the Businesses.
(c) Notwithstanding any other provision of this Section, access to or
possession of any Books and Records or materials or information, as the case may
be, may be denied to the requesting party if the providing party is advised by
counsel that to grant such access or possession would reasonably be expected to
violate any Law.
Section V.7 Financial Information. (a) For a period of one year from
and after the Closing Date, upon written request of Sellers, Buyer will provide
Sellers within twenty (20) Business Days of such request, with such financial
information (and related back-up support) of the Businesses as of the Closing
Date as Sellers may reasonably request and in such format as is reasonably
practicable for Buyer to prepare and Buyer will cooperate with Sellers to enable
Sellers to format such information in a format customarily required by Sellers
(with reimbursement of Buyer's reasonable out-of-pocket expenses, which are
reasonably documented, incurred to comply with such request).
(b) From and after the date of this Agreement and prior to the Closing,
Sellers will deliver to Buyer, within forty-five days following the close of any
fiscal quarter
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of the Businesses, unaudited financial information, containing information
consistent with the Financial Information and prepared in a manner consistent
with the Financial Information, with respect to the Businesses as of and for the
period ended on the date of closing of such fiscal quarter. Such financial
information shall be presented both for the subject fiscal quarter and for the
same fiscal quarter of the Businesses for the prior fiscal year.
Section V.8 Intellectual Property.
(a) Buyer hereby acknowledges and agrees that nothing in this Agreement
grants or shall be deemed to grant to Buyer the right to use or any interest in
the Underwood Intellectual Property in Venezuela; it being understood that Buyer
shall have the right to use or any interest in the Underwood Intellectual
Property other than in Venezuela, and Sellers shall have the right to use the
Underwood Intellectual Property only in Venezuela. Sellers agree that neither
they nor their Affiliates will knowingly, directly or indirectly, sell or export
products of the Underwood Venezuelan Business outside of Venezuela; it being
understood, that immaterial amounts of such product may reach territories
outside of Venezuela through no direct action of Sellers or their Affiliates.
Buyer agrees that neither it nor its Affiliates will knowingly, directly or
indirectly, sell or export products using the Underwood Intellectual Property
into Venezuela; it being understood, that immaterial amounts of such product may
reach into Venezuela through no direct action of Buyer or its Affiliates.
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(b) In the event that the Underwood Intellectual Property is being
infringed by any Person, Buyer shall have the sole and exclusive right to bring
actions and recover damages for infringements which occur outside of Venezuela
and Sellers shall have the sole and exclusive right to bring actions and recover
damages for infringements which occur in Venezuela. The limitations in this
Section 5.8 shall expressly apply, without limitation, to the use by Buyer of
any stationery or invoices, or identifying signs or any properties of the
Businesses in Venezuela, which identify or in any way make use of the Underwood
Intellectual Property and to the use by Sellers of any stationery or invoices,
or identifying signs or any properties of Underwood Meat Spreads, which identify
or in any way make use of the Underwood Intellectual Property other than in
Venezuela.
(c) (i) Neither Buyer nor its Affiliates shall sell or otherwise
distribute any products bearing or using the Diablitos Intellectual Property,
directly or indirectly, in the territories listed on Schedule 2.2(f), and
(ii)(A) Buyer and its Affiliates shall ensure that they do not sell or otherwise
distribute any products bearing or using the Diablitos Intellectual Property to
any third parties who intend to, are likely to or who Buyer or its Affiliates
should reasonably know are, directly or indirectly, sell(ing) or otherwise
distribut(ing) such products in the territories listed on Schedule 2.2(f), (B)
Buyer and its Affiliates shall immediately cease all sales or other distribution
of such products to any such third party who Buyer or its Affiliates knows is
selling such products in the territories listed on Schedule 2.2(f), and (C)
Buyer and its Affiliates agree that neither they nor any
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of their successors or assigns will file or cause any other Person to file any
applications for registration relating to the ownership or use of the Diablitos
Intellectual Property in the territories listed on Schedule 2.2(f).
(d) (i) Neither Sellers nor their Affiliates shall sell or otherwise
distribute any products bearing or using the Diablitos Intellectual Property,
directly or indirectly, other than in Venezuela, and (ii)(A) Sellers and their
Affiliates shall ensure that they do not sell or otherwise distribute any
products bearing or using the Diablitos Intellectual Property to any third
parties who intend to, are likely to or who Sellers or their Affiliates should
reasonably know are, directly or indirectly, sell(ing) or otherwise
distribut(ing) such products outside of Venezuela, (B) Sellers and their
Affiliates shall immediately cease all sales or other distribution of such
products to any such third party who Sellers or their Affiliates knows is
selling such products outside of Venezuela, and (C) Sellers and their Affiliates
agree that neither they nor any of their successors or assigns will file or
cause any other Person to file any applications for registration relating to the
ownership or use of the Diablitos Intellectual Property outside of Venezuela.
Sellers agree that neither Sellers nor their Affiliates shall sell or transfer
any of the intellectual property set forth on Schedule 2.2(f) to any person
other than an Affiliate of Sellers, except that Sellers or their Affiliates
shall be permitted to sell or transfer the trademarks set forth thereon which
are registered in Venezuela.
Section V.9 Further Assurances. At any time after the date hereof,
Sellers and Buyer shall promptly execute, acknowledge and deliver any other
assurances
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or documents reasonably requested by Buyer or Sellers, as the case may be, and
necessary for Buyer or Sellers, as the case may be, to satisfy its obligations
hereunder.
Section V.10 Compliance with WARN, etc. With respect to the Employees,
Buyer will timely give all notices required to be given under, or will otherwise
comply with, WARN or other similar statutes or regulations of any jurisdiction
relating to any plant closing or mass layoff or as otherwise required by such
statute. For this purpose, Buyer shall be deemed to have caused a mass layoff if
the mass layoff would not have occurred but for Buyer's failure to employ the
Employees in accordance with the terms of this Agreement.
Section V.11 Transitional Services. On the Closing Date, if Buyer
determines that it would like Pillsbury to provide transitional services that
are necessary for the operation of the Businesses, Buyer and Pillsbury shall
execute and deliver a transitional services agreement (the "Transitional
Services Agreement") pursuant to which for a period not to exceed six months
following the Closing Date, which period may be less with respect to certain
services as Buyer and Pillsbury may agree, Pillsbury shall make available to
Buyer at Direct Variable Cost such services reasonably requested by Buyer and
agreed to by Pillsbury.
Section V.12 Antitrust Approval.
Pillsbury and Buyer shall have duly filed with the FTC and the
Antitrust Division, the notification and report form (the "Report") required
under the HSR Act with respect to the transactions contemplated hereby no later
than the fifth (5th) Business Day
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following the date hereof. Each party shall cooperate with the other party to
the extent necessary to assist the other party in the preparation of its Report,
to request early termination of the waiting period required by the HSR Act and,
if requested, to promptly amend or furnish additional information thereunder.
Section V.13 Relocation of Production Lines.
(a) (i) No later than six months following the Closing Date, the
Ac'cent Production Line shall be removed from the Hannibal Facility and
transported to, and installed in, a facility designated by Buyer (the "Ac'cent
Relocation") and (ii) no later than twelve months following the Closing Date,
the Underwood Meat Spreads Production Line shall be removed from the Hannibal
Facility and transported to, and installed in, a facility designated by Buyer
(the "Underwood Relocation"). Buyer shall perform the Ac'cent Relocation and the
Underwood Relocation under the supervision of the management of the Hannibal
Facility in a manner that does not unreasonably disrupt the operations conducted
at the Hannibal Facility and without causing unnecessary damage to the Hannibal
Facility or any fixtures, equipment or tangible personal property located
thereon or therein. Buyer shall be solely responsible for and shall bear all
costs associated with the Ac'cent Relocation and the Underwood Relocation,
including the cost of repairing any damage to the Hannibal Facility or any
fixtures, equipment or tangible personal property located thereon or therein
resulting from the Ac'cent Relocation or the Underwood Relocation; provided,
however, that Buyer shall not be responsible for any environmental Releases
occurring prior to the Ac'cent Relocation and the Underwood Relocation.
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Subject to the foregoing, Sellers hereby grant Buyer and its employees, agents
and contractors the right to have access to and enter the Hannibal Facility,
during regular business hours, upon reasonable advance notice and subject to the
reasonable rules and regulations of Sellers, in order for Buyer to take such
actions which are reasonably necessary or desirable to effect the Ac'cent
Relocation and the Underwood Relocation in accordance with the terms of this
Agreement. The aforementioned rights shall terminate upon the completion of the
Ac'cent Relocation and the Underwood Relocation.
(b) At the Closing, Buyer and Pillsbury shall execute and deliver a
supply agreement (the "Ac'cent Relocation Supply Agreement") pursuant to which
Pillsbury shall agree to manufacture and supply to Buyer, (i) during the period
from the Closing to the commencement of the Ac'cent Relocation (or six months
following the Closing, whichever is earlier) at Fully Allocated Facility Cost
and (ii) if the Ac'cent Relocation has not occurred within six months following
the Closing, during the period from six months following the Closing up to
twelve months following the Closing at Fully Allocated Facility Cost plus a
$0.75 per case co-packing fee, up to all of Buyer's reasonable requirements for
those products manufactured on the Ac'cent Production Line and consistent with
demand forecasts to be provided by Buyer to Sellers no less than 30 days prior
to the month in which product is required by Buyer to be supplied by Sellers.
(c) At the Closing, Buyer and Pillsbury shall execute and deliver a
supply agreement (the "Underwood Relocation Supply Agreement") pursuant to which
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Pillsbury shall agree to manufacture and supply to Buyer for sale other than in
Venezuela, during the period from the Closing to the commencement of the
Underwood Relocation at Fully Allocated Facility Cost, up to all of Buyer's
reasonable requirements for those products manufactured on the Underwood Meat
Spreads Production Line and consistent with demand forecasts to be provided by
Buyer to Sellers no less than 30 days prior to the month in which such product
is required by Buyer to be supplied by Sellers.
Section V.14 Financing. (a) Buyer shall use its reasonable best efforts
to comply with all covenants and to satisfy all conditions to funding of the
Financing described in the Commitment Letters which are within the exclusive
control of Buyer and its Affiliates. Buyer shall notify Sellers promptly if it
has any reasonable basis for believing that the funding of the Financing
described in the Commitment Letters will be materially delayed or will not occur
as contemplated herein.
(b) Sellers shall cooperate reasonably, and shall cause their
respective officers and employees to cooperate reasonably, in connection with
Buyer's arrangements for the Financing, including (i) preparing and making
available such financial information with respect to the Businesses as may be
reasonably requested by Buyer and (ii) making available representatives and
employees of Sellers and their accountants and attorneys, including for purposes
of due diligence and marketing efforts related to the Financing. Buyer shall
reimburse Sellers for Sellers' reasonable out of pocket expenses, which are
reasonably documented, incurred to comply with this Section 5.14(b).
Section V.15 Exclusivity. Sellers have been in negotiations with other
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parties concerning a possible sale of the Businesses and such other parties have
obtained certain information relating thereto. Sellers agree to immediately
terminate, and to cause their respective Affiliates, representatives, agents,
officers, employees, lawyers and accountants to terminate, all existing
negotiations or activities with any party other than Buyer, its Affiliates and
their respective representatives, and, from the date of this Agreement until the
earlier of (a) the termination of this Agreement pursuant to Section 9.1 and (b)
the Closing, (i) agree not to, and cause their respective Affiliates,
representatives, agents, officers, employees, lawyers and accountants not to,
directly or indirectly, solicit, negotiate or enter into other substantive
discussions with any party other than Buyer, its Affiliates and their respective
representatives relating to the sale of all or any part of any of the Businesses
and (ii) agree not to provide this Agreement or any financial or operating
information relating to the Businesses to any party other than Buyer, its
Affiliates and their respective representatives. Buyer shall be entitled to
pursue any and all remedies to which it may be entitled at law or in equity for
violations of this Section 5.15. Sellers agree that Buyer will suffer
irreparable damage in the event that any provision of this Section 5.15 is not
performed in accordance with its terms or otherwise is breached. It is
accordingly agreed that Buyer shall be entitled to the remedy of specific
performance of the terms of this Section 5.15 and injunctive relief preventing
any breach of the terms of this Section 5.15 by Sellers, this being in addition
to any other remedy to which Buyer may be entitled at law or in equity.
Section V.16 Notices Prior to Closing.Prior to the Closing, Sellers, on
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the one hand, and Buyer, on the other hand, shall give prompt notice to the
other of (i) any breach or default by either party of any of its
representations, warranties, covenants or agreements hereunder, (ii) any notice
or other communication from any third party alleging that the consent of such
third party is or may be required in connection with the transactions
contemplated by this Agreement and (iii) any notice or other communication from
any governmental entity in connection with the transactions contemplated by this
Agreement. Prior to the Closing, Sellers shall give prompt notice to Buyer if
Sellers receive any written notice from a material supplier of any Business that
it will not sell raw materials, supplies, merchandise or other goods to, or that
any material customer of any Business will not purchase products from, Buyer or
Buyer's Affiliates after the Closing Date.
Section V.17 FIRPTA. On or before the Closing Date, Sellers shall
deliver to Buyer a FIRPTA affidavit from Sellers in form and substance
reasonably acceptable to Buyer.
Section V.18 Zoning Letters. Seller shall, at the request of Buyer,
reasonably cooperate with Buyer, at Buyer's sole cost and expense, in obtaining
building code and zoning code compliance letters stating that the Owned Real
Property complies with the building and zoning codes applicable thereto and
otherwise in form and substance reasonably satisfactory to Buyer from the
governmental authorities having jurisdiction over such matters.
Section V.19 Promotional Programs, Coupon Redemptions. Following
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the Closing, Buyer shall discharge or perform all of the debts, liabilities and
obligations under Promotional Programs put into effect by Sellers prior to
Closing to the extent that such debts, liabilities or obligations relate to
marketing or sales activities following the Closing. Such debts, liabilities and
obligations shall include all advertising (and related creative development
expenses) aired to consumers following the Closing and all trade promotions
(including features and displays, temporary price reductions, slotting or new
distribution allowance fees, trade coupons and shipper promotional allowances)
executed by customers or brokers of the Businesses for all such activity
performed after the Closing. Sellers shall discharge all coupon redemption
obligations (and related creative development and insertion expenses) related to
coupons for the Businesses distributed by Sellers prior to the Closing,
regardless of the dates on which the coupon redemption periods expire. Buyer
shall discharge all coupon redemption obligations (and related creative
development and insertion expenses) related to coupons for the Businesses
distributed by Buyer after the Closing, and the cost of any other consumer
promotion activity made available to consumers after the Closing.
Section V.20 Assistanc in Collecting Certain Amounts. From and after
the Closing Date, Buyer, at Sellers' sole cost and expense, shall use its
reasonable efforts to assist, cooperate with and consult with Sellers in
connection with the collection of Accounts Receivable relating to products or
goods shipped or sold by Sellers on or before the Closing Date, and Buyer shall
remit promptly to Sellers any payments or other sums received by Buyer that
relate to any sales, shipments or other matters occurring on or
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before the Closing Date or that otherwise are properly for the account of
Sellers. If, after the Closing Date, Sellers wish to make a claim or otherwise
take action with respect to an Excluded Asset or an Excluded Liability, Buyer,
at Sellers' sole cost and expense, shall (a) use its reasonable efforts to
assist, cooperate and consult with Sellers with respect to such claim or such
action; provided, however, that Buyer shall not be required to assist, cooperate
or consult with Sellers with respect to any such claim or action which is
reasonably likely to materially disrupt any existing relationship of Buyer or
any Business with any customers or suppliers thereof and (b) in any event, remit
promptly to Sellers any payments or other sums received by Buyer that relate
thereto. Sellers and Buyer agree that such collection efforts shall be conducted
in a manner which will not materially disrupt any existing relationship of Buyer
or any Business; provided that Sellers shall not be prevented from taking
appropriate actions, including collection actions, to resolve any claim for an
unpaid receivable. Sellers shall remit promptly to Buyer any payments or other
sums received by Sellers after the Closing Date that relate to any sales or
shipments made by Buyer after the Closing Date or that otherwise are properly
for the account of Buyer.
Section V.21 Differentiation Between Products of Sellers and Buyer.
From and after the Closing, Buyer will date code products in a manner to ensure
that products and goods of the Businesses finished and sold by Buyer can be
distinguished from products of the Businesses finished and sold by Sellers. From
and after the Closing, Buyer will code coupons in a manner which clearly
identify such coupons as coupons of
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Buyer.
Section V.22 Certain Financial Information. Prior to the Closing Date,
Sellers shall provide, or cause to be provided to, Buyer the audited and
unaudited financial and other information required for the preparation of
selected and summary financial data and pro forma financial information
regarding the Businesses, and related managements' discussion and analysis, for
all periods required by applicable provisions of Regulations S-X and S-K
promulgated under the Securities Act and the Securities Exchange Act of 1934, as
amended; it being understood that the costs and expenses incurred in connection
with the preparation, review and audit of such information shall be paid by
Sellers and all incremental costs and expenses incurred thereafter shall be paid
by Buyer or reimbursed to Sellers by Buyer, if paid by Sellers, at Closing.
Section V.23 Brokers, Distributors and Wholesalers.
(a) Buyer acknowledges that (i) Sellers currently have distribution
arrangements with the brokers, distributors and wholesalers listed on Schedule
5.23 in connection with the Businesses and (ii) Sellers may be subject to
liability in connection with the termination of any such distribution
arrangements.
(b) Buyer hereby agrees to indemnify Sellers and their Affiliates for
any Losses incurred by any such Person, including any Losses incurred pursuant
to any Law (including any franchise Law), resulting from or arising out of
Buyer's failure or cessation (including through the termination of any
distribution arrangement) following the Closing to provide or sell, or resulting
from or arising out of Buyer's making any change in the
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terms regarding the marketing or distribution of, products marketed and
distributed by the Businesses to or through any distributor, broker or
wholesaler for the Businesses listed on Schedule 5.23 for the geographic regions
listed thereon. In addition to the procedures outlined in Section 8.3, to the
extent that there is a dispute as to Losses resulting from or incurred in
connection with the foregoing, Sellers, at their sole cost and expense, may
participate with Buyer in the defense and resolution of any claim made by any
broker, distributor or wholesaler listed on Schedule 5.23 if Sellers are
continuing to distribute products, other than products marketed and distributed
by the Businesses, to or through such broker, distributor or wholesaler
following the Closing.
(c) Buyer hereby agrees for a period of twelve months commencing on the
Closing Date to continue to distribute and sell all of the products marketed and
distributed by the Businesses to and through the distributors, brokers and
wholesalers being utilized by Sellers or any of their Affiliates for the
products marketed and distributed by the Businesses prior to the Closing listed
on Schedule 5.23, except for distributors, brokers or wholesalers that Buyer has
good cause to terminate for performance-related matters; it being understood
that such termination shall not limit Buyer's indemnification obligations under
clause (b) of this Section 5.23. Buyer will not during such twelve-month period
add any new distributors, brokers or wholesalers with respect to the products
marketed and distributed by the Businesses in those territories covered by the
distributors, brokers or wholesalers listed on Schedule 5.23, except to the
extent such distributors, brokers or wholesalers are terminated as permitted
herein.
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(d) After the Closing, Buyer shall use its reasonable efforts to obtain
in any agreement it may execute with the distributors, brokers or wholesalers
listed on Schedule 5.23 a full and unconditional release of Sellers for any
liability or obligation arising as a result of the consummation of the
transactions contemplated by this Agreement, including the termination of
Sellers' relationship with any such distributor, broker or wholesaler with
respect to the Businesses.
Section V.24 Non-Solicitation. Buyer agrees that, other than with
respect to the Employees and the person listed on Schedule 5.24, neither Buyer
nor any Affiliate of Buyer shall, for a period commencing on the date hereof and
expiring on the second anniversary of the Closing Date, directly or indirectly
induce, encourage or solicit any employee of Sellers or any of its Affiliates to
leave such employment or to accept any other position or employment with Buyer
or Affiliate or Buyer. Sellers agree that, for a period commencing on the date
hereof and expiring on the second anniversary of the Closing Date, Sellers will
not, directly or indirectly induce, encourage or solicit, or assist any
Affiliate of Sellers in inducing, encouraging or soliciting, any employee of
Buyer or any of its Affiliates to leave such employment or to accept any other
position or employment with Sellers or Affiliate of Sellers.
Section V.25 Corporate Names.
(a) Except as set forth in this Section 5.25, following the Closing,
Buyer shall not have or acquire any right, title or interest in any intellectual
property of Sellers or their Affiliates by virtue of this Agreement or any of
the transactions or
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agreements contemplated hereby other than the Intellectual Property.
(b) Buyer may use in connection with its operation of the Businesses
any pre-printed labels or shipping cartons contained in the Inventory and any
advertising or promotional materials transferred to Buyer as Transferred Assets
that include any corporate or trade name of Sellers or their Affiliates
(provided, however, that Buyer will use or sell such Inventory and such
advertising or promotional materials prior to using or selling any other similar
inventory or materials related to the Businesses). After the Closing Date, Buyer
shall notify its distributors, retailers and customers that it now markets the
products and goods to which such materials relate and to whom payment should be
made, if applicable, and provide a phone number and address for questions or
claims regarding such products or goods or the supplier. Any permitted use of
the corporate or trade name of Sellers or their Affiliates pursuant to this
Section 5.25 shall inure to the benefit of Sellers or their Affiliates, as
applicable.
(c) Notwithstanding the other provisions of this Section 5.25, Buyer
agrees that it will do nothing, nor permit anything to be done, to damage the
goodwill in or value of any corporate name or trade name of Sellers or their
Affiliates.
Section V.26 Title Insurance. Sellers shall reasonably cooperate with
Buyer in Buyer's obtaining at Buyer's sole cost and expense, a good and valid,
irrevocable ALTA title insurance commitment in form and substance reasonably
acceptable to Buyer (the "Title Commitment"), in final form, from Chicago Title
Insurance Company or one or more other title insurance companies designated by
Buyer (collectively, the "Title
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Company").
Section V.27 Survey. Sellers shall reasonably cooperate with Buyer in
Buyer's obtaining, at Buyer's sole cost and expense, prior to Closing, an
as-built survey of the Owned Real Property in form and substance reasonably
acceptable to Buyer (the "Survey"). Section V.28 Up-Dating of Disclosure
Schedules. Not less than 10 days prior to the Closing, Sellers may deliver to
Buyer revised Schedules modifying or qualifying the representations and
warranties of Sellers under Article III hereof with respect to any matter or
event that causes an inaccuracy or breach of a representation or warranty and
that first arises prior to the Closing Date (whether before or after the date of
this Agreement), except for matters or events of which Sellers had Knowledge as
of the date of this Agreement. Such revised Schedules shall be deemed to have
modified the representations and warranties made by Sellers as of the date of
this Agreement for purposes of Article VIII hereof and to have superseded any
similarly numbered Schedule delivered to Buyer on the date hereof. The
foregoing, however, shall not affect the condition to the Closing of Buyer
contained in Section 6.1(a) as such condition relates to such representations
and warranties prior to giving effect to the delivery of such revised Schedules.
In the event that the condition to the Closing obligations of Buyer set forth in
Section 6.1(a), as such condition relates to representations and warranties,
shall not have been satisfied, but would be satisfied after giving effect to the
delivery of revised disclosure Schedules under this Section 5.28, then, in
respect of the failure of such
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condition, Buyer's sole remedy shall be to elect not to consummate the
transactions contemplated by this Agreement, and Buyer shall not be entitled to
make a claim under Article VIII for such breach of representation or warranty
that is contained in the Schedules delivered on the date hereof but superseded
and corrected by delivery of the revised Schedules under this Section 5.28.
Section V.29 Las Palmas Co-Packing Agreement. Buyer acknowledges that
Pillsbury's rights and obligations under the Las Palmas Co-Packing Agreement are
subject to the terms and conditions contained in that certain Intercreditor and
Consent Agreement dated as of August 18, 1997 between Fleet Capital Corporation,
as agent ("Fleet"), and Pillsbury (the "Intercreditor Agreement"), and that
certain Collateral Assignment dated as of August 18, 1997 by Anthony Foods, LLC
in favor of Fleet (the "Collateral Assignment"). Buyer agrees that, at Closing,
it shall deliver a written agreement to be bound by the terms and conditions
contained in the Intercreditor Agreement and the Collateral Assignment as if it
were Pillsbury. Buyer further agrees not to assign any of its rights or
obligations under the Las Palmas Co-Packing Agreement without first delivering
to Sellers and to Fleet agreements in writing of the assignee substantially the
same as the agreements of Buyer contained in this Section 5.29.
Section V.30 Joan of Arc Co-Packing Agreement. On or before the
Closing, Sellers shall (a) enter into an agreement with Faribault Foods, Inc.
("FFI") to extend the term of the Joan of Arc Co-Packing Agreement for a period
of twelve months or (b) enter into a new agreement with FFI or a third party
which would have a term of
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twelve months, either (a) or (b) to be on terms and conditions substantially
similar in all material respects to the Joan of Arc Co-Packing Agreement or on
such other terms and conditions as are reasonably acceptable to Buyer.
Article VI
CONDITIONS TO THE PURCHASE AND SALE
Section VI.1 Conditions to the Purchase and Sale Relating to Buyer. The
obligation of Buyer at the Closing to consummate the transactions contemplated
hereby shall be subject to the satisfaction (or written waiver by Buyer) on or
prior to the Closing Date of each of the following conditions:
(a) Each of the representations and warranties of Sellers contained in
this Agreement that are not qualified by materiality shall be true and correct
in all material respects, and each of the representations and warranties of
Sellers that are so qualified shall be true and correct, when made and as of the
Closing Date, with the same effect as though such representations and warranties
had been made on and as of the Closing Date (except (i) that representations and
warranties that are made as of a specific date, other than the date of this
Agreement, need be true and correct in all material respects, or true and
correct, as the case may be, only as of such date and (ii) as explicitly
contemplated or permitted by this Agreement to change between the date of this
Agreement and the Closing Date).
(b) Each of the covenants and agreements of Sellers to be performed on
or prior to the Closing Date shall have been duly performed in all material
respects.
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(c) Buyer shall have been furnished with a certificate of an authorized
officer of each Seller, dated as of the Closing Date, certifying to the effect
that the conditions contained in Sections 6.1(a) and 6.1(b) have been fulfilled.
(d) There shall not be in effect any statute, rule or regulation, and
there shall not have been issued and be in effect any order, decree or judgment
of any court or tribunal of competent jurisdiction which prohibits the
consummation of the purchase and sale of the Businesses.
(e) Buyer shall have received evidence, in form and substance
reasonably satisfactory to it, that all consents set forth on Schedule 6.1(e)
have been obtained.
(f) There shall not have occurred any Material Adverse Effect.
(g) Buyer shall have received the proceeds of the Financing in
accordance with the terms of the Commitment Letters or otherwise on terms
acceptable to Buyer.
(h) Buyer shall have received from each Seller an opinion or opinions
of counsel, dated as of the Closing Date, in form and substance reasonably
satisfactory to Buyer.
(i) The waiting period required by the HSR Act, and any extensions
thereof obtained by request or other action of the FTC and/or the Antitrust
Division, shall have expired or been terminated by the FTC and the Antitrust
Division.
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(j) The transfer or reissuance of the Portland Facility permits set
forth on Schedule 6.1(j) shall have been effected; provided, however, that
Sellers may, at their election in writing at Closing, indemnify Buyer for any
fines, penalties or losses arising out of the failure to transfer such permits,
in which case Buyer shall waive this condition.
Section VI.2 Conditions to the Purchase and Sale Relating to Sellers.
The obligation of each Seller at the Closing to consummate the transactions
contemplated hereby shall be subject to the satisfaction (or written waiver by
Sellers) on or prior to the Closing Date of each of the following conditions:
(a) Each of the representations and warranties of Buyer contained in
this Agreement that are not qualified by materiality shall be true and correct
in all material respects, and each of the representations and warranties of
Buyer that are so qualified shall be true and correct, when made and as of the
Closing Date, with the same effect as though such representations and warranties
had been made on and as of the Closing Date (except (i) that representations and
warranties that are made as of a specific date, other than the date of this
Agreement, need be true and correct in all material respects, or true and
correct, as the case may be, only as of such date and (ii) as explicitly
contemplated or permitted by this Agreement to change between the date of this
Agreement and the Closing Date).
(b) Each of the covenants and agreements of Buyer to be performed on or
prior to the Closing Date shall have been duly performed in all material
respects.
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(c) Each Seller shall have been furnished with a certificate of an
authorized officer of Buyer, dated as of the Closing Date, certifying to the
effect that the conditions contained in Sections 6.2(a) and 6.2(b) have been
fulfilled.
(d) There shall not be in effect any statute, rule or regulation, and
there shall not have been issued and be in effect any order, decree or judgment
of any court or tribunal of competent jurisdiction which prohibits the
consummation of the purchase and sale of the Businesses.
(e) Each Seller shall have received from Buyer an opinion or opinions
of counsel, dated as of the Closing Date, in form and substance reasonably
acceptable to Sellers.
(f) The waiting period required by the HSR Act, and any extensions
thereof obtained by request or other action of the FTC and/or the Antitrust
Division, shall have expired or been terminated by the FTC and the Antitrust
Division.
Article VII
AMENDMENT AND WAIVER
Section VII.1 Amendment and Modification. This Agreement may only be
amended or modified in writing, signed by each Seller and Buyer, at any time
prior to the Closing with respect to any of the terms contained herein.
Section VII.2 Waiver. At any time prior to the Closing either Sellers
or Buyer may (i) extend the time for the performance of any of the obligations
or other acts of the other party hereto, (ii) waive any inaccuracies in the
representations and warranties
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of the other party contained herein or in any document delivered pursuant
hereto, and (iii) waive compliance with any of the agreements or conditions of
the other party contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid if set forth in a written instrument
executed by the party granting such extension or waiver. Any agreement on the
part of a party hereto to any such extension or waiver or failure to insist upon
strict compliance with any obligation, covenant, agreement or condition under
this Agreement shall not operate as an extension or waiver of, or estoppel with
respect to, any subsequent or other failure. No failure or delay by any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
Article VIII
SURVIVAL AND INDEMNIFICATION
Section VIII.1 Survival of Representations and Warranties; Knowledge of
Breach.
The representations and warranties contained in this Agreement shall
survive the Closing until eighteen months after the Closing Date, except that
(a) the representations and warranties in Sections 3.1, 3.3 and 4.1 shall
survive the Closing Date in perpetuity and (b) the foregoing time limitations
shall not apply if notice of any claim for indemnification under this Article
VIII shall have been given prior to expiration of the applicable time period and
such notice describes with specificity the circumstances to
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which such indemnification claim relates, out of which such indemnification
claim arises, or from which such indemnification claim results and, to the
extent reasonably practicable, a good faith calculation of the damages incurred
as a result thereof. All covenants and agreements contained in this Agreement
shall survive the Closing Date in perpetuity and shall remain in full force and
effect.
Except as set forth in Section 5.28 or Section 8.5(c), no right of
indemnification hereunder shall be limited by reason of any investigation or
audit conducted before or after the Closing or by the Knowledge of any party of
any breach of a representation, warranty, covenant or agreement by the other
party at any time, or the decision of any party to complete the Closing.
Section VIII.2 Indemnification.
(a) From and after the Closing Date and subject to Sections 8.1, 8.5,
8.6 and 8.7, Sellers, jointly and severally (the "Sellers Indemnifying Party"),
agree to indemnify and hold harmless, net of the value of any tax deduction
actually available to Buyer in the year of the Loss (reduced by the present
value of any tax detriment to Buyer resulting from the indemnification payment),
Buyer and its Affiliates and each of their respective directors, officers,
employees, shareholders, partners and agents (the "Buyer Indemnified Party"),
against and in respect of any and all losses, claims, damages, liabilities,
costs and expenses, including reasonable legal fees and expenses ("Losses"),
resulting or arising from or otherwise relating to (i) any breaches of Sellers'
representations and warranties set forth in this Agreement for the period such
representations
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and warranties survive, other than the representations and warranties set forth
in Section 3.16 of this Agreement, (ii) any nonfulfillment of or failure to
comply with any covenant set forth in this Agreement by Sellers, or (iii) any
Excluded Liability.
(b) From and after the Closing Date and subject to Sections 8.1, 8.5
and 8.7, Buyer (the "Buyer Indemnifying Party") agrees to indemnify and hold
harmless, net of the value of any tax deduction actually available to Sellers in
the year of the Loss (reduced by the present value of any tax detriment to
Sellers resulting from the indemnification payment), Sellers and their
Affiliates and each of their respective directors, officers, employees,
shareholders, partners and agents (the "Sellers Indemnified Party"), against and
in respect of any and all Losses resulting or arising from or otherwise relating
to (i) any breaches of Buyer's representations and warranties set forth in this
Agreement for the period any such representations and warranties survive, (ii)
any nonfulfillment of or failure to comply with any covenant set forth in this
Agreement by Buyer, or (iii) any Assumed Liability.
(c) Any payments pursuant to this Article VIII shall be treated as an
adjustment to the Purchase Price.
(d) Subject to Sections 8.6 and 8.7, the indemnity provided in this
Section 8.2 shall be the sole and exclusive remedy of the Buyer Indemnified
Parties or Sellers Indemnified Parties, as the case may be, for the matters
referred to in this Section 8.2.
Section VIII.3 Notice and Opportunity to Defend. With respect to claims
by third parties, all claims for indemnification by any Indemnified Party
hereunder shall be
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asserted and resolved as set forth in this Section 8.3.
(a) In the event that any written claim or demand for which an
Indemnifying Party would be liable to any Indemnified Party hereunder is
asserted against or sought to be collected from any Indemnified Party by a third
party, such Indemnified Party shall promptly, but in no event more than 15 days
following such Indemnified Party's receipt of such claim or demand, notify the
Indemnifying Party of such claim or demand and the amount or the estimated
amount thereof to the extent then feasible (which estimate shall not be
conclusive of the final amount of such claim and demand) (the "Claim Notice").
The rights of any Indemnified Party to be indemnified hereunder shall not be
adversely affected by its failure to give, or its failure to timely give, a
Claim Notice with respect thereto unless, and only to the extent that, the
Indemnifying Party is materially prejudiced thereby.
(b) The Indemnifying Party may elect to compromise or defend, at its
own expense and by its own counsel, any demand or claim or the commencement (or
threatened commencement) of any action, proceeding or investigation that could
reasonably be expected to result in a Loss if (i) the claim involves (and
continues to involve) solely monetary damages and (ii) the Indemnifying Party
states in writing to the Indemnified Party the Indemnifying Party's good faith
belief that, as between the two, the Indemnifying Party is primarily obligated
to satisfy and discharge the claim (the foregoing collectively, the "Litigation
Conditions"); provided, however, that the Indemnifying Party shall forfeit the
right to control the defense or settlement of any such claim if, at any time
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after assuming the defense or settlement thereof, the Indemnifying Party no
longer satisfies the Litigation Conditions. The Indemnifying Party shall have 45
days (or less if the nature of the claim or demand so requires) from the
personal delivery or mailing of the Claim Notice (the "Notice Period") to notify
the Indemnified Party as to (i) whether or not the Indemnifying Party disputes
the liability of the Indemnifying Party to the Indemnified Party hereunder with
respect to such claim or demand and (ii) whether or not it elects to defend the
Indemnified Party against such claim or demand. All costs and expenses incurred
by the Indemnifying Party in defending such claim or demand shall be a liability
of, and shall be paid by, the Indemnifying Party; provided, however, that the
amount of such costs and expenses shall be a liability of the Indemnifying Party
subject to the limitations set forth in Section 8.5(a). Except as hereinafter
provided, in the event that the Indemnifying Party notifies the Indemnified
Party within the Notice Period that it elects to defend the Indemnified Party
against such claim or demand, the Indemnifying Party shall have the right to
defend the Indemnified Party by appropriate proceedings and shall have the sole
power to direct and control such defense; provided, however, that if the
Indemnifying Party assumes the defense with respect to any third party claim,
the Indemnified Party shall have the right to participate in the defense thereof
and to employ counsel reasonably acceptable to the Indemnifying Party, at the
Indemnifying Party's sole expense, separate from the counsel employed by the
Indemnifying Party, if such claim involves potential conflicts of interest
between or substantially different defenses for the Indemnified Party and the
Indemnifying Party. The Indemnified Party shall not settle, compromise or offer
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to settle or compromise or make an admission of liability with respect to any
such claim or demand. In addition, with respect to a third party claim involving
a combination of monetary damages and other relief, the Indemnified Party shall
not without the prior written consent of the Indemnifying Party, which consent
shall not be unreasonably withheld, settle, compromise or offer to settle or
compromise the monetary aspect of such claim for which the Indemnified Party
intends to seek indemnification hereunder. The Indemnifying Party shall not,
without the prior written consent of the Indemnified Party, which consent shall
not be unreasonably withheld, settle, compromise or offer to settle or
compromise any such claim or demand on a basis that would result in (i) the
imposition of a consent order, injunction or decree that would restrict the
future activity or conduct of the Indemnified Party or any subsidiary or
affiliate thereof, or (ii) any monetary liability of the Indemnified Party that
will not be paid or reimbursed by the Indemnifying Party. If the Indemnifying
Party elects not to defend the Indemnified Party against such claim or demand,
whether by not giving the Indemnified Party timely notice as provided above or
otherwise, then the portion of any such claim or demand as to which the defense
by the Indemnified Party is unsuccessful (and the reasonable costs and expenses
pertaining to the Indemnified Party's defense, whether or not successful) shall
be the liability of the Indemnifying Party hereunder, subject to the limitations
set forth in Section 8.5(a). The Indemnified Party or the Indemnifying Party may
participate, at their own expense, in the defense of a claim or demand if the
other party is entitled to and elects to defend such claim or demand. The Person
handling any defense of any claim hereunder shall use its
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reasonable best efforts in such defense. To the extent the Indemnifying Party
elects to direct, control or participate in the defense or settlement of any
third party claim or demand, the Indemnified Party shall, subject to the receipt
of a reasonable confidentiality agreement, give the Indemnifying Party and its
counsel reasonable access to, during normal business hours, the relevant
business records and other documents, and shall permit them to consult with the
employees and counsel of the Indemnified Party, for which the Indemnifying Party
shall reimburse the Indemnified Party for reasonable out of pocket expenses
incurred in connection therewith.
Section VIII.4 Method of Asserting Claims, etc. In the event that any
party incurs or suffers any Losses with respect to which indemnification may be
sought by such party pursuant to this Article VIII (other than in respect of
third party claims and except as otherwise provided in Sections 8.3, 8.5, 8.6
and 8.7), the Indemnified Party must assert the claim by a Claims Notice to the
Indemnifying Party. The Claims Notice must state the nature and basis of the
claim in reasonable detail based on the information available to the Indemnified
Party. The Indemnifying Party to whom a Claims Notice is given shall respond to
the Indemnified Party that has given a Claims Notice (a "Claim Response") within
thirty (30) days (the "Response Period") after the date that the Claims Notice
is delivered. Any Claim Response shall specify whether or not the Indemnifying
Party given the Claims Notice disputes the claim described in the Claims Notice.
If the Indemnifying Party fails to give a Claim Response within the Response
Period, such Indemnifying Party shall be deemed not to dispute the claim
described in the related
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Claims Notice. If the Indemnifying Party elects not to dispute a claim described
in a Claims Notice, whether by failing to give a timely Claim Response or
otherwise, then, subject to Section 8.5 hereof, the amount of such claim shall
be conclusively deemed to be an obligation of such Indemnifying Party. If the
Indemnifying Party shall be so obligated to indemnify the Indemnified Party
pursuant to this Article VIII, such Indemnifying Party shall pay to such
Indemnified Party within thirty (30) days after the last day of the applicable
Response Period the amount to which such Indemnified Party shall be entitled. If
there shall be a dispute as to a claim for indemnification under this Agreement,
the Indemnifying Party and the Indemnified Party shall seek to resolve such
dispute through negotiations and, if such dispute is not resolved within thirty
(30) days after the last day of the applicable Response Period, the Indemnified
Party may pursue such remedies as may be available in accordance with this
Agreement. Subject to Section 8.5, if the Indemnifying Party fails to pay all or
any part of any claim for indemnification which it is obligated to pay pursuant
to this Article VIII on or before the later to occur of (x) thirty (30) days
after the last day of the applicable Response Period, (y) thirty (30) days after
the resolution of the dispute as to the claim for indemnification and (z) if the
Claims Notice relates to Losses that have not been liquidated as of the date of
the Claims Notice, thirty (30) days after the date on which all or any part of
such Losses shall have become liquidated and determined, then the Indemnifying
Party shall also be obligated to pay to the Indemnified Party interest on the
unpaid amount for each day following the later to occur of the date of delivery
of the Claims Notice or a Loss by the Indemnified Party
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during which the obligation remains unpaid at the Closing Date Interest Rate.
Section VIII.5 Indemnification Amounts. (a) No Indemnifying Party shall
have liability under Section 8.2(a)(i) or (b)(i), as the case may be, until the
aggregate amount of Losses theretofore incurred by the Indemnified Party, as the
case may be, exceed $2,232,560 (the "Deductible"), in which case the Indemnified
Party, as the case may be, shall be entitled to Losses in an amount up to
$96,000,000 in the aggregate; provided, however, that the Indemnifying Party, as
the case may be, shall be liable only for the amount by which all Losses exceed
the Deductible; provided, further, that no individual claim for payment of a
Loss may be made under Section 8.2(a)(i) or Section 8.2(b)(i) unless such claim
(or the aggregate amount of related claims) is an amount of $9,000 or greater.
(b) The limitations on the indemnification obligations set forth in
this Section 8.5 shall not apply to any covenants or agreements of the parties
in this Agreement. In addition, notwithstanding the provisions of paragraph (a)
above, the limitations on the indemnification obligations of the parties set
forth therein shall not apply to breaches of the representations and warranties
made in Sections 3.1 and 3.3 and Section 4.1.
(c) Notwithstanding anything to the contrary set forth herein, no
limitation on the indemnification obligations set forth in this Section 8.5
shall apply to any breach of a representation or warranty made as of the date
hereof if such representation or warranty was made with Knowledge by the party
making such representation or warranty
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(which shall be Sellers, on the one hand, or Buyers, on the other hand) that it
(i) contained an untrue statement of a material fact or (ii) omitted to state a
material fact necessary to make the statements contained therein not misleading;
provided, however, that this provision shall not apply if the party not making
such representation or warranty had Knowledge as of the date hereof of the
breach of such representation or warranty. Solely for purposes of calculating
the amount of Losses incurred arising out of or relating to any breach of a
representation or warranty (and not for purposes of determining whether or not a
breach has occurred), the references to "Material Adverse Effect" or other
materiality qualifications (or correlative terms), including as expressed in
accounting concepts, shall be disregarded.
Section VIII.6 Pre-Closing Environmental Liabilities. (a) Sellers'
obligations with respect to any Pre-Closing Environmental Liability regarding
the Owned Real Property is limited to matters for which a Claim Notice is
delivered to Sellers within three years of the Closing Date, that individually
exceed $50,000. Sellers' obligations with respect to any Pre-Closing
Environmental Liability relating to (i) the off-site Release, transportation,
disposal, recycling, treatment or storage of any Hazardous Substances by the
Businesses prior to the Closing Date and (ii) except as otherwise provided in
Section 5.13(a), any real property which is not a Transferred Asset, are limited
to matters for which a Claim Notice is delivered to Sellers within five years of
the Closing Date, regardless of the amount of the Losses resulting therefrom.
Sellers' obligations for Pre-Closing Environmental Liabilities are limited to
the direct costs to correct any such
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violation of any Environmental Law (including related fines and penalties) and
the cost of any Remediation required by any applicable Environmental Law or
Remediation required by any order issued by any governmental entity. Pre-Closing
Environmental Liabilities shall not include any investigation costs which are
not expressly required under any applicable Environmental Law, any Remediation
which is not expressly required under any applicable Environmental Law and does
not include any of Buyer's internal costs, any costs arising out of Buyer's
negligence or willful actions or any consequential damages, lost profits, any
loss of property value and any damages arising out of Buyer's actions or
omissions to the extent such actions result in damages or costs that would not
otherwise have been incurred. In addition, Pre-Closing Environmental Liabilities
shall not include, and Sellers shall not have liability for, the abatement or
remediation of any Hazardous Substances present on the Owned Real Property or
the Transferred Assets at Closing which are in compliance with Environmental
Laws, including without limitation, asbestos, polychlorinated biphenyls,
petroleum products, lead or chlorofluorocarbons.
(b) Sellers shall have the right to assume the management of any
defense or any Remediation of any Pre-Closing Environmental Liabilities. Such
environmental remediation may utilize the most cost-effective method permitted
under Environmental Laws and acceptable to governmental entities with
jurisdiction over such matters, and may include the use of risk assessments,
institutional controls, deed notice or use restrictions. Sellers' right to
manage any such environmental investigation or Remediation is subject to the
duty of Sellers to consult in good faith with Buyer and to
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provide copies of all relevant documentation generated in connection with the
management of any Remediation. Buyer shall have the right to review in advance
and comment on any environmental investigation or Remediation work plan,
remedial selection, scope of work or other material document provided that such
review shall not unreasonably delay the Remediation. Sellers shall incorporate
Buyer's reasonable comments provided that such comments do not materially
increase the cost or duration of any Remediation. Any Remediation, institutional
controls, or use restrictions undertaken by Sellers hereunder shall not
materially interfere with the operation of the Businesses.
(c) Sellers' agents and representatives shall upon prior reasonable
notice be granted access to the subject property to remediate any Pre-Closing
Environmental Liability, during regular business hours or at such other time as
is mutually agreed upon by the parties. Buyer shall cooperate fully with Sellers
and shall provide Sellers with copies of all reports, studies, data, backup
documentation, estimates and other information developed in connection with any
Pre-Closing Environmental Liability.
(d) Upon completion of the Remediation, Sellers shall have no further
responsibility with respect to such matter including, without limitation, any
change in any Environmental Law, changes in plant configuration, new information
with respect to the condition or any third party claim or suit. The provisions
of this Agreement shall constitute Buyer's sole remedy with respect to any
pre-closing environmental condition on the Owned Real Property and Buyer waives
any other remedy arising under any Environmental Law with respect to the Owned
Real Property.
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Section VIII.7 Liability for Taxes of the William Underwood Company and
Related Matters.
(a) Liability for Taxes. Sellers shall be liable for and
indemnify Buyer for all Taxes (including, without limitation, any liability for
any Tax under Treas. Reg. ss. 1.1502-6 or analogous provision determined on a
consolidated, combined or unitary basis with respect to a group of corporations
that include or included the William Underwood Company at any time on or before
the Closing Date ("Consolidated Group Liability") and any Taxes resulting from
the William Underwood Company ceasing to be a member of such group of
corporations) imposed on the William Underwood Company or for which the William
Underwood Company may otherwise be liable for any taxable year or period that
ends on or before the Closing Date and, with respect to any taxable year or
period beginning before and ending after the Closing Date, the portion of such
taxable year ending on and including the Closing Date, including any
Consolidated Group Liability for any taxable year that includes the Closing
Date. Sellers shall be entitled to any refund of Taxes of the William Underwood
Company received for such periods.
(b) Buyer shall be liable for and indemnify Sellers for the Taxes of
the William Underwood Company for any taxable year or period that begins after
the Closing Date and, in the case of Taxes other than a Consolidated Group
Liability, with respect to any taxable year or period beginning before and
ending after the Closing Date, the portion of such taxable year beginning after
the Closing Date. Buyer shall be entitled to any refund of Taxes of the William
Underwood Company received for such periods.
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(c) Taxes for Short Taxable Year. For purposes of subsections (a) and
(b), whenever it is necessary to determine the liability for Taxes of the
William Underwood Company for a portion of a taxable year or period that begins
before and ends after the Closing Date, the determination of the Taxes of the
William Underwood Company for the portion of the year or period ending on, and
the portion of the year or period beginning after, the Closing Date shall be
determined by assuming that the William Underwood Company had a taxable year or
period which ended at the close of the Closing Date, except that exemptions,
allowances or deductions that are calculated on an annual basis, such as the
deduction for depreciation, shall be apportioned on a time basis.
(d) Adjustment to Purchase Price. Any payment by Buyer or Sellers under
this Section 8.7 will be an adjustment to the Purchase Price.
(e) Tax Returns. Sellers shall file or cause to be filed when due all
Tax Returns that are required to be filed by or with respect to the William
Underwood Company for taxable years or periods ending on or before the Closing
Date and shall pay any Taxes due in respect of such Tax Returns, and Buyer shall
file or cause to be filed when due all Tax Returns that are required to be filed
by or with respect to the William Underwood Company for taxable years or periods
ending after the Closing Date and shall remit any Taxes due in respect of such
Tax Returns. Sellers shall pay Buyer the Taxes for which Seller is liable
pursuant to subsection (a) but which are payable with Tax Returns to be filed by
Buyer pursuant to the previous sentence within 10 days prior to the due date for
the filing of such Tax Returns.
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(f) Contest Provisions.
(i) Buyer shall promptly notify Sellers in writing upon receipt by
Buyer, any of its affiliates or the William Underwood Company of notice of
any pending or threatened federal, state, local or foreign income or
franchise tax audits or assessments which may affect the tax liabilities of
the William Underwood Company for which Sellers would be required to
indemnify Buyer pursuant to subsection (a).
(ii) Sellers shall have the sole right to represent the William
Underwood Company's interests in any tax audit or administrative or court
proceeding relating to taxable periods ending on or before the Closing
Date, and to employ counsel of its choice at its expense. Notwithstanding
the foregoing, Sellers shall not be entitled to settle, either
administratively or after the commencement of litigation, any claim for
Taxes which would adversely affect the liability for Taxes of the Buyer or
the William Underwood Company for any period after the Closing Date to any
extent (including, but not limited to, the imposition of income tax
deficiencies, the reduction of asset basis or cost adjustments, the
lengthening of any amortization or depreciation periods, the denial of
amortization or depreciation deductions, or the reduction of loss or credit
carryforwards) without the prior written consent of Buyer. Such consent
shall not be unreasonably withheld, and shall not be necessary to the
extent that Sellers has indemnified the Buyer against the effects of any
such settlement.
(iii) Sellers shall be entitled to participate at its expense in the
defense of any claim for Taxes for a year or period ending after the
Closing Date which may be the subject of indemnification by Seller pursuant
to subsection (a) and, with the written consent of Buyer, and at its sole
expense, may assume the entire defense of such tax claim. Neither Buyer nor
the William Underwood Company may agree to settle any tax claim for the
portion of the year or period ending on the Closing Date which may be the
subject of indemnification by Sellers under subsection (a) without the
prior written consent of Sellers, which consent shall not be unreasonably
withheld.
(g) Termination of Tax Allocation Agreements. Any tax allocation or
sharing agreement or arrangement, whether or not written, that may have been
entered into by Sellers and the William Underwood Company shall be terminated as
to the William Underwood Company as of the Closing Date, and no payments which
are owed by or to the William Underwood Company pursuant thereto shall be made
thereunder.
(h) Information to be Provided by Buyer. Following the Closing, Sellers
shall submit to Buyer blank tax return workpaper packages requesting information
reasonably necessary for Sellers to complete Tax Returns for the William
Underwood Company for the taxable year ending on the Closing Date (the "Tax
Package"). Buyer shall, within one hundred twenty (120) days after the receipt
of the Tax Package, cause the William Underwood Company to deliver the completed
Tax Package to Sellers for the portion of the taxable period ending on the
Closing Date.
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(i) Assistance and Cooperation. After the Closing Date, each of Sellers
and Buyer shall:
(i) assist (and cause their respective affiliates to assist) the other
party in preparing any Tax Returns or reports which such other party is
responsible for preparing and filing in accordance with this Section 8.7;
(ii) cooperate fully in preparing for any audits of, or disputes with
taxing authorities regarding, any Tax Returns of the William Underwood
Company;
(iii) make available to the other and to any taxing authority as
reasonably requested all information, records, and documents relating to
Taxes of the William Underwood Company;
(iv) provide timely notice to the other in writing of any pending or
threatened tax audits or assessments of the William Underwood Company for
taxable periods for which the other may have a liability under this Section
8.7; and
(v) furnish the other with copies of all correspondence received from
any taxing authority in connection with any tax audit or information
request with respect to any taxable period for which the other may have a
liability under this Section 8.7.
(j) Survival of Obligations. The obligations of the parties set forth
in this Section 8.7 shall be unconditional and absolute and shall remain in
effect without limitation as to time.
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Article IX
MISCELLANEOUS
Section IX.1 Right to Terminate. (a) If the transactions contemplated
by this Agreement shall not have been consummated (other than through the
failure of any party seeking to terminate this Agreement to comply fully with
its obligations hereunder) prior to April 1, 1999, Sellers or Buyer shall have
the right to terminate this Agreement at any time thereafter by giving at least
three (3) Business Days advance notice of such termination to Buyer or Sellers,
as the case may be.
(b) Sellers and Buyer shall have the right to terminate this Agreement
upon their mutual written consent.
(c) Buyer or Sellers shall have the right to terminate this Agreement
if a court of competent jurisdiction or governmental or regulatory body shall
have issued an order, decree or ruling, or taken any other action, restraining,
enjoining or otherwise prohibiting the Closing of the transactions contemplated
hereby and such order, decree, ruling or other action shall have become final
and non-appealable.
(d) If this Agreement is terminated as provided herein, this Agreement
shall thereafter become void and have no effect, and no party shall have any
liability or further obligation to any other party or their respective
Affiliates, directors, officers, partners or employees under the terms of this
Agreement or otherwise, except for the obligations of the parties hereto
contained in this Section 9.1(d) and in Sections 9.2, 9.3, 9.4, 9.6, 9.10, 9.11,
9.12 and 9.14 (and any related definitional provisions set forth in
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Article I), and except that nothing in this Section 9.1(d) shall relieve any
party from liability for any breach of this Agreement that arose prior to such
termination.
Section IX.2 Return of Information. If for any reason whatsoever the
transactions contemplated by this Agreement are not consummated, Buyer shall
upon request from Sellers promptly return to Sellers all books, records and
documents (including all copies, if any, thereof) furnished by Sellers, the
Businesses, or any of their respective agents, employees, or representatives,
and shall not use or disclose the information contained in such books, records
or documents for any purpose or make such information available to any other
entity or person.
Section IX.3 Expenses. Unless otherwise indicated, the parties shall
bear their own respective expenses (including, but not limited to, all
compensation and expenses of counsel, financial advisors, consultants, actuaries
and independent accountants) incurred in connection with the preparation and
execution of this Agreement and consummation of the transactions contemplated
hereby.
Section IX.4 Public Disclosure. Each of the parties to this Agreement
hereby agrees with the other parties hereto that, except as may be required to
comply with the requirements of applicable law and the London Stock Exchange, no
press release or similar public announcement or communication will be made or
caused to be made concerning the existence, execution or performance of this
Agreement unless specifically approved in advance by all parties hereto.
Section IX.5 Assignment. Except as provided in the following sentence,
this Agreement may not be assigned, by operation of law or otherwise. Buyer may
assign or delegate its rights, obligations or liabilities under this Agreement
in whole or in part (a) to a subsidiary of Buyer, (b) through a collateral
assignment, to any lender providing financing in connection with the
transactions contemplated hereby or (c) no earlier than twelve months following
the Closing in connection with any sale by Buyer of its business or any part
thereof; provided, however, that in such event, Buyer shall remain fully liable
for the fulfillment of all such obligations. Any attempted assignment or
delegation in contravention hereof shall be null and void. This Agreement shall
be binding upon and inure to the benefit of the successors and assigns of the
parties hereto. The directors, officers, employees, shareholders, partners and
representatives of Buyer and its Affiliates are intended third party
beneficiaries of Section 8.2(a) of this Agreement. The directors, officers,
employees, shareholders, partners and representatives of Sellers and their
Affiliates are intended third party beneficiaries of Section 8.2(b) of this
Agreement. Nothing else contained in this Agreement is intended to confer upon
any person (including, without limitation, any employees), other than the
parties hereto and their respective successors and permitted assigns, any rights
or remedies hereunder.
Section IX.6 Entire Agreement. Except as otherwise contemplated herein,
this Agreement (a) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties, with
respect to the subject matter hereof (other than the Confidentiality Agreement);
and (b) is not intended to confer upon any other persons any rights or remedies
hereunder.
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Section IX.7 Schedules. The disclosure of any matter in any Schedule to
this Agreement shall be deemed to be disclosure of such matter in any other
Schedule to this Agreement so long as the relevance of the matter to such other
Schedule is readily and reasonably apparent from the disclosure of the matter
that appears in the Schedule where it is disclosed, but inclusion therein shall
expressly not be deemed to constitute an admission by Sellers or Buyer or
otherwise imply, that any such matter is material or creates a measure for
materiality for the purposes of this Agreement.
Section IX.8 Counterparts. This Agreement and any amendments hereto may
be executed in one or more counterparts, each of which shall be deemed to be an
original, but all of which shall be considered one and the same instrument.
Section IX.9 Section Headings. The section and paragraph headings
contained in this Agreement are for reference purposes only and shall not in any
way affect the meaning or interpretation of this Agreement.
Section IX.10 Notices. All notices hereunder shall be deemed given if
in writing and delivered personally or sent by facsimile transmission or by
registered or certified mail (return receipt requested) to the parties at the
following addresses (or at such other addresses as shall be specified by like
notice):
(a) if to Sellers, to:
The Pillsbury Company
Pillsbury Center
200 South Sixth Street
Minneapolis, Minnesota 55402
Attention: General Counsel
Facsimile: (612) 330-4543
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With a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Francis J. Aquila
Facsimile: (212) 558-3588
(b) if to Buyer, to:
Heritage Acquisition Corp.
426 Eagle Rock Avenue
Roseland, New Jersey 07068
Attention: David L. Wenner
Facsimile: (973) 228-7461
With copies to:
Bruckmann, Rosser, Sherrill & Co., Inc.
126 East 56th Street
New York, New York 10022
Attention: Stephen C. Sherrill
Facsimile: (212) 521-3799
Dechert Price & Rhoads
30 Rockefeller Plaza
New York, New York 10112
Attention: Glyndwr P. Lobo
Facsimile: (212) 698-3599
Any notice given by mail shall be effective when received. Any notice given by
facsimile transmission shall be effective when the appropriate facsimile
transmission acknowledgment is received.
Section IX.11 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without
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reference to the choice of law principles thereof.
Section IX.12 Bulk Sales Laws. Buyer and Sellers each hereby waive
compliance by Sellers with the provisions of "bulk sales," "bulk transfer" or
similar applicable Laws as such relate to the transfer of the Transferred
Assets. Sellers agree to indemnify and hold Buyer harmless against any and all
Losses incurred by Buyer or any of its Affiliates as the transferee of the
Transferred Assets as a result of any failure to comply with any such "bulk
sales," "bulk transfer" or similar Laws with respect to such Transferred Assets.
Section IX.13 Illegality. In case any provision in this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section IX.14 Dispute Resolution. (a) If a dispute, controversy or claim
arises out of or in connection with the terms and conditions of this Agreement,
it shall be submitted to binding arbitration which shall be conducted as
follows: (i) the arbitrator shall be an independent third party knowledgeable of
the branded food manufacturing and distributing industry and mutually
satisfactory to Buyer and Sellers; (ii) the arbitrator, in conducting such
arbitration, shall have access to all relevant documents and records of the
parties; (iii) the arbitration shall be conducted in accordance with the
Commercial Arbitration Rules of the American Arbitration Association ("AAA") in
effect on the date such arbitration is commenced and shall be final and binding
on the parties hereto; and (iv) all arbitration proceedings shall be conducted
in New York City, New York in
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English; provided, however, that the parties may submit testimony or
documentation in a language other than English, and shall, upon the request of
the other party, at the submitting party's expense, furnish a translation in
English of any such testimony or documentary evidence.
(b) Except as may otherwise be agreed to in writing by the disputing
parties or as ordered by the arbitrator upon substantial justification, the
hearings of the dispute shall be held and concluded within ninety (90) days of
submission of the dispute to arbitration. The arbitrator shall render its final
award within thirty (30) days following closing of the record. The arbitrator
shall state the factual and legal basis for the award. The decision of the
arbitrator shall be final and binding, and no appeal shall be permitted
therefrom. Final judgment may be entered upon such an award in any state or
federal court having the arbitration jurisdiction thereof, but entry of such
judgment shall not be required to make such award effective.
(c) Any filing or administration fees shall be borne by the disputing
party requesting administration by the AAA. If more than one disputing party
requests such administration, the fees shall be borne initially by the party
incurring such fees as provided by the rules of the AAA. The arbitrator shall
have the authority to award, but is not required to award, that the prevailing
party in such arbitration is to be reimbursed from the other party for all or
part of the prevailing party's costs (including but not limited to the
arbitrator's compensation), expenses and reasonable attorneys' fees.
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(d) Nothing in this Section 9.14 shall limit any right that any party
may otherwise have to seek to obtain (i) preliminary injunctive relief in order
to preserve the status quo pending the disposition of any such arbitration
proceeding or (ii) temporary or permanent injunctive relief from any breach of
any provisions of this Agreement.
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IN WITNESS WHEREOF, this Agreement has been signed on behalf of each of
the parties hereto as of the date first above written.
HERITAGE ACQUISITION CORP.
By
-------------------------------
Name:
Title:
THE PILLSBURY COMPANY
By
-------------------------------
Name:
Title:
INDIVINED, B.V.
By
-------------------------------
Name:
Title:
IC ACQUISITION COMPANY
By
-------------------------------
Name:
Title:
B&G Foods, Inc. hereby guarantees
the performance of all of
Heritage Acquisition Corp.'s
debts, liabilities, covenants and
obligations under this Agreement
and confirms the truth and
accuracy of the representation
and warranty set forth in Section
4.3
B&G FOODS, INC.
By
-------------------------------
Name:
Title:
