<PAGE> 1
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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) JANUARY 30, 1995
[CAMPBELL SOUP COMPANY LOGO]
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY
STATE OF INCORPORATION
1-3822
(COMMISSION FILE NUMBER)
21-0419870
I.R.S. EMPLOYER IDENTIFICATION NO.
CAMPBELL PLACE
CAMDEN, NEW JERSEY 08103-1799
PRINCIPAL EXECUTIVE OFFICES
TELEPHONE NUMBER: (609) 342-4800
================================================================================
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
ON JANUARY 30, 1995, CAMPBELL SOUP COMPANY ("CAMPBELL") COMPLETED THE
PURCHASE OF THE ASSETS AND BUSINESS OF PACE FOODS, LTD. ("PACE"),
PURSUANT TO THE PROVISIONS OF AN ASSET PURCHASE AGREEMENT DATED
JANUARY 30, 1995. THE TOTAL PURCHASE PRICE WAS APPROXIMATELY $1.1
BILLION IN CASH AND THE ASSUMPTION OF CERTAIN LIABILITIES AND WAS
DETERMINED BY ARMS' LENGTH NEGOTIATION BETWEEN CAMPBELL, PACE AND
PACE'S OWNER, CHRISTOPHER GOLDSBURY, JR. THE ASSETS INCLUDED CERTAIN
PROPERTY, EQUIPMENT, CONTRACTS, RECEIVABLES, TRADEMARKS AND INVENTORY
USED IN THE MANUFACTURE AND MARKETING OF MEXICAN SAUCES.
THE PURCHASE PRICE FOR THE PACE BUSINESS WAS FUNDED WITH THE
PROCEEDS OF COMMERCIAL PAPER BORROWINGS OF DIFFERENT MATURITIES AND
INTEREST RATES. AGGREGATE COMMERCIAL PAPER BORROWINGS FOR THE PACE
ACQUISITION WERE APPROXIMATELY $1 BILLION AS OF JANUARY 30, 1995. A
PORTION OF THESE BORROWINGS WILL BE REPLACED WITH A $300 MILLION
FIXED RATE TWO-YEAR EURONOTE ISSUE.
FOR A COMPLETE DESCRIPTION OF THE TERMS OF THE ACQUISITION AND
RELATED TRANSACTIONS, REFERENCE IS MADE TO THE ASSET PURCHASE
AGREEMENT AMONG CAMPBELL SOUP COMPANY, PACE FOODS LTD. AND
CHRISTOPHER GOLDSBURY, JR. ATTACHED AS EXHIBIT 2 TO THIS CURRENT
REPORT ON FORM 8-K.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
2(a) AND (b) PRO FORMA FINANCIAL INFORMATION
IT IS IMPRACTICABLE AT THIS TIME FOR CAMPBELL SOUP COMPANY
TO FILE, TOGETHER WITH THIS CURRENT REPORT, THE REQUIRED
FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL INFORMATION
WITH RESPECT TO THE ACQUISITION OF THE PACE BUSINESS.
ACCORDINGLY, CAMPBELL SOUP COMPANY HEREBY UNDERTAKES TO FILE
SUCH REQUIRED STATEMENTS AND INFORMATION BY AMENDMENT TO
THIS CURRENT REPORT ON FORM 8-K ON OR PRIOR TO APRIL 10,
1995.
(C) EXHIBITS (LISTED BY NUMBERS CORRESPONDING TO THE PROVISIONS OF
ITEM 601 OF REGULATION S-K)
(2) ASSET PURCHASE AGREEMENT DATED JANUARY 30, 1995, AMONG
CAMPBELL SOUP COMPANY, PACE FOODS, LTD. AND CHRISTOPHER
GOLDSBURY, JR.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF
1934, CAMPBELL SOUP COMPANY HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED HEREUNTO DULY AUTHORIZED.
CAMPBELL SOUP COMPANY
BY: /s/JOHN M. COLEMAN
---------------------------
JOHN M. COLEMAN
SENIOR VICE PRESIDENT - LAW
AND PUBLIC AFFAIRS
DATE: FEBRUARY 9, 1995
<PAGE> 3
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
2 Asset Purchase Agreement dated January 30, 1995, among
Campbell Soup Company, Pace Foods, Ltd. and Christopher
Goldsbury, Jr.
<PAGE> 1
Exhibit 2
Conformed Copy
- --------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
among
CAMPBELL SOUP COMPANY,
PACE FOODS, LTD.
and
CHRISTOPHER GOLDSBURY, JR.
Dated January 30, 1995
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1 SALE AND PURCHASE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Sale and Purchase of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3 Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.4 Retained Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.5 Assets of Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 2 CLOSING; PAYMENT OF PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1 The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.3 Purchase Price and Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.4 Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF PACE AND HOLDER . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1 Existence; Good Standing; Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.2 Authorization, Validity and Effect of Agreements . . . . . . . . . . . . . . . . . . . . . . . 9
3.3 Other Interests; Ownership; Predecessors . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.4 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.7 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.8 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.9 Certain Employee Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.10 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.11 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.12 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.13 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.14 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.15 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.16 Insurance and Insurance Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.17 Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.18 Patents, Trademarks, Copyrights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.19 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.20 Compensation Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.21 Product Recalls; Market Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.22 Trade Promotion Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.23 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.24 Accounts Receivable; Marketable Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.25 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.1 Existence; Good Standing; Corporate Authority . . . . . . . . . . . . . . . . . . . . . . . . 34
4.2 Authorization; Validity and Effect of Agreements . . . . . . . . . . . . . . . . . . . . . . . 34
4.3 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE 5 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.1 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
5.2 Filings; Other Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.3 Inspection of Records and Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.4 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.5 Further Action; Certain Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.6 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.7 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.8 Non-Competition, Non-Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.9 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.10 Tax Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.11 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.12 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.13 Bank Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.14 Environmental Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.15 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.16 Name Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE 6 CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.1 Conditions to Each Party's Obligation to Effect the Transactions Contemplated Hereby . . . . . 51
6.2 Conditions to Obligation of Pace and Holder to Effect the Transactions Contemplated Hereby . . 51
6.3 Conditions to Obligation of the Buyer to Effect the Transactions Contemplated Hereby . . . . . 52
ARTICLE 7 TERMINATION; INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.1 Termination by Mutual Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.2 Termination by Either the Buyer or Holder . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.3 Termination by Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.4 Termination by the Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.5 Effect of Termination and Abandonment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.6 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.7 Indemnification by Holder and Pace . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.8 Buyer's Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.9 General Third Party Claim Indemnification Procedures . . . . . . . . . . . . . . . . . . . . . 57
7.10 Deductible; Limits on Certain Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 59
7.11 Pace Family Lawsuits Indemnification Procedures . . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE 8 GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.1 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.3 Assignment; Binding Effect; Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
8.5 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.8 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.9 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.10 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.12 Enforcement of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
8.13 Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
8.14 Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
8.15 Post Closing Use of Colorado Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
</TABLE>
2
<PAGE> 4
<TABLE>
<S> <C> <C>
8.16 Bulk Sales Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.17 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.18 Prior Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
</TABLE>
[For purposes of this Current Report on Form 8-K, the following schedules have
been omitted but will be supplied to the Securities and Exchange Commission
upon request:
EXHIBIT 3.6 Pace Officers
EXHIBIT 5.7A Form of Severance Agreement
EXHIBIT 5.7B Form of Special Severance Protection Plan
A separate Disclosure Letter was also executed by the parties on January 30,
1995 and will be supplied to the Securities and Exchange Commission upon
request.]
3
<PAGE> 5
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "Agreement"), dated January 30, 1995,
among Campbell Soup Company, a New Jersey corporation (the "Buyer"), Pace
Foods, Ltd., a Texas limited partnership ("Pace"), and Christopher Goldsbury,
Jr. ("Holder").
RECITALS
Holder is the owner of 100% of the outstanding shares of capital
stock of C.A.G. Management, Inc., a Delaware corporation ("Management"), and
C.A.G. Holding, Inc., a Delaware corporation ("Holding" and, collectively with
Management, the "Companies"). The Companies together own 100% of the
outstanding partnership interests in Pace.
Pace desires to sell to the Buyer, and the Buyer desires to buy from
Pace, substantially all of the assets, properties and business of Pace and, in
connection therewith, the Buyer is willing to assume certain liabilities and
obligations of Pace.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1
SALE AND PURCHASE OF ASSETS
1.1 Sale and Purchase of Assets. At the Closing (as
defined in Section 2.1), on the terms and subject to the
<PAGE> 6
conditions set forth in this Agreement, and subject to the exclusions set forth
in Section 1.2, Pace shall sell, transfer, assign, convey and deliver to the
Buyer, and the Buyer shall purchase and acquire from Pace, free and clear of
all liens, claims, charges and encumbrances whatsoever (collectively, "Liens")
except "Permitted Liens" (as hereinafter defined), all of Pace's right, title
and interest in and to all of its properties and business as a going concern
and good will and assets of every kind, nature and description, as the same may
exist at the time of the Closing, wherever such assets are located and whether
real, personal or mixed, tangible or intangible, and whether or not any of such
assets have any value for accounting purposes or are carried or reflected on or
specifically referred to in its books or financial statements, (collectively,
the "Assets"), including, without limitation, the following:
(a) All real property owned or leased by Pace,
including, without limitation, the Retained Properties (as defined in Section
3.19) and (i) all buildings, facilities and other structures and improvements
thereon, (ii) all rights, privileges, hereditaments and appurtenances
appertaining thereto or to any of such buildings, facilities or other
structures or improvements, and (iii) to the extent constituting real property
under applicable law, all fixtures, installations, equipment and other property
attached thereto or located thereon;
(b) All inventories of raw materials, work in
process and finished goods;
2
<PAGE> 7
(c) All other tangible assets, including vehicles,
furniture, supplies, office equipment, computer hardware and other personal
property;
(d) All rights and benefits under purchase
contracts, sales contracts and other contracts or agreements, whether written
or oral, including, without limitation, those listed on Schedule 3.14 of the
disclosure letter delivered by Holder to the Buyer at or prior to the execution
hereof (the "Pace Disclosure Letter");
(e) All licenses, permits, authorizations,
franchises and other approvals from any domestic (federal, state or local) or
foreign governmental, public or self-regulatory body or authority;
(f) All sales and promotional literature and all
books, records, files and data in each case however evidenced (including,
without limitation, by computer disk or tape);
(g) All United States and foreign patents, patent
applications, trademarks, trademark applications, copyrights, trade names,
trade rights, whether or not registered, inventions, discoveries, improvements,
designs, logos, patterns, processes, formulae, computer software and systems
applications, trade secrets, property rights and data, items and know-how,
whether patentable or not (including, without limitation, the items listed on
Schedule 3.18 of the Pace Disclosure Letter);
(h) All prepayments and prepaid expenses;
(i) All claims, causes of action, choses in
action, rights of recovery and setoff rights of any kind;
3
<PAGE> 8
(j) All cash, including cash deposits and cash
collateral, marketable securities and other cash equivalents;
(k) All accounts, notes and other receivables and
all claims arising therefrom, together with any interest accrued thereon;
(l) All bank accounts, lockboxes and safe deposit
boxes;
(m) All rights under insurance policies; and
(n) All goodwill and going concern value
associated with the business conducted by Pace.
1.2 Excluded Assets. Notwithstanding anything in Section
1.1 to the contrary, the Assets do not include the assets set forth on Schedule
1.2 of the Pace Disclosure Letter (collectively, the "Excluded Assets").
1.3 Assumed Liabilities. Subject to the terms and
conditions of this Agreement, at the Closing, the Buyer shall by an appropriate
instrument of assumption to be executed and delivered at Closing and to be in
form and substance reasonably satisfactory to the Buyer and Pace (the
"Assumption Agreement"), assume and agree to perform, pay or discharge, when
due, to the extent not theretofore performed, paid or discharged, any liability
or obligation of Pace arising out of or relating to the Assets, or the business
conducted by Pace and its predecessors prior to the Closing, or the ownership
or operation by Pace and its predecessors of the Assets, of whatever kind or
nature, whether contingent or absolute, whether arising prior to or on or
after, and whether determined or indeterminable on, the Closing
4
<PAGE> 9
Date, and whether or not specifically referred to in this Agreement, excepting
only the Retained Liabilities (as defined in Section 1.4) (such liabilities and
obligations, except for the Retained Liabilities, being collectively referred
to as the "Assumed Liabilities"). Except with respect to the Assumed
Liabilities, the Buyer does not hereby and shall not assume any liabilities or
obligations of Pace, and Pace agrees to pay and satisfy any liabilities and
obligations of Pace and its predecessors not assumed by the Buyer. It is not
the intention of either the Buyer or Pace that the assumption by the Buyer of
the Assumed Liabilities shall in any way enlarge the rights of any third
parties relating thereto. Nothing contained in this Agreement shall prevent
the Buyer from contesting any of the Assumed Liabilities with any third party
obligee.
1.4 Retained Liabilities. Notwithstanding anything
contained herein to the contrary, the Buyer shall not assume or have any
liability or responsibility for any of the following liabilities and
obligations or any liabilities or obligations arising out of or relating to any
of the following matters, whether arising before or after the Closing
(collectively, the "Retained Liabilities"):
(a) any liability or obligation arising out of or
relating to any business or product line formerly owned or operated by Pace or
any predecessor thereof but not presently so owned or operated (collectively,
"Previously Owned Businesses"), including, without limitation, La Martinique
salad dressing line,
5
<PAGE> 10
Woody's Bar-B-Que sauces, California & Washington Holdings Corporation and C &
W Company;
(b) any liability or obligation arising out of, or
related to, any indemnification or other provision under any contract or other
agreement pursuant to which any sale or disposition was made of a Previously
Owned Business;
(c) any claim, liability or obligation (including,
without limitation, arising out of any personal injury or property damage claim
or any clean up, remediation or investigation obligation) in connection with or
arising from any Environmental Matter (as defined in Section 3.19) related to
(i) any property previously owned, operated, leased, used, occupied or
controlled by any Previously Owned Business or by Pace or any predecessor
thereof but not presently so owned, operated, leased, used, occupied or
controlled by Pace or (ii) any other property on which any materials that were
used at, originated from or were generated at, or resulted from activities
conducted at, any property previously owned, operated, leased, used, occupied
or controlled by any Previously Owned Business or by Pace or any predecessor
thereof but not presently so owned, operated, leased, used, occupied or
controlled by Pace have come to be located;
(d) any claim, liability or obligation in
connection with or arising from or related to any Excluded Asset or the
possession, use or disposition of any Excluded Asset, including any
Environmental Matter and any Taxes (as defined in Section 3.8) associated
therewith;
6
<PAGE> 11
(e) any liability of Pace or any of its affiliates
for indemnification of, or advancement of expenses or payment of insurance
proceeds to, any present or former director or officer of (or other person
serving in a fiduciary capacity at the request of) Pace or any of its
affiliates based upon an actual or alleged breach of fiduciary duty of such
person prior to the Closing;
(f) any obligations or liabilities to Goldman,
Sachs & Co. under the engagement letter referred to in Section 3.11;
(g) any obligations or liabilities for federal,
state, local or foreign income taxes, including any interest or any penalty,
addition to tax or additional amount relating thereto;
(h) any obligations or liabilities with respect to
the EVSP (as defined in Section 3.9) or any payments or compensation
contemplated by the EVSP Disclosure Letter (as defined in Section 3.9), or
resulting from the loan forgiveness contemplated by Paragraph 2 of Schedule 5.7
to the Pace Disclosure Letter, including any obligation to pay the employer's
portion of employment taxes arising out of such payments or compensation and to
withhold all applicable taxes (such taxes, together with interest and penalties
thereon, are referred to herein as the "Employment Taxes");
(i) any obligations or liabilities with respect to
the Credit Agreement, dated as of March 24, 1994, among Pace, the Lenders from
time to time party thereto, and Nationsbank of
7
<PAGE> 12
Texas, N.A., as Administrative Lender, or any letters of credit associated
therewith;
(j) any obligations or liabilities with respect to
the Credit Agreement, dated as of March 24, 1994, between Pace and Nationsbank
of Texas, N.A., or any letters of credit associated therewith;
(k) any obligations or liabilities of Pace under
or arising out of this Agreement;
(l) any liabilities or obligations of Pace to its
partners respecting distributions or otherwise;
(m) any liabilities or obligations of Pace arising
out of any matters occurring, or obligations incurred, after the Closing;
(n) any liabilities or obligations of Pace for any
recording, sales, transfer and similar taxes, charges and assessments resulting
from or arising out of the transactions contemplated hereby;
(o) any liabilities or obligations of Pace for any
professional, financial advisory or consulting fees and expenses incident to or
arising out of the negotiation, preparation, approval or authorization of this
Agreement, the Agreement and Plan of Merger among the Buyer, two of its
subsidiaries, the Companies and Holder dated as of November 25, 1994 (the
"Prior Agreement") and the transactions contemplated hereby or thereby, or any
other proposed transaction for the direct or indirect sale of the business of
Pace, including without limitation the fees, expenses and disbursements of
Pace's counsel and accountants;
8
<PAGE> 13
(p) any liability or obligation of Pace or its
predecessors arising out of any contract, agreement, permit, franchise or claim
that is not transferred to the Buyer as part of the Assets or is not
transferred to the Buyer because of Pace's failure to obtain any third party
consent required for such transfer;
(q) subject to Section 5.15, any liability or
obligation of Pace or its predecessors to the extent the amount of such
liability or obligation is covered by a policy of insurance or other indemnity
agreement maintained by or for the benefit of Pace or its predecessors in
effect prior to or at Closing, unless the rights under such policy of insurance
or indemnity agreement have been assigned to the Buyer;
(r) any liability or obligation of Pace for
severance, vacation pay, sick pay or other benefits to Pace's employees that
must be paid as a result of the termination of the employment of such employees
by Pace as of the Closing as is contemplated by Section 5.7;
(s) any liability or obligation under the $10
million universal life insurance policy maintained by Pace on the life of the
Holder; and
(t) any liability or obligation arising out of or
relating to the lawsuits captioned: Imogene Pace Haggerty vs. Pace Foods, Ltd.,
Campbell Soup Co. and Christopher Goldsbury, individually, pending in the
District Court, 73rd Judicial District, Bexar County, Texas; and James W. Pace
Jr., John Lance Pace and Kenneth Don Pace vs. Christopher Goldsbury, Campbell
9
<PAGE> 14
Soup Co., Pace Foods Ltd., Margaret Pace Willson, Linda Pace Roberts, Dr. Paul
Pace and Jean Pace, pending in the District Court, 73rd Judicial District,
Bexar County, Texas (collectively, as such lawsuits are modified or amended
from time to time, the "Pace Family Lawsuits"), including without limitation,
the costs, expenses and counsel fees incurred in connection therewith.
1.5 Assets of Affiliates. To the extent any assets or
properties used in the business of Pace are owned or leased by any affiliate of
Pace, they are included within the term "Assets" (unless such assets or
properties constitute Excluded Assets), and Pace shall cause each such
affiliate, at or prior to the Closing, to convey such assets or properties to
the Buyer, or to Pace for conveyance to the Buyer, in accordance with the
provisions of this Agreement. Any such assets or properties are described on
Schedule 1.5 to the Pace Disclosure Letter.
ARTICLE 2
CLOSING; PAYMENT OF PURCHASE PRICE
2.1 The Closing. Subject to the terms and conditions of
this Agreement, the closing (the "Closing") of the transactions contemplated by
this Agreement shall take place at the offices of Dechert Price & Rhoads, 4000
Bell Atlantic Tower, 1717 Arch Street, Philadelphia, PA 19103 at 9:00 a.m.,
local time, on the date of this Agreement. The date on which the Closing
occurs is herein referred to as the "Closing Date."
2.2 Deliveries. At the Closing:
(i) Pace shall deliver to the Buyer (A) a general
warranty deed or deeds to the Retained Properties, duly executed
10
<PAGE> 15
and acknowledged by Pace, in customary and recordable form, (B) a bill of sale
and instrument of assignment to the other Assets, duly executed by Pace; (C) a
patent and trademark assignment, duly executed by Pace and in proper form for
recordation at the U.S. Patent and Trademark Office; (D) title certificates to
any motor vehicles included in the Assets, duly executed by Pace; (E) such
other instruments of transfer and assignment as the Buyer may reasonably
request or as may be otherwise necessary to vest in the Buyer all of Pace's
right, title and interest in and to the Assets in accordance with the terms of
this Agreement; and (F) such other documents as the Buyer may reasonably
request. All such instruments of transfer and assignment shall be in form and
substance reasonably satisfactory to the Buyer and Pace;
(ii) The Buyer shall deliver to Pace the Assumption
Agreement, duly executed by the Buyer; and
(iii) The closing certificates, opinions and other
documents and deliveries required pursuant to this Agreement will be exchanged.
2.3 Purchase Price and Payment. The aggregate
consideration to be paid by the Buyer for the Assets and the other agreements
of Pace and Holder contained herein (the "Purchase Price") shall consist of:
(i) One Billion Seventy-Six Million Dollars ($1,076,000,000) in cash (the
"Cash Consideration"); and (ii) the assumption by the Buyer of the Assumed
Liabilities. At the Closing the Buyer shall transmit by wire transfer to a
bank account specified in writing by Pace, in immediately available funds, the
Cash Consideration.
11
<PAGE> 16
2.4 Allocation of Purchase Price. The Buyer, Pace and
Holder agree that the Purchase Price shall be apportioned among the Assets to
the extent relevant for income tax purposes in accordance with Section 1060 of
the Internal Revenue Code of 1986, as amended (the "Code").
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PACE AND HOLDER
Pace and Holder jointly and severally represent and warrant to
the Buyer as follows:
3.1 Existence; Good Standing; Authority.
(a) Pace is a limited partnership duly organized,
validly existing and in good standing under the laws of Texas, and is duly
licensed or qualified to do business as a foreign limited partnership in, and
is in good standing under the laws of, the jurisdictions set forth in Schedule
3.1 of the Pace Disclosure Letter and in each other jurisdiction in which the
character of the properties owned or leased by it therein or in which the
transaction of its business makes such qualification necessary, except where
the failure to be so qualified is not material. Pace has all requisite
partnership power and authority, to own, operate and lease its properties and
carry on its business as now conducted. For the purpose of this Agreement,
"Pace Material Adverse Effect" means any adverse effect or change, individually
or together with other adverse
12
<PAGE> 17
effects or changes taken as a whole, in the business, results of operations,
prospects or financial condition of Pace that is material to Pace or which has
a material adverse effect on the ability of Holder or Pace to consummate the
transactions contemplated hereby.
(b) The copies of the organizational documents
(such as the partnership agreement) of Pace previously delivered to the Buyer
are true and correct and are in full force and effect.
3.2 Authorization, Validity and Effect of Agreements.
(a) Pace has the requisite partnership power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement by Pace, and
consummation by Pace of the transactions contemplated hereby, including the
execution, delivery and performance of the instruments of transfer contemplated
by Section 2.2 hereof, have been duly authorized by all requisite partnership
action.
(b) Holder is an adult individual and is competent
to execute and deliver this Agreement and to perform his obligations hereunder.
(c) This Agreement constitutes the valid and
legally binding obligation of Holder and Pace, enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights and general principles of equity.
The instruments of transfer contemplated by Section 2.2 hereof, when executed
and delivered by Pace at the Closing, will constitute the valid and legally
13
<PAGE> 18
binding obligation of Pace, enforceable in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights and general principles of equity.
3.3 Other Interests; Ownership; Predecessors.
(a) Except as set forth on Schedule 3.3 to the
Pace Disclosure Letter, Pace does not own directly or indirectly any equity
interest or investment in any corporation, partnership, joint venture,
business, trust or other entity.
(b) Holder owns 100% of the outstanding equity
interests in the Companies. The Companies together own 100% of the outstanding
ownership interests in Pace. The sole general partner of Pace is Management.
(c) Management is a holding company and has not
conducted any business or owned any assets other than owning a general
partnership interest in, and serving as the general partner of, Pace. Prior to
January 3, 1994, Holding conducted the business now conducted by Pace. On
January 3, 1994, Holding validly transferred all of its assets, properties,
business and good will to Pace. Accordingly, since January 3, 1994, Holding
has been a holding company and has not conducted any business or owned any
assets other than owning a limited partnership interest in Pace. Unless the
context clearly requires otherwise, references in this Article 3 to Pace shall
be deemed to refer to Pace and the predecessors to Pace -- i.e. Holding, Pace
Foods, Inc., a Texas corporation ("Pace-Texas"), Pepper Products, Inc.,
14
<PAGE> 19
a Texas corporation ("Pepper Products, Inc."), and any other predecessor
entities.
3.4 No Violation. Without regard to Section 5.5(b)
hereof, neither the execution and delivery by Holder and Pace of this Agreement
nor the consummation by Holder and Pace of the transactions contemplated hereby
in accordance with the terms hereof will: (i) conflict with or result in a
breach of any provision of the partnership agreement or other organizational
documents of Pace or cause a dissolution of Pace under its partnership
agreement; (ii) except as set forth on Schedule 3.4 to the Pace Disclosure
Letter, violate, or conflict with, or result in a breach of any provision of,
or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in or permit the
termination, revocation, modification or cancellation of, or accelerate the
performance required by, or result in the creation of any Lien upon any of the
material properties of Pace under, or result in or permit being declared void,
voidable, or without further binding effect, any of the terms, conditions or
provisions of any material note, bond, mortgage, indenture, deed of trust or
any material license, franchise, permit, lease, contract, agreement or other
instrument, commitment or obligation to which Pace is a party, or by which Pace
or any of its properties is bound or affected (including any Contract, License
or Environmental Permit as such terms are hereinafter defined); (iii) other
than filings required under the Hart-Scott-Rodino Antitrust Improvements Act of
1976 (the "HSR Act") (collectively,
15
<PAGE> 20
the "Regulatory Filings"), require any material consent, approval or
authorization of, or declaration, filing or registration with, any domestic or
foreign governmental or regulatory authority; (iv) conflict with or result in a
breach or violation of any judgment or order of any court or governmental
department, commission, board, agency or instrumentality, or any applicable
law, rule or regulation; or (v) except for consents of third persons to the
assignment or transfer to the Buyer of the Contracts, Licenses, Environmental
Permits, insurance policies and other Assets, which consents are disclosed on
Schedule 3.4 to the Pace Disclosure Letter (the "Third Party Consents"),
require any consent, approval or authorization of any third person.
3.5 Financial Statements.
(a) Holder has delivered to the Buyer and included
as Schedule 3.5(a) to the Pace Disclosure Letter true and complete copies of
(i) audited statements of assets, liabilities and shareholder's equity,
statements of revenue and expenses, statements of shareholder's equity and
statements of cash flows of Pace as of and for the years ended December 31,
1993, 1992 and 1991 (the "Audited Financial Statements"), (ii) statements of
assets, liabilities and shareholder's equity and statements of revenue and
expenses of Pace as of and for the years ended December 31, 1993, 1992 and 1991
(the "Internal Annual Financial Statements"), (iii) unaudited "C-Corp" pro
forma statements of assets, liabilities, shareholder's equity and statements of
revenue and expenses of Pace as of and for the years ended December 31, 1993,
1992, 1991 and 1990 and the ten months ended
16
<PAGE> 21
October 31, 1994 (the "C-Corp Financial Statements"), (iv) an unaudited
statement of assets, liabilities and shareholder's equity and an unaudited
statement of revenue and expenses of Pace as of and for the ten months ended
October 29, 1994 (the "Interim Financial Statements") and (v) an unaudited
statement of assets, liabilities and shareholder's equity and an unaudited
statement of revenue and expenses of Pace as of and for the year ended December
31, 1994 (the "1994 Internal Annual Financial Statements"). The Audited
Financial Statements, the Internal Annual Financial Statements, the C-Corp
Financial Statements, the Interim Financial Statements and the 1994 Internal
Annual Financial Statements are sometimes referred to herein as the "Financial
Statements," and the Interim Financial Statements and the Internal Annual
Financial Statements are sometimes referred to herein as the "GAAP Financial
Statements." The Audited Financial Statements (as well as the Internal Annual
Financial Statements for calendar 1990) have been audited by Ernst & Young;
Ernst & Young conducted its audits in accordance with generally accepted
auditing standards; however, the Audited Financial Statements were not prepared
in accordance with generally accepted accounting principles; rather, as
described in the notes thereto, the Audited Financial Statements were prepared
on the accounting basis used for federal income tax purposes, accrual method.
The amounts reflected in the Internal Annual Financial Statements were derived
from the Audited Financial Statements. The books of account and related
records of Pace fairly reflect in reasonable detail in all material respects
its assets,
17
<PAGE> 22
liabilities and transactions. The Financial Statements have been compiled from
and are in accordance in all material respects with the books and records of
Pace. Except as set forth in Schedule 3.5(a) to the Pace Disclosure Letter,
the statements of revenue and expenses and cash flows included in the Audited
Financial Statements fairly present, in all material respects, the revenue and
expenses of Pace and its cash flows for the periods covered thereby, in
accordance with the accounting principles described in the notes thereto,
consistently applied. Except as set forth in Schedule 3.5(a) to the Pace
Disclosure Letter, the statements of revenue and expenses included in the GAAP
Financial Statements fairly present, in all material respects, the revenue and
expenses of Pace for the periods covered thereby, in accordance with generally
accepted accounting principles consistently applied. The C-Corp Financial
Statements were derived from the Audited Financial Statements. Holder has
delivered to the Buyer and included as Schedule 3.5(a) to the Pace Disclosure
Letter a list of pro forma adjustments (the "Pro Forma Adjustments") which
reconcile the GAAP Financial Statements to the C-Corp Financial Statements.
(b) The nature and amount of the expenses excluded
from the income statements included in the C-Corp Financial Statements are
described on Schedule 3.5(b) to the Pace Disclosure Letter; all such expenses
(other than the depreciation expenses listed in the "Other Adjustments" column
in the Pro Forma Adjustments) were for items for which Pace received no
material benefit, except that Holder made available the Pace
18
<PAGE> 23
facility in Colorado identified as Item 7 in Schedule 3.13 to the Pace
Disclosure Letter (the "Colorado Facility") for business meetings attended by
Holder, and spent up to an additional 20 full working days engaged in Pace
business. The assets excluded from the balance sheets included in the C-Corp
Financial Statements were not material to the conduct of Pace's food products
business during the periods covered by the C-Corp Financial Statements.
(c) The statements of assets, liabilities and
shareholder's equity included in the GAAP Financial Statements fairly present,
in all material respects, the assets, liabilities and shareholder's equity of
Pace as at their respective dates, in accordance with generally accepted
accounting principles, consistently applied. The statements of assets,
liabilities and shareholder's equity included in the Audited Financial
Statements fairly present, in all material respects, the assets, liabilities
and shareholder's equity of Pace as at their respective dates, in accordance
with the accounting principles described in the notes thereto, consistently
applied. Except as and to the extent set forth on the statement of assets,
liabilities and shareholder's equity of Pace at October 29, 1994 included in
the Interim Financial Statements (the "Interim Balance Sheet"), including all
notes thereto, Pace has no material liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) that would be required to
be reflected on, or reserved against or disclosed in, a statement of assets,
liabilities and shareholder's equity of Pace or in the notes thereto, prepared
in
19
<PAGE> 24
accordance with generally accepted accounting principles except (i) liabilities
arising in the ordinary course of business since such date, none of which,
individually or in the aggregate has been or will be materially adverse, and
(ii) except as set forth in Schedule 3.5 to the Pace Disclosure Letter.
(d) Except as set forth in Schedule 3.5(a) to the
Pace Disclosure Letter, and except for the items disclosed to the Buyer in
Price Waterhouse's memorandum dated January 27, 1995 (the "PW Memorandum"), the
1994 Internal Annual Financial Statements fairly present, in all material
respects, the assets, liabilities and shareholder's equity of Pace as of
December 31, 1994 and the revenue and expenses of Pace for the year then ended,
in accordance with generally accepted accounting principles, consistently
applied.
3.6 Litigation. There are no actions, suits or
proceedings pending against Pace or, to the actual knowledge of the officers of
Pace listed on Exhibit 3.6 hereto (the "Pace Officers"), threatened against
Pace, at law or in equity, or before or by any court, commission, board,
bureau, agency or instrumentality. To the knowledge of the Pace Officers,
there are no investigations pending or threatened against Pace, at law or in
equity, or before or by any court, commission, board, bureau, agency or
instrumentality. There are presently no outstanding judgments, decrees or
orders of any court or governmental or administrative agency against or
affecting Pace or any of its assets.
3.7 Absence of Certain Changes. Since October 29, 1994,
there has not been any Pace Material Adverse Effect, other than
20
<PAGE> 25
changes reflected in (i) the 1994 Internal Annual Financial Statements and (ii)
the PW Memorandum. Except as set forth in Schedule 3.7 to the Pace Disclosure
Letter and except as expressly contemplated by this Agreement to occur after
the date hereof, since December 31, 1993, Pace has conducted its business only
in the ordinary course and there has not been (i) any declaration, setting
aside or payment of any distribution with respect to any partnership or other
ownership interests in Pace, or any redemption, purchase or other acquisition
of any partnership or other ownership interests in Pace; (ii) any material
change in its accounting principles, practices or methods; (iii) any material
damage, destruction or loss, whether or not covered by insurance, adversely
affecting the properties, business or prospects of Pace, or any material
deterioration in the operating condition of the assets of Pace; (iv) any
material adverse change or, to the knowledge of the Pace Officers, any threat
of any material adverse change in Pace's relations with, or any loss or, to the
knowledge of the Pace Officers, any threat of loss of, any of Pace's important
suppliers or any of Pace's ten largest food service customers or twenty largest
retail customers; (v) any organized labor walkout, work stoppage or slowdown by
any of Pace's employees or, to the actual knowledge of the Pace Officers, any
threat thereof or any organized attempts to establish unions or collectively
bargain with respect to the employees of Pace; (vi) any cancellation or waiver
of any right material to the operation of Pace's business or any disposition of
or failure to keep in effect any rights in, to or
21
<PAGE> 26
for the use of any material patent, or any trademark, servicemark, or tradename
used in any jurisdiction where Pace has a material amount of product sales, or
any disclosure to any person not an employee of Pace or other disposal of any
trade secret, process or know-how; (vii) any increase in the salaries or other
compensation payable or to become payable to, or any advance (excluding
advances for ordinary business expenses) or loan to, any officer, director,
employee or shareholder of Pace (except for normal compensation increases made
in the ordinary course of business and consistent with past practice), or any
increase in, or addition to, other benefits (including without limitation any
bonus, profit sharing, pension, or other plan) to which any of its officers,
directors, employees or shareholders may be entitled (except for increases in
or additions to benefits which are required by the terms of plans in effect on
November 25, 1994 or changes which are less favorable to participants in such
plans or as may be required by applicable law); (viii) any payments to any
pension, retirement, profit sharing, bonus or similar plan, except payments in
the ordinary course of business and consistent with past practice made pursuant
to the employee benefits plans described on Schedule 3.9 to the Pace Disclosure
Letter; (ix) any payment of any bonuses to its officers, directors, employees
or shareholders except payments of non-discretionary cash bonuses made pursuant
to and consistent with bonus plans existing on November 25, 1994 and disclosed
on Schedule 3.9 to the Pace Disclosure Letter; or (x) any payment, loan or
advance of any amount to or in respect of, or the sale,
22
<PAGE> 27
transfer or lease of any properties or assets to or entering into of any other
agreement, arrangement or transaction with, any Related Party (as hereinafter
defined). For purposes of this Agreement, the term "Related Party" means
Holder and any of his "affiliates" or "associates" (as such terms are defined
under Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as
amended) other than Pace. From October 29, 1994 to the date hereof, Pace has
not made any capital expenditures in excess of $190,000 in the aggregate.
Since November 25, 1994, Pace has not taken or failed to take any action which
would have constituted a violation of Sections 5.1 or 5.8(b) hereof if such
Sections had applied since November 25, 1994. Since October 29, 1994, Pace has
not (i) incurred any indebtedness for borrowed money; (ii) made or agreed to
make any bonus, compensation or other payment of any kind to (or on behalf of)
any Related Party or any Pace Officer other than the payment of normal base
compensation at rates not exceeding the rates of compensation disclosed on
Schedule 3.20 to the Pace Disclosure Letter and reimbursement of and advances
for ordinary business expenses made in the ordinary course of business; or
(iii) paid any professional, financial advisory or consulting fees or expenses,
including fees, expenses and disbursements of its counsel and accountants,
incurred by Pace in connection with the negotiation, execution or performance
of this Agreement, the prior Agreement, the transactions contemplated hereby or
thereby or any other proposed transaction for the direct or indirect sale of
the business of Pace, other
23
<PAGE> 28
than any such fees and expenses which will be reimbursed by Holder to Pace
prior to the Closing.
3.8 Taxes. (a) For the purposes of this Agreement:
"Governmental Body" means any foreign, federal, state,
local or other governmental authority or regulatory body.
"Income Taxes" means any federal income tax, including
any interest or any penalty, addition to tax or additional amount relating
thereto.
"Buyer Affiliated Group" means any affiliated group
within the meaning of Code Section 1504, or any similar group defined under a
similar provision of state, local or foreign law, of which the Buyer is or at
any time was a member.
"Tax" or "Taxes" means any federal, state, local or
foreign income, gross receipts, windfall profits, severance, property,
production, sales, use, transfer, gains, license, excise, employment, payroll,
withholding, value added, estimated, alternative or add on minimum tax, or any
other tax, custom, duty, governmental fee or other like assessment or charge of
any kind whatsoever, together with any interest or any penalty, addition to tax
or additional amount imposed by any Governmental Body.
"Tax Return" means any return, report or similar
statement required to be filed with respect to any Taxes (including any
attached schedules), including, without limitation, any information return,
claim for refund, amended return and declaration of estimated Tax.
24
<PAGE> 29
(b) (i) assuming that the tax year of Pace ends for
all purposes as of the Closing Date, the provisions for Taxes reflected on the
Financial Statements or as set forth in Schedule 3.8 to the Pace Disclosure
Letter are adequate to cover all Tax liabilities, whether or not disputed, of
Pace or its predecessors with respect to any taxable year or taxable period
ending on or before the Closing Date; (ii) except as set forth in Schedule 3.8
to the Pace Disclosure Letter, there are no pending or, to the actual knowledge
of the Pace Officers, threatened claims, assessments, notices, proposals to
assess, deficiencies, or audits with respect to any Taxes; (iii) for
Governmental Bodies with respect to which Pace does not file Tax Returns, no
such Governmental Body has claimed that Pace is or may be subject to taxation
by that Governmental Body; and (iv) Pace has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or
owing to any employee, shareholder, creditor, independent contractor or other
party. Except as set forth in Schedule 3.8 to the Pace Disclosure Letter, Pace
has not executed any presently effective waiver or extension of any statute of
limitations against assessments and collections of Taxes. All material Tax
Returns regarding Taxes (other than Income Taxes and Employment Taxes) which
are required to be filed by or with respect to Pace on or before the date
hereof have been filed within the time and in the manner required by law, and
all such Tax Returns are true and correct and accurately reflect the Tax
liabilities of the filing party in all
25
<PAGE> 30
material respects. No Tax Returns of Pace are presently subject to an
extension of time to file.
(c) Pace has not made any payments, is not
obligated to make any payments, and is not a party to any agreement that under
any circumstances could obligate it to make any payments that will not be
deductible under Code Section 280G. Pace is not a party to any Tax allocation
or sharing agreement or tax benefit transfer agreement.
(d) No transaction contemplated by this Agreement
is subject to withholding under Section 1445 of the Code.
3.9 Certain Employee Plans. (a) The term "Employees"
shall mean all current employees (including those on layoff, disability or
leave of absence, whether paid or unpaid), former employees and retired
employees of Pace, and the term "Employee" shall mean any of the Employees.
(b) The term "Benefit Plans" shall mean each and
all "employee benefit plans" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), maintained or
contributed to by Pace or any other employer that is, or was at any time after
September 2, 1984, together with Pace, treated as a "single employer" under
Section 414(b), 414(c), 414(m) or 414(o) of the Code (an "ERISA Affiliate"), or
in which Pace or an ERISA Affiliate participates or participated and which
provides benefits to employees or their spouses or covered dependents,
including (i) any such plans that are "employee welfare benefit plans" as
defined in Section 3(1)
26
<PAGE> 31
of ERISA and (ii) any such plans that are "employee pension benefit plans" as
defined in Section 3(2) of ERISA.
(c) The term "Benefit Arrangements" shall mean
each and all foreign and domestic pension, supplemental pension, accidental
death and dismemberment, life and health insurance and benefits (including
medical, dental, vision and hospitalization), savings, bonus, deferred
compensation, incentive compensation, holiday, vacation, severance pay, salary
continuation, sick pay, sick leave, short and long term disability, tuition
refund, service award, company car, scholarship, relocation, patent award,
fringe benefit and other employee benefit arrangements, plans, contracts (other
than individual employment, consulting or severance contracts), policies or
practices of Pace or any ERISA Affiliate providing employee or executive
compensation or benefits to Employees, other than the Benefit Plans.
(d) Schedule 3.9 to the Pace Disclosure Letter
contains a list of all written and unwritten Benefit Plans and Benefit
Arrangements, except for Benefit Plans and Benefit Arrangements the aggregate
cost of which does not exceed $75,000 annually. True and complete copies of
each such listed written Benefit Plan and Benefit Arrangement and written
descriptions of each such listed unwritten Benefit Plan and Benefit Arrangement
have previously been delivered or made available to the Buyer. Each Benefit
Plan which is intended to qualify under Section 401(a) of the Code is and
always has been qualified under Section 401(a) of the Code ("Qualified Plans").
All Qualified Plans have been amended to comply with the Tax Reform Act of 1986
and any
27
<PAGE> 32
subsequent changes in the law that require amendments of such Qualified Plans.
To the knowledge of the Pace Officers, each Qualified Plan is in receipt of a
favorable determination letter issued by the Internal Revenue Service and each
such letter has not been revoked nor threatened to be revoked to the knowledge
of the Pace Officers. Each Benefit Plan and Benefit Arrangement has been
administered in all material respects in compliance with all applicable laws
and in accordance with the terms of the Benefit Plan and Benefit Arrangement.
No "prohibited transaction" (within the meaning of Section 406 of ERISA or
Section 4975 of the Code) has occurred with respect to any Benefit Plan which
would result directly or indirectly in a material liability to Pace.
(e) No Benefit Plan which is subject to Part 3 of
Title I of ERISA or Section 412 of the Code has an accumulated funding
deficiency within the meaning of such provisions, except as set forth in
Schedule 3.9 to the Pace Disclosure Letter.
(f) Neither Pace nor any ERISA Affiliate has ever
participated in nor had an obligation to contribute to any "multiemployer plan"
(as defined in Sections 3(37) and 4001(a)(3) of ERISA).
(g) Pace has no obligation to provide any benefits
to Employees under any post-retirement medical plan. Only Employees actively
employed by Pace and their covered dependents are entitled to participate in
Pace's medical plan except for disabled employees who receive coverage for not
more than 18 months or those employees receiving coverage pursuant to Section
28
<PAGE> 33
4980B of the Code or under any applicable state insurance law that requires
continuation or conversion rights not to extend for more than 30 days.
(h) Except as noted in Schedule 3.9 to the Pace
Disclosure Letter, all material contributions to, and material payments from,
the Benefit Plans and Benefit Arrangements that may have been required to be
made in accordance with the Benefit Plans and Benefit Arrangements and, when
applicable, Section 302 of ERISA or Section 412 of the Code, have been timely
made.
(i) Except as noted in Schedule 3.9 to the Pace
Disclosure Letter, there are no pending investigations by any governmental
agency involving the Benefit Plans or Benefit Arrangements, no termination
proceedings involving the Benefit Plans or Benefit Arrangements, and no pending
and, to the knowledge of the Pace Officers, no threatened claims (except for
claims for benefits payable in the normal operation of the Benefit Plans and
Benefit Arrangements), suits or proceedings against any Benefit Plan or Benefit
Arrangement or asserting any rights or claims to benefits under any Benefit
Plan or Benefit Arrangement.
(j) Neither Pace nor any ERISA Affiliate has
incurred any material liability to the Pension Benefit Guaranty Corporation
("PBGC") with respect to any Benefit Plan subject to Title IV of ERISA, other
than for the payment of premiums, all of which have been paid when due. No
Benefit Plan has applied for or received a waiver of the minimum funding
standards imposed by Section 412 of the Code. Pace and each ERISA Affiliate
has
29
<PAGE> 34
furnished to the Buyer the most recent actuarial report with respect to each
Benefit Plan that is a defined benefit pension plan, as defined by Section
3(35) of ERISA. The information supplied to the actuary by Pace and each ERISA
Affiliate for use in preparing those reports was complete and accurate in all
material respects and Pace and each ERISA Affiliate have no reason to believe
that the conclusions expressed in those reports are incorrect in any material
respect. Since the date of any such actuarial report, Pace has not taken any
action that would materially increase the benefit liabilities of any such
Benefit Plan. Since the date of any such actuarial report, no event has
occurred that has materially decreased the amount of the Plan assets shown in
such report, other than the use of assets for payments of benefits in the
ordinary course.
(k) Neither Pace nor any ERISA Affiliate has
incurred or is reasonably likely to incur any liability with respect to any
plan or arrangement that would be included within the definition of Benefit
Plan or Benefit Arrangement hereunder but for the fact that such plan or
arrangement was terminated before the date of this Agreement.
(l) Holder has delivered to the Buyer a letter
dated the date hereof (the "EVSP Disclosure Letter") attached to which is a
true and correct copy of the Pace Executive Value Sharing Plan (the "EVSP").
Also attached to the EVSP Disclosure Letter is a true and accurate list of each
participant in the EVSP, the number of Performance Units granted to each such
participant, the date of grant and the Basis of each such Performance Unit, a
true
30
<PAGE> 35
and accurate summary of retroactive Basis adjustments under the EVSP, and the
Company Value for each participant as of December 31, 1991, 1992, 1993 and as
estimated for December 31, 1994.
3.10 Labor Matters. Pace is not a party to, or bound by,
any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization. There is no material
unfair labor practice or labor arbitration proceeding pending or, to the actual
knowledge of the Pace Officers, threatened against Pace. To the actual
knowledge of the Pace Officers, in the past three years there have been no
actual or threatened organizational efforts with respect to the formation of a
collective bargaining unit involving employees of Pace. Pace is in compliance
in all material respects with all applicable immigration laws, and has not been
fined since November 6, 1986 for violating the Immigration Reform and Control
Act of 1986.
3.11 Brokers. Except for the engagement letter agreement
among Pace, Holder and Goldman, Sachs & Co., Pace has not entered into any
contract, arrangement or understanding with any person or firm which may result
in the obligation of either Pace or the Buyer to pay any finder's fees,
brokerage or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
contemplated hereby.
3.12 Compliance with Law. Since January 1, 1990, Pace has
conducted its operations in compliance in all material respects with all
applicable federal, state, local and foreign
31
<PAGE> 36
laws, ordinances, rules, regulations, orders, judgments and decrees, including,
without limitation, those relating to food and drugs, food safety, agriculture,
equal employment opportunity and employee health. Since January 1, 1990, no
notice, citation, summons or order has been issued, no complaint has been
filed, no penalty has been assessed and no investigation or review is pending
or to the actual knowledge of the Pace Officers threatened by any governmental
or other entity with respect to (i) any alleged material violation by Pace of
any law, ordinance, rule, regulation, order, judgment or decree or (ii) any
alleged material failure by Pace to have any license, certificate,
authorization, permit or approval required in connection with its business.
3.13 Properties. Schedule 3.13 to the Pace Disclosure
Letter lists all real property owned (the "Owned Property") or leased as lessor
or lessee (the "Leased Property") by Pace, including a brief description of
each such property, its location and use, and whether such real property is
owned or leased. Pace has good, marketable and insurable title in fee simple
to the Owned Property and unencumbered leasehold title to the Leased Property,
in each case, free and clear of all Liens other than (1) Liens reflected in the
statement of assets, liabilities and shareholder's equity of Pace at December
31, 1993 included in the Audited Financial Statements or the notes thereto, (2)
those consisting of zoning or planning restrictions, easements, permits and
other restrictions or limitations on the use of such property or irregularities
in title thereto which individually and in the
32
<PAGE> 37
aggregate do not materially detract from the value of such property or
materially impair the use of such property by Pace, (3) Liens for current
taxes, assessments or governmental charges or levies on property incurred in
the ordinary course of business and not yet due and delinquent or which are
being contested in good faith by appropriate proceedings and for payment of
which adequate reserves have been made in the Financial Statements, (4)
warehousemen's, mechanics', carriers', landlords', repairmen's or other similar
Liens arising in the ordinary course of business and securing obligations of
Pace not yet due and payable and (5) other Liens which individually and in the
aggregate are not material (collectively, "Permitted Liens"). Pace has good
and valid title to all other assets which it purports to own, including,
without limitation, the assets reflected in the statement of assets,
liabilities and shareholder's equity of Pace at October 29, 1994 included in
the Interim Financial Statements (other than assets disposed of in the ordinary
course of business since October 29, 1994), free and clear of all Liens other
than Permitted Liens. Pace has not received any written or oral notice for
assessments for public improvements against any Owned Property or Leased
Property which remain unpaid, and to the actual knowledge of the Pace Officers,
no such assessment has been proposed. There is no pending condemnation,
expropriation, eminent domain or similar proceeding affecting all or any
portion of any Owned Property or material Leased Property and, to the actual
knowledge of the Pace Officers, no such proceeding is contemplated.
33
<PAGE> 38
3.14 Material Contracts. Except as set forth in Schedule
3.14 to the Pace Disclosure Letter, as of November 25, 1994 Pace was not bound
or affected by any:
(a) lease agreement (whether as lessor or lessee)
relating to personal property involving payments of more than $150,000 annually
or relating to real property;
(b) license agreement, assignment or contract
(whether as licensor or licensee, assignor or assignee) relating to any
Intellectual Property (as defined in Section 3.18);
(c) employment or consulting agreement not
terminable at will without liability to Pace or employment agreement which
provides for compensation at the rate of more than $75,000 per year (including
all salary, bonuses and commissions) to any employee, or any agreement
providing for severance benefits;
(d) agreement for the purchase or sale of
products, materials or supplies or other property or services involving future
payments in excess of $250,000;
(e) manufacturing, distribution, processing or
grower agreement or arrangement involving future payments in excess of
$250,000;
(f) agreement not otherwise listed in clauses (a)
through (e) of this Section 3.14 the performance of which is expected to extend
more than six months, involving payments in excess of $250,000;
(g) franchising, joint venture or partnership
agreement with any person;
34
<PAGE> 39
(h) agreement relating to indebtedness (including
capital leases) or guarantees of, by, from or to Pace, indemnifying any person
for obligations or liabilities of any kind, or granting any person a Lien on
any of the assets of Pace, other than a Permitted Lien;
(i) agreement which restricts Pace from doing
business anywhere in the world or from engaging in or competing in any line of
business or with any person;
(j) any agreement with a Related Party;
(k) any contract relating to cleanup, abatement or
other actions in connection with environmental matters;
(l) any contract granting to any person an option
or right of first refusal first offer or similar preferential right to purchase
or acquire any of Pace's assets;
(m) any material sales agency, manufacturer's
representative, contract managers or distributorship agreements or any other
material distribution, broker or commission arrangement, and any material
arrangements with brokers, distributors or customers relating to the sale or
promotion of Pace's products (other than ordinary course purchase orders); and
(n) any agreement which is otherwise material to
the business of Pace or where the consequences of a default or termination
thereof may reasonably be expected to be material to Pace.
Correct and complete copies of all such contracts and agreements, as
amended (or, if oral, correct and complete written summaries thereof)
(collectively referred to herein, as
35
<PAGE> 40
"Contracts"), have been delivered or made available to the Buyer prior to the
date hereof. Correct and complete copies of all standard form invoices or
contracts used by Pace have been delivered or made available to the Buyer prior
to the date hereof. Except as set forth in Schedule 3.14 to the Pace
Disclosure Letter, each Contract is in full force and effect. Except as set
forth in Schedule 3.14 to the Pace Disclosure Letter, Pace has performed in all
material respects the obligations required to be performed by it under each of
the Contracts, and Pace is not (with or without the lapse of time or the giving
of notice, or both) in breach or default in any material respect thereunder,
and, to the actual knowledge of the Pace Officers, as of the date hereof each
party to any such Contract (other than Pace) is not (with or without the lapse
of time or the giving of notice, or both) in breach or default in any material
respect under any such Contract.
3.15 Licenses.
(a) Pace possesses and is in compliance in all
material respects with all licenses, certificates, authorizations, permits,
waivers and certificates of public convenience and necessity and has made all
registrations that are required to operate its business in the manner currently
operated except for such licenses, certificates, authorizations, permits,
waivers and certificates of public convenience and necessity the absence of
which would not materially impair its ability to so conduct its business
(collectively, "Licenses").
36
<PAGE> 41
(b) Each License is valid and in full force and
effect, no application, action or proceeding is pending for the renewal or
modification of any License, and no application, complaint, action or
proceeding is pending or, to the actual knowledge of the Pace Officers,
threatened that may result in the denial of an application for renewal or the
revocation, modification, non-renewal or suspension of any License.
3.16 Insurance and Insurance Requirements. Schedule 3.16
of the Pace Disclosure Letter contains a correct and complete list of all
material insurance policies and material fidelity and surety bonds, including
letters of credit and similar instruments, covering Pace and/or any of its
assets. All of the foregoing insurance policies and bonds are in full force
and effect, all premiums due and payable have been paid and there are no
pending or threatened terminations or material premium increases for the
current policy period with respect to any of such policies or bonds, and Pace
is in compliance in all material respects with all conditions contained in such
policies or bonds. Except as set forth in Schedule 3.16 to the Pace Disclosure
Letter, Pace has not been insured under any policy of insurance which provides
for retrospective or retroactive premium adjustments.
3.17 Related Party Transactions. There are no contracts,
arrangements or transactions currently in effect between Pace, on the one hand,
and Holder, the Companies or any other Related Party, on the other hand, except
as set forth in Schedule 3.17
37
<PAGE> 42
to the Pace Disclosure Letter. Except as set forth in Schedule 3.17 to the
Pace Disclosure Letter, no Related Party (i) has any interest in any assets or
property (whether real or personal tangible or intangible), used in the
business of Pace, (ii) has any direct or indirect interest of any nature in any
corporation or business (other than as the owner of shares of stock of publicly
traded corporations) which competes with, conducts any business similar to, has
any present (or contemplated) arrangement or agreement (including, without
limitation, arrangements regarding the shared use of personnel and facilities)
with (whether as a customer or supplier or otherwise) or is involved in any
material way with, Pace, (iii) has loaned funds to or borrowed funds from Pace
which funds remain outstanding or (iv) has any contractual or other claim of
any kind whatsoever against Pace. Neither Pace, Holder nor any other Related
Party has made any agreement or arrangement to make any payments to any
employee of the Companies or Pace conditioned upon the execution of this
Agreement or the consummation of the transactions contemplated hereby, except
as disclosed in the EVSP Disclosure Letter. Since December 31, 1989, neither
Holder nor any other Related Party has made any payments on behalf or for the
benefit of Pace which are not reflected as expenses of Pace in the Financial
Statements, except for payments not in excess of $15,000 in the aggregate.
Except as set forth on Schedule 3.17 to the Pace Disclosure Letter, none of the
Excluded Assets is or has been used in or is or has been necessary for the
conduct of the food products business of Pace. The book value of the Excluded
Assets as of October 29, 1994 was approximately $5,081,000.
38
<PAGE> 43
3.18 Patents, Trademarks, Copyrights. Schedule 3.18 to the
Pace Disclosure Letter contains a correct and complete list of all patents,
trademarks, trade names, copyright registrations, service marks, trade dress
and designs which are in use, pending, applied for, granted or registered in
any country or jurisdiction and are either owned by Pace and/or used in the
conduct of Pace's business. Pace owns or possesses adequate licenses or other
valid rights to use (without the making of any payment to others or the
obligation to grant rights to others in exchange) all patents, patent rights,
trademarks, trademark rights and registrations, trade names, trade name rights,
service marks, service mark rights and registrations, trade dress, trade dress
rights, copyrights, copyright registrations, computer software, trade secrets,
know-how and other proprietary information (collectively, "Intellectual
Property") necessary to the conduct of its business as presently being
conducted. To the actual knowledge of the Pace Officers, there is currently no
infringement by others of any material Intellectual Property right owned by or
licensed by Pace. Pace does not use any Intellectual Property pursuant to a
license from a third party, nor does it license any Intellectual Property to a
third party, except as indicated in Schedule 3.18 to the Pace Disclosure
Letter, which contains a correct and complete list of all such licenses, and
Pace is not in breach of any such licenses. To the knowledge of the Pace
Officers, the conduct of Pace's business does not infringe on or violate the
patents, trademarks, service marks, trade names, trade dress, copyrights, trade
secrets or
39
<PAGE> 44
other intellectual property of any other person, and no such claim has been
made, notice been given, or dispute arisen which is not disclosed in Schedule
3.18 to the Pace Disclosure Letter. All of the patents and all of the
registrations of trademarks, service marks and copyrights listed in Schedule
3.18 to the Pace Disclosure Letter are valid and in full force, are held of
record in Pace's name free and clear of all liens, encumbrances and other
claims, and, except as set forth in Schedule 3.18 to the Pace Disclosure
Letter, are not subject to any pending cancellation or reexamination proceeding
or any other pending proceeding challenging their extent or validity. Pace is
the applicant of record in all patent applications and all applications for
trademark, service mark and copyright registration listed in Schedule 3.18 to
the Pace Disclosure Letter, and no notice of opposition, interference,
rejection, or refusal to register has been received in connection with any such
application except as listed in Schedule 3.18 to the Pace Disclosure Letter.
No order, holding, decision or judgment has been rendered by any court or other
governmental authority, and no agreement, consent or stipulation exists, which
would limit Pace's use of any Intellectual Property or its use of any
advertising or promotional claim or campaign, including without limitation the
expansion of its use of any trademark, service mark, trade name, or trade dress
to any food product. Except as disclosed in Schedule 3.18 to the Pace
Disclosure Letter, registrations have been issued for, or applications are
pending to register, all trademarks, service marks and copyrights in all
40
<PAGE> 45
jurisdictions where Pace sells any material quantity of its products.
3.19 Environmental Matters.
(a) For the purposes of this Agreement:
"Environmental Matters" means any matter arising out
of, relating to or resulting from pollution, protection of the environmental
and human health or safety, health or safety of employees, sanitation, and any
matters relating to emissions, discharges, releases or threatened releases of
Hazardous Materials or otherwise arising out of, resulting from or relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials.
"Environmental Costs" means, without limitation, any
actual or potential cleanup costs, remediation, removal or other response
costs, investigation costs, losses, liabilities or obligations, payments,
damages, civil or criminal fines or penalties, judgments, amounts paid in
settlement and expenses (including attorney's fees) arising out of or relating
to or resulting from any Environmental Matter.
"Environmental Laws" means, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), 42 U.S.C. Section Section 9601 et seq., the Emergency Planning and
Community Right-to-Know Act of 1986, 42 U.S.C. Section Section 11001 et seq.,
the Resource Conservation and Recovery Act, 42 U.S.C. Section Section 6901 et
seq., the Toxic Substances Control Act, 15 U.S.C. Section Section 2601 et
seq., the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. Section
Section 136 et seq., the Clean Air Act, 42 U.S.C., Section Section 7401 et
41
<PAGE> 46
seq., the Clean Water Act (Federal Water Pollution Control Act), 33 U.S.C.
Section Section 1251 et seq., the Safe Drinking Water Act, 42 U.S.C. Section
Section 300f et seq., the Occupational Safety and Health Act, 29 U.S.C.,
Section Section 641 et seq., the Hazardous Materials Transportation Act, 49
U.S.C. Section Section 1801 et seq., as any of the above statutes have been or
may be amended from time to time, all rules and regulations promulgated
pursuant to any of the above statutes, and any other foreign, federal, state or
local law, statute, ordinance, rule or regulation governing Environmental
Matters, as the same have been or may be amended from time to time, including
any common law cause of action providing any right or remedy with respect to
Environmental Matters, and all applicable judicial and administrative
decisions, orders, and decrees relating to Environmental Matters.
"Hazardous Materials" means any pollutants,
contaminants, or hazardous or toxic substances, materials, wastes, constituents
or chemicals that are regulated by, or form the basis for liability under, any
Environmental Laws, including petroleum products, asbestos and radioactive
materials.
"Previously Owned or Leased Property" means any
property owned, operated or leased by Pace or its predecessors, other than the
Owned Property and the Leased Property.
"Release" means any spilling, leaking, pumping,
pouring, emitting, emptying, injecting, discharging, escaping, leaching,
dumping or disposing into the environment.
42
<PAGE> 47
"Retained Properties" means any real property
currently owned, operated or leased by Pace, other than the Excluded Assets.
(b) (i) Subject to clause (x) below, Pace is in
compliance in all material respects with all applicable Environmental Laws.
(ii) Pace has obtained, and is in compliance
in all material respects with, all permits, licenses, authorizations,
certificates, registrations and other governmental consents ("Environmental
Permits") required to be obtained by it by applicable Environmental Laws.
Except as disclosed on Schedule 3.19 to the Pace Disclosure Letter, all such
Environmental Permits are transferable to the Buyer.
(iii) All such Environmental Permits are in
full force and effect, and Pace has made all appropriate filings for issuance
or renewal of such Environmental Permits.
(iv) Subject to clause (x) below, no
Hazardous Materials have been Released in violation of applicable Environmental
Law, or in a manner that requires remediation of property under applicable
Environmental Law at, on, about or under any Previously Owned or Leased
Property or any Retained Property.
(v) There are no claims, notices, civil,
criminal or administrative actions, suits, hearings, investigations, inquiries
or proceedings pending or to the knowledge of the Pace Officers threatened that
are based on or related to any
43
<PAGE> 48
Environmental Matters or the failure to have any required Environmental
Permits.
(vi) Pace has not used any waste disposal
site, or otherwise disposed of, transported, or arranged for the transportation
of, any Hazardous Materials to any place or location which is listed or
proposed for listing under CERCLA, CERCLIS or any similar state list, or in
violation of any Environmental Laws.
(vii) Subject to clause (x) below, there are
no underground storage tanks, polychlorinated biphenyls ("PCBs"), asbestos
containing materials or surface impoundments at, on, under or within any
Previously Owned or Leased Property or any Retained Property, and except as
disclosed on Schedule 3.19 to the Pace Disclosure Letter, there have been no
underground storage tanks removed from any Previously Owned or Leased Property
or any Retained Property.
(viii) Pace has not filed or received any
oral or written notice of a Release or threat of Release of a Hazardous
Material or asserting that it may be a potentially responsible party at any
waste disposal site or other location used for the disposal of, or where there
has been a Release or threatened Release of, any Hazardous Materials.
(ix) Except as listed in Schedule 3.19 to the
Pace Disclosure Letter and heretofore provided to the Buyer, there have been no
material investigations, reports, studies, inspections, audits, tests, reviews
or other analyses conducted by Holder, Pace, their respective employees or
outside
44
<PAGE> 49
contractors at the direction of Holder or Pace in relation to the following
matters: (i) potential soil or groundwater contamination at any property or
business now or previously owned, operated or leased by Pace; or (ii) the
compliance of Pace's operations with applicable Environmental Law.
(x) Holder makes no representation in clause
(i), (iv) or (vii) of this Section 3.19 with respect to the presence or absence
of any Hazardous Materials at, on or under any Retained Properties, except with
respect to any matters arising during the period (the "Environmental
Investigation Period") after the date and time of the Phase II environmental
audit referred to in Section 5.14(a) and prior to the Closing Date, nor any
representation as to compliance of Pace's operations at the Retained Properties
with Environmental Laws, except with respect to compliance during the
Environmental Investigation Period.
3.20 Compensation Arrangements. Set forth on Schedule 3.20
to the Pace Disclosure Letter is the name and current annual salary, bonus and
all other forms of monetary compensation (excluding payments under the EVSP
disclosed in the EVSP Disclosure Letter) of all present officers and employees
of Pace whose current annual salary, including any promised, expected or
customary bonus, equals or exceeds $75,000, together with a statement of the
full amount of all remuneration paid by Pace or any Related Party to each such
person, with respect to 1993.
45
<PAGE> 50
3.21 Product Recalls; Market Research.
(a) There have been no product recalls, stop sales
or withdrawals with respect to the products of Pace during the last three
years. To the knowledge of the Pace Officers, there have been no incidents of
product tampering or threatened incidents of product tampering during the last
three years.
(b) Holder has made available to the Buyer all
market research studies relating to consumer preference for and brand identity
of Pace's and its competitor's products, which were conducted by or on behalf
of Pace since January 1, 1991.
3.22 Trade Promotion Expenses. To the knowledge of the
Pace Officers, Pace's food brokers and contract managers do not make or provide
and have not made or provided any payments or any other form of trade promotion
to purchasers of Pace's products to induce such purchasers to purchase such
products.
3.23 Inventory. All of the inventories of Pace, including
that reflected in the Interim Balance Sheet, are valued at the lower of cost or
market, the cost thereof being determined on a first-in, first-out basis.
Except as disclosed on Schedule 3.23 to Pace Disclosure Letter, all of the
inventories of Pace reflected in the Interim Balance Sheet and all such
inventories acquired since the date of the Interim Balance Sheet consist of
items of a quality and quantity useable and saleable in the ordinary course of
business within a reasonable period of time and at normal profit margins, and
all of the raw materials and work-in-process inventory of Pace reflected in the
Interim Balance Sheet and all such inventories acquired since the date of
46
<PAGE> 51
the Interim Balance Sheet can reasonably be expected to be consumed in the
ordinary course of business within a reasonable period of time.
3.24 Accounts Receivable; Marketable Securities. All of
Pace's trade accounts receivable reflected in the Interim Balance Sheet or
acquired after the date thereof represent amounts receivable for products
actually delivered, have arisen from bona fide transactions in the ordinary
course of Pace's business, are not subject to any counterclaims or offsets and
have been billed and are generally due within 30 days after such billing. All
such receivables are fully collectible in the normal and ordinary course of
business, except to the extent of a reserve in an amount not in excess of the
reserve for doubtful accounts reflected on the Interim Balance Sheet. The fair
market value of the marketable securities reflected on the Interim Balance
Sheet was at least the amount shown therefor on the Interim Balance Sheet.
3.25 Disclosure. No representation or warranty by Holder
or Pace in this Agreement and any schedules or exhibit hereto or in the Pace
Disclosure Letter or the EVSP Disclosure Letter or in any certificate delivered
pursuant hereto contains or will contain any untrue statement of a material
fact, or omits or will omit to state a material fact necessary to make the
statement or facts contained herein or therein not misleading.
47
<PAGE> 52
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to Holder as follows:
4.1 Existence; Good Standing; Corporate Authority. The
Buyer is a corporation duly incorporated, validly existing and in good standing
under the laws of its jurisdiction of incorporation.
4.2 Authorization; Validity and Effect of Agreements. The
Buyer has the requisite corporate power and authority to execute and deliver
this Agreement and to perform its obligations hereunder, including the
execution, delivery and performance of the Assumption Agreement. The
consummation by the Buyer of the transactions contemplated hereby has been duly
authorized by all requisite corporate action. This Agreement constitutes the
valid and legally binding obligation of the Buyer, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights and general
principles of equity. When executed and delivered at the Closing, the
Assumption Agreement will constitute the valid and legally binding obligation
of the Buyer, enforceable against the Buyer in accordance with its terms,
subject to applicable bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights and general principles of equity.
4.3 No Violation. Neither the execution and delivery by
the Buyer of this Agreement, nor the consummation by the Buyer of the
transactions contemplated hereby in accordance with the terms
48
<PAGE> 53
hereof, including the execution, delivery and performance of the Assumption
Agreement will: (i) conflict with or result in a breach of any provisions of
the Certificate of Incorporation or Bylaws of the Buyer; (ii) violate, or
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, any note, bond, mortgage, indenture, deed of
trust, contract, agreement or other instrument, commitment or obligation to
which the Buyer or any of its subsidiaries is a party, or by which the Buyer or
any of its subsidiaries or any of their properties is bound or affected, except
for any of the foregoing matters which would not have a material adverse effect
on the ability of the Buyer to consummate the transactions contemplated hereby
(a "Buyer Material Adverse Effect"); or (iii) other than the Regulatory
Filings, require any material consent, approval or authorization of, or
declaration, filing or registration with, any domestic or foreign governmental
or regulatory authority, the failure to obtain or make which would have a
material adverse effect on the ability of the Buyer to consummate the
transactions contemplated hereby.
ARTICLE 5
COVENANTS
5.1 Conduct of Business. Prior to the Closing, except as
set forth in Schedule 5.1 to the Pace Disclosure Letter or as expressly
contemplated by any other provision of this Agreement,
49
<PAGE> 54
unless the Buyer has consented in writing thereto, Pace shall and Holder shall
cause Pace to:
(a) conduct its operations according to its usual,
regular and ordinary course in substantially the same manner as heretofore
conducted including without limitation continuing to make the expenditures
substantially as contemplated by its media advertising budget;
(b) use its reasonable efforts to preserve intact
its business organization and goodwill, keep available the services of its
officers and employees and maintain its present relationships with those
persons having business relationships with it;
(c) confer on a regular basis with one or more
representatives of the Buyer to report operational matters of materiality and
any proposals to engage in material transactions;
(d) not amend its partnership agreement or other
organizational documents or enter an agreement of the type identified in
Section 3.14(b) or 3.14(g), 3.14(i) or 3.14(l);
(e) promptly notify the Buyer of any material
emergency or other material change in the condition (financial or otherwise),
business, properties, assets, liabilities or the normal course of its business
or in the operation of its properties, any material litigation or material
governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated), or the breach in
50
<PAGE> 55
any material respect of any representation or warranty contained herein;
(f) not (i) issue any partnership or other
ownership interests or otherwise change its equity capitalization as it existed
on the date hereof, (ii) grant, confer or award any option, warrant, conversion
right or other right to acquire any partnership or other ownership interests,
(iii) increase any compensation or enter into or amend any employment or
consulting agreement with any of its officers, directors or employees, except
for normal increases made in the ordinary course of business and consistent
with past practice, (iv) make any payments to any pension, retirement, profit
sharing, bonus or similar plan, except payments made in the ordinary course of
business consistent with past practice pursuant to the Benefit Plans described
on Schedule 3.9 to the Pace Disclosure Letter, (v) directly or indirectly pay
or agree to pay any bonus, profit sharing, severance or termination pay or
other extraordinary compensation to any of its employees, except the payment of
non-discretionary cash bonuses to officers, directors or employees pursuant to
and consistent with existing plans or programs disclosed on Schedule 3.9 to the
Pace Disclosure Letter, or (vi) adopt any new employee benefit plan (including
any stock option, stock benefit or stock purchase plan) or amend any existing
Benefit Plan or Benefit Arrangement in any material respect, except for changes
which are less favorable to participants in such plans or as may be required by
applicable law;
51
<PAGE> 56
(g) not (i) declare, set aside or pay or make any
distribution or payment with respect to any partnership or other ownership
interests or (ii) redeem, purchase or otherwise acquire any of its partnership
or other ownership interests or any interest in the Companies or make any
commitment for any such action;
(h) not sell, lease, license or otherwise dispose
of any of its assets (including Intellectual Property) except for sales of
inventory made in the ordinary course of business and except for sales of
amounts of personal property which are not individually or in the aggregate
material;
(i) not purchase or otherwise acquire any assets
which are material, individually or in the aggregate, except in the ordinary
course of business;
(j) not mortgage or pledge any of its assets,
except for Permitted Liens;
(k) not incur, guarantee or assume any debt or
other obligation for money borrowed;
(l) not loan, advance funds or make an investment
in or capital contribution to any other person, other than advances to
employees for ordinary business expenses;
(m) not acquire all or a material portion of the
business or assets of another person or make any capital expenditures other
than expenditures disclosed on Schedule 5.1 to the Pace Disclosure Letter;
(n) not make or permit Holder to make any payment
to or enter in any agreement, arrangement or transaction with a
52
<PAGE> 57
Related Party, and not make any bonus, compensation or other payment of any
kind to (or on behalf of) any Related Party or any Pace Officer other than the
payment of normal base compensation at rates not exceeding the rate of
compensation disclosed on Schedule 3.20 to the Pace Disclosure Letter and
reimbursement of and advances for ordinary business expenses made in the
ordinary course of business;
(o) not forgive or otherwise permit to be
discharged the approximately $32,727,000 of indebtedness (or any other
indebtedness) owed by Holder to Pace, other than by the repayment of such
indebtedness, at its par value, in cash;
(p) not make, change or revoke any Tax election or
make any material agreement or settlement with any Governmental Body; and
(q) not enter into an agreement to take any of the
actions specified in paragraphs (d) and (f) through (p) above prior to or after
the Closing.
5.2 Filings; Other Action. Subject to the terms and
conditions herein provided, the parties hereto shall: (a) promptly make their
respective filings and thereafter make any other required submissions under the
HSR Act with respect to the transactions contemplated hereby (subject in each
case to the reasonable review and comments of each other prior to filing); (b)
use all reasonable efforts to cooperate with one another in (i) determining
whether any other filings are required to be made prior to the Closing with, or
consents, approvals, permits or authorizations are required to be obtained
prior to the Closing
53
<PAGE> 58
from, governmental or regulatory authorities or third parties in connection
with the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and (ii) timely making all such filings and
timely seeking all such consents, approvals, permits or authorizations as are
required; and (c) use all commercially reasonable efforts to take, or cause to
be taken, all other actions and do, or cause to be done, all other things
necessary, proper or appropriate to consummate and make effective the
transactions contemplated by this Agreement. The parties hereto will use their
respective reasonable efforts to resolve such objections, if any, as may be
asserted with respect to the transactions contemplated hereby under the HSR Act
or other antitrust laws. In the event a suit is instituted challenging the
transactions contemplated hereby as violative of the HSR Act or other antitrust
laws, the parties hereto will use their respective reasonable efforts to resist
or resolve such suit. Moreover, the parties hereto will use their respective
reasonable efforts to take such action as may be required (a) by the Antitrust
Division of the Department of Justice or the Federal Trade Commission in order
to resolve such objections as either of them may have to the transactions
contemplated hereby under the HSR Act or other antitrust laws or (b) by any
federal or state court of the United States, in any suit challenging the
transactions contemplated hereby as violative of the HSR Act or other antitrust
laws, in order to avoid the entry of, or to effect the dissolution of, any
injunction, temporary restraining order or other order which has the effect of
preventing the
54
<PAGE> 59
consummation of the transactions contemplated hereby. Notwithstanding the
foregoing or any other provision contained herein, in no event will the Buyer
or its affiliates be required, as a condition to dissolving or eliminating any
such injunction decree or order, or to resolve any objection that may be
asserted with respect to the transactions contemplated hereby under the HSR Act
or other antitrust laws, or in order to avoid the entry of or to effect the
dissolution of, any injunction, temporary restraining order or other order, to
pay damages, other than any incidental costs of litigation, or to accept any
"hold-separate" order, agree to any divestiture or any limitation on the
conduct by the Buyer or any of its affiliates of their respective businesses,
or any other action which would have an adverse effect on the value to the
Buyer of the transactions contemplated hereby. If, at any time after the
Closing, any further action is necessary or desirable to carry out the purpose
of this Agreement, the Buyer and Holder shall take all such necessary action.
5.3 Inspection of Records and Properties. From the date
hereof to the Closing, Holder and Pace shall allow all designated officers,
attorneys, accountants and other representatives (collectively,
"Representatives") of the Buyer access at all reasonable times to the records
and files, correspondence, audits and properties, officers, personnel,
accountants' work papers, as well as to all other information relating to
commitments, contracts, assets, titles and financial position, or otherwise
pertaining to the business and affairs, of Pace or the Companies.
55
<PAGE> 60
Without limiting the foregoing, the Buyer's Representatives shall be allowed
access to the facilities and properties of Pace during regular business hours
for the purpose of conducting an environmental audit (including environmental
testing and sampling); provided that such activities shall be conducted in a
manner which does not interfere with the normal operation of Pace's facilities.
All information obtained by the Buyer and its Representatives shall be subject
to the Confidentiality Agreement referred to in Section 8.4. From and after
the Closing, Holder and Pace, on the one hand, and the Buyer, on the other
hand, shall allow representatives of each other reasonable access during
regular business hours to their respective books and records to the extent
reasonably necessary in connection with the preparation of their respective Tax
returns and to the extent otherwise reasonably requested by Holder or Pace, on
the one hand, or the Buyer, on the other hand. All information obtained by
Holder or Pace shall be subject to Section 5.9 hereof. Holder and Pace will
assist and cooperate with the Buyer and its Representatives in conducting its
review of the business, operations and properties of Pace, and shall furnish to
the Buyer or its representatives such information concerning the business,
operations and properties of Pace as the Buyer and its Representatives may
reasonably request on reasonable notice during regular business hours. Holder
and Pace also agree that the Buyer and its Representatives may conduct
discussions with key customers, brokers, growers and others having important
business relationships with Pace, and Holder and Pace agree to
56
<PAGE> 61
facilitate such discussions; provided that advance notice of such discussions
will be provided to Pace and Pace representatives will be permitted to
participate in such discussions. The Buyer may request its internal auditors
and/or its independent public accountants to conduct an audit of the Financial
Statements (the "Audit"). Holder and Pace will cooperate and cause Pace's
independent public accountants to cooperate in the conduct of the Audit,
including requiring Pace's independent accountants to provide copies of their
work papers to the Buyer's auditors and accountants. No investigation or
receipt of information or knowledge by or on behalf of the Buyer will diminish
or obviate any of the representations, warranties or covenants of Holder or
Pace contained in this Agreement, or the conditions to the Buyer's obligations
contained in this Agreement.
5.4 Publicity. Without the prior consent of each of the
parties hereto, no party shall make any public disclosure with respect to the
transactions contemplated hereby, unless required by law (including
requirements of stock exchanges and other similar regulatory bodies on which
the Buyer's securities are listed). If any disclosure of the transactions
contemplated hereby is required by law, the parties hereto shall consult with
each other as early as practicable prior to such disclosure, and shall use
reasonable efforts to agree upon the text of any disclosure, before issuing any
press release or otherwise making public disclosure with respect thereto.
5.5 Further Action; Certain Consents. (a) Each party
hereto shall, subject to the fulfillment at or before the Closing
57
<PAGE> 62
of each of the conditions of performance set forth herein or the waiver
thereof, use its commercially reasonable efforts to perform such further acts
and execute such documents as may be reasonably required to effect the
transactions contemplated hereby.
(b) Notwithstanding anything herein to the
contrary, to the extent the assignment of any Asset to be assigned to the Buyer
pursuant to the provisions hereof shall require the consent of any other party
which shall not have been obtained prior to the Closing, this Agreement shall
not constitute an agreement to transfer such Asset unless and until such
consent is obtained. Pace shall use all commercially reasonable efforts to
obtain such consent as soon as is possible. If any such consent is not
obtained, Pace shall, at the Buyer's request, cooperate with the Buyer in any
reasonable arrangement (including without limitation the appointment of the
Buyer as attorney-in-fact for Pace) designed to provide for the Buyer the
benefit of any such Asset, including using its reasonable efforts to enforce
any and all rights of Pace with respect to such Asset; and pending receipt of
such consent, such Asset shall be held by Pace in trust for the benefit of the
Buyer and Pace shall immediately remit to the Buyer all money or other
consideration received by it or its affiliates in respect of such Asset. When
any such consent is obtained after the Closing, Pace shall transfer such Asset
to the Buyer. So long as the Buyer is receiving the benefit of any such Asset,
the Buyer shall, immediately following receipt of written evidence of payment
by Pace, reimburse Pace for any payments made
58
<PAGE> 63
by Pace in accordance with the terms of any contract, agreement or instrument
evidencing or relating to such Asset which is included in the Assets (other
than any payment arising out of, resulting from or relating to a breach or
default by Pace).
5.6 Expenses. Whether or not the transactions
contemplated hereby are consummated and subject to Section 8.13, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses;
provided, however, that if the transactions contemplated hereby are
consummated, all professional, financial advisory or consulting fees and
expenses incurred by Pace in connection with this Agreement, the Prior
Agreement, the transactions contemplated hereby and thereby and any other
proposed transaction for the direct or indirect sale of the business of Pace,
including the fees, expenses and disbursements of Pace's counsel and
accountants, shall be paid by Holder; and provided further that subject to
Section 1.4 and 8.13, all other such costs and expenses shall constitute
Assumed Liabilities. Notwithstanding the foregoing, if the transactions
contemplated hereby are consummated, all cost and expenses of Pace incurred in
connection with the Pace Family Lawsuits shall be paid by Holder and any such
costs and expenses paid by Pace prior to Closing will be reimbursed by Holder
to Pace prior to the Closing.
5.7 Employee Matters. (a) As of the Closing Date, the
employment of all of the Employees will terminate. Immediately thereafter, and
subject to the other provisions of this Article
59
<PAGE> 64
5, all Employees (other than former or retired employees of Pace) shall be
offered employment by the Buyer effective as of the Closing Date (hereinafter
referred to as "Buyer Employees"), at substantially the same salaries and wages
and on substantially the same terms and conditions as those in effect
immediately prior to the Closing Date. At the Closing, the Buyer shall assume
and shall thereafter perform all obligations of Pace under all Benefit Plans
and Benefit Arrangements and all agreements with Employees which relate to
employment or compensation or benefits. Contemporaneous with the Closing, Pace
shall transfer the sponsorship of the Qualified Plans to the Buyer. The Buyer
and Pace shall use reasonable efforts to arrange for the assignment to and
assumption by the Buyer of the insurance contracts underlying any health, life
insurance, or disability insurance plans maintained by Pace that cover the
Employees. Notwithstanding the foregoing or any other provision hereof,
nothing in the Agreement shall limit the Buyer's right to (i) terminate the
employment of any Buyer Employee at any time or (ii), subject to Section
5.7(b), modify the terms and conditions of employment of any Buyer Employee at
any time, or to modify, amend or eliminate any of the Benefit Plans or Benefit
Arrangements.
(b) From and for a period of 12 months after the
Closing Date, the Buyer shall provide benefits to the Buyer Employees which in
the aggregate are no less favorable, in terms of coverage and employee cost,
than the benefits currently provided to the Employees under the Benefit Plans
and Benefit
60
<PAGE> 65
Arrangements (other than the EVSP). Holder agrees to make any payments that
may be due under the EVSP, whether such payments are due before or after the
Closing, to pay the employer portion of social security, medicare and other
employment taxes due in connection with such payments, and to withhold from
such payments all applicable income and employment taxes. If the Buyer chooses
to include Buyer Employees in its benefit plans, the Buyer will grant all Buyer
Employees who are actively employed on such date with the Buyer, or any of its
affiliates, credit for all service with Pace and its affiliates and their
respective predecessors prior to the Closing Date for all purposes for which
such service is recognized under the Buyer's benefit plans and arrangements
(provided that any benefits paid under the Buyer's employee benefit plans to
the Buyer Employees shall be offset by any benefits paid under the Benefit
Plans or Benefit Arrangements) and shall waive any pre-existing condition and
actively-at-work exclusions and provide that any expenses incurred within the
plan year on or before the Closing Date shall be taken into account for
purposes of satisfying applicable deductible, coinsurance and maximum
out-of-pocket provisions.
(c) As of the date of this Agreement, the Buyer
and each of the Pace Officers have entered into employment agreements.
(d) On or prior to Closing, Pace intends to (i)
enter into severance agreements in the form of Exhibit 5.7A with each of the
employees listed on Schedule 5.7, the maximum benefits under which are set
forth on such Schedule; and
61
<PAGE> 66
(ii) adopt a severance plan in the form of Exhibit 5.7B covering each of the
employees listed on such Schedule 5.7, the maximum benefits under which are
also set forth on such Schedule; (all such severance arrangements being
collectively referred to as the "Severance Agreements"). Without limiting the
generality of Section 5.7(a), the Buyer agrees that at the Closing it shall
assume and shall thereafter fully perform the obligations of Pace under the
Severance Agreements described in the preceding sentence.
(e) The Buyer agrees that if the Closing occurs it
shall pay bonuses in respect of the 1994 fiscal year to all active employees
pursuant to the bonus plans disclosed in Schedule 3.9 to the Pace Disclosure
Letter (excluding the EVSP).
(f) The Buyer agrees that Pace may forgive the
loans to officers of Pace that are set forth in Paragraph 2 of Schedule 5.7 to
the Pace Disclosure Letter, subject to compliance by Pace with all applicable
tax payment and withholding laws.
(g) In addition to the benefits provided pursuant
to Section 5.7(b), the Buyer agrees that at the Closing it shall assume and
continue for a period of 12 months after the Closing, in accordance with their
terms in effect on November 25, 1994 and disclosed on Schedule 3.9 to the Pace
Disclosure Letter, the split dollar life insurance agreements with the officers
of Pace disclosed and marked with an asterisk on Schedule 3.9 to the Pace
Disclosure Letter. Buyer may cancel the other split dollar life insurance
agreements (and the underlying policies) disclosed on such Schedule.
62
<PAGE> 67
(h) On or prior to Closing, Holder shall cause
Pace to terminate the EVSP, effective as of the Closing, subject to the rights
of the participants as set forth in the EVSP Disclosure Letter. On or prior to
Closing, Holder shall secure from such participants, who are the only
participants in the EVSP, written releases in form and substance reasonably
satisfactory to the Buyer releasing Pace and the Buyer from all liabilities and
obligations under the EVSP.
5.8 Non-Competition, Non-Solicitation. (a) In
consideration of the benefits of this Agreement to Holder and Pace and in order
to induce the Buyer to enter into this Agreement, Holder and Pace hereby
covenant and agree that from and after the Closing and until the fifth
anniversary of the Closing Date, neither Holder nor Pace shall, and Holder will
cause his Related Parties (including the Companies) not to, directly, or
indirectly, as a proprietor, partner, stockholder, director, executive,
employee, consultant, joint venturer, investor or in any other capacity, engage
in, or own, manage, operate or control, or participate in the ownership,
management, operation or control of, any entity which engages anywhere in the
Territory in the manufacture, distribution or sale of salsa, picante sauce or
other tomato or pepper-based Mexican sauces or other Mexican foods; provided,
however, that nothing herein shall prohibit Holder from owning not more than 3%
of any class of securities of a publicly traded entity in any of the foregoing
lines of business so long as Holder does not participate in any way in the
management, operation or control of such entity; and
63
<PAGE> 68
provided further that nothing herein shall prohibit Holder from owning not more
than a 10% interest in a "blind pool" investment fund, any of the portfolio
companies of which is in any of the foregoing lines of business, so long as
such investment fund is managed on a discretionary basis by an independent
third party and was not formed for the purpose of making investments in
entities engaged in the business of manufacturing and selling Mexican foods,
and so long as Holder does not participate in any way in the management,
operation or control of such portfolio company. For the purpose of this
Agreement, "Territory" shall mean the United States of America, its territories
and possessions, Canada, Mexico, and any other country in the world in which
Pace has sold products.
(b) From the date hereof until the third
anniversary of the Closing Date, Holder and Pace shall not, and Holder shall
cause his Related Parties and representatives not to, without prior written
approval of the Buyer, directly or indirectly, solicit for employment any
current senior manager, general manager, sales or technical employee of Pace or
any Buyer Employee performing any of the foregoing functions; provided,
however, that (i) general solicitations of employment published in a journal,
newspaper or other publication of general circulation and not specifically
directed towards such employees shall not be deemed to constitute solicitation
for purposes of this Section 5.8(b) and (ii) Holder, his Related Parties and
64
<PAGE> 69
representatives shall not be prohibited from employing any such person who
contacts Holder, his Related Parties and representatives on his or her own
initiative and without any solicitation by Holder, his Related Parties and
representatives.
(c) Holder and Pace acknowledge that given the
nature of Pace's business the covenants contained in this Section 5.8 contain
reasonable limitations as to time, geographical area and scope of activity to
be restrained, and do not impose a greater restraint than is necessary to
protect and preserve for the benefit of the Buyer the goodwill of Pace's
business and to protect the legitimate business interests of the Buyer. If,
however, this Section 5.8 is determined by any court of competent jurisdiction
to be unenforceable by reason of its extending for too long a period of time or
over too large a geographic area or by reason of its being too extensive in any
other respect or for any other reason it will be interpreted to extend only
over the longest period of time for which it may be enforceable and/or over the
largest geographical area as to which it may be enforceable and/or to the
maximum extent in all other aspects as to which it may be enforceable, all as
determined by such court and in such action.
5.9 Confidentiality. From and after the Closing, Holder
and Pace shall, and Holder shall cause his Related Parties and representatives
to, keep confidential and not disclose to any other person or use for his or
its own benefit or the benefit of any other person any trade secrets or other
confidential proprietary information in his or their possession or control
regarding Pace or its business and operations. The obligation of Holder and
Pace under this Section shall not apply to information
65
<PAGE> 70
which: (i) is or becomes generally available to the public without breach of
the commitment provided for in this section; or (ii) is required to be
disclosed by law, order or regulation of a court or tribunal or governmental
authority; provided, however, that, in any such case, Holder shall notify the
Buyer as early as reasonably practicable prior to disclosure to allow the Buyer
to take appropriate measures to preserve the confidentiality of such
information. Holder or Pace may have entered into certain confidentiality
agreements (similar to the Confidentiality Agreement referred to in Section 8.4
hereof) with third parties regarding the possible sale of Pace or its business.
Holder has previously requested that all such third parties return to Pace all
confidential information provided to such parties by or on behalf of Holder or
Pace or that such information be destroyed. At the Closing, Holder shall
assign all of his rights in and to any such confidentiality agreements to the
Buyer.
5.10 Tax Covenants. Holder shall, at its expense, cause to
be prepared and duly and timely filed all Tax Returns with respect to
Employment Taxes, Income Taxes and state, local or foreign income taxes
required to be filed by or with respect to Pace. Pace and the Buyer shall
follow the "Standard Procedure" specified in Rev. Proc. 84-77, 1984-2 C.B. 753,
whereby each will be responsible for the reporting duties to employees with
respect to its own payment of wages and compensation in connection with the
business conducted with the Assets. The Buyer shall, at its expense, cause to
be prepared and duly and timely filed (i) all Tax Returns (other than Tax
Returns described in the first two
66
<PAGE> 71
sentences of this Section 5.10(a) and Tax Returns required to be filed on or
before the Closing Date) required to be filed by or with respect to Pace for
all taxable years and periods ending on or before, or including the Closing
Date and (ii) all Tax Returns required to be filed by or with respect to the
business conducted with the Assets for all taxable years and periods after the
Closing Date. Holder and Pace shall be liable for, and shall indemnify and
hold the Buyer Indemnified Group (as defined in Section 7.7) harmless against
all Losses (as defined in Section 7.7) with respect to Taxes due or payable by
(or with respect to) Pace or any of its predecessors which Taxes are
attributable to the Pre-Closing Tax Period (as defined herein), including Taxes
resulting from the transactions contemplated hereunder but excluding Taxes
(other than Income Taxes and Employment Taxes) to the extent: (x) reflected as
current liabilities on the October 29, 1994 balance sheet included in the
Interim Financial Statements or (y) incurred on account of the ordinary
operation of Pace's business during the period October 30, 1994 through the
Closing Date; provided, however, that the obligation of Holder and Pace to
indemnify Buyer Indemnified Group for Taxes other than Employment Taxes, Income
Taxes and state, local and foreign income taxes (including interest and
penalties on such taxes) (such non-income taxes, interest and penalties and
non-Employment Taxes being referred to herein as "Non-Income Taxes") shall be
subject to the limitations contained in Section 7.10(a) hereof. The Buyer
shall be liable for, and shall indemnify and hold Holder and Pace harmless
against Losses with respect to Taxes due
67
<PAGE> 72
or payable by (or with respect to) the business conducted with the Assets which
Taxes are attributable to the Post-Closing Tax Period (as defined herein) and
Taxes (other than Income Taxes and Employment Taxes) due or payable by (or with
respect to) Pace to the extent: (x) reflected as current liabilities on the
October 29, 1994 balance sheet included in the Interim Financial Statements or
(y) incurred on account of the ordinary operation of Pace's business during the
period October 30, 1994 through the Closing Date. For purposes of this
Agreement: (i) "Pre-Closing Tax Period" shall mean all taxable periods of
Pace and its predecessors ending on or before the Closing Date and the portion
ending on the Closing Date of any taxable period that includes (but does not
end on) the Closing Date; and (ii) "Post-Closing Tax Period" shall mean, with
respect to the business conducted with the Assets, all taxable periods that
begin after the Closing Date and the portion beginning after the Closing Date
of any taxable period of Pace that includes (but does not end on) the Closing
Date. Any Taxes with respect to the business conducted with the Assets for a
taxable period that begins before the Closing Date and ends after the Closing
Date shall be apportioned between the Pre-Closing Tax Period and the
Post-Closing Tax Period: (i) in the case of real and personal property Taxes
(and other Taxes not measured or measurable, in whole or in part by reference
to net or gross income or receipts, capital expenses or compensation expenses)
on a per diem basis and (ii) in the case of other Taxes, as determined from the
books and records of Pace as if a taxable period ended on the Closing Date.
68
<PAGE> 73
5.11 Indebtedness. At or prior to the Closing, Holder
shall repay in full in cash all outstanding indebtedness owing by Holder to
Pace which indebtedness is approximately $32,727,000 on the date hereof.
5.12 Insurance. Pending Closing, Pace shall use
commercially reasonable efforts, and Holder will cause Pace to use commercially
reasonable efforts, to maintain in full force and effect all policies of
insurance referred to in Section 3.16 or insurance policies comparable in
coverage and amount to such policies.
5.13 Bank Debt. At or prior to Closing, Pace shall
discharge in full all amounts owed under the Credit Agreements disclosed in
paragraph (h) of Schedule 3.14 to the Pace Disclosure Letter (the "Bank Debt").
The Buyer understands that payment of the Bank Debt will be made out of working
capital of Pace and neither Pace nor Holder shall have any obligation to the
Buyer under Section 1.4 of this Agreement by reason of such payment.
5.14 Environmental Audit.
(a) Prior to the date hereof, an environmental
consultant retained by the Buyer ("Buyer's Environmental Consultant") conducted
a Phase I and Phase II environmental audit of the Retained Properties for the
purpose of determining the existence of any Environmental Matters,
noncompliance with Environmental Laws or other environmental conditions,
including, but not limited to, the presence of any Hazardous Materials. Holder
and Pace jointly and severally represent to the Buyer that
69
<PAGE> 74
to the knowledge of the Pace Officers the written information provided to
Buyer's Environmental Consultant by Pace, its employees and agents was true and
correct in all material respects.
(b) Buyer's Environmental Consultant has provided
to the Buyer and Holder a written report setting forth any investigation and/or
remediation activities required to bring the Retained Properties into
compliance with the standards established by applicable Environmental Laws and
any capital expenditures necessary to cure any noncompliance with standards
established by applicable Environmental Laws.
(c) If the Closing occurs, Holder shall have no
further obligation to the Buyer under this Agreement with respect to
environmental conditions at the Retained Properties, except for breaches of the
representations and warranties set forth in Section 3.19 and the last sentence
of 5.14(a).
5.15 Insurance. With respect to any loss, liability or
damage arising out of, resulting from or relating to the ownership or conduct
of the business of Pace prior to the Closing, for which Pace would be entitled
to assert, or cause any other person to assert, a claim for recovery under any
policy of insurance or other indemnity agreement maintained by or for the
benefit of Pace ("Insurance"), which Insurance has not been assigned to the
Buyer pursuant to Section 1.1 hereof, then, notwithstanding Section 1.3 hereof,
Pace shall be deemed, solely for the purpose of asserting claims for insurance
or indemnification pursuant to this Section 5.15, to have retained
70
<PAGE> 75
liability for such loss, liability or damage to the extent of the available
limits of the applicable Insurance, and Pace shall assert, or cause to be
asserted, one or more claims under such Insurance covering such loss, liability
or damage. Pace shall, at the Buyer's request and expense, cooperate with the
Buyer and take such actions reasonably designed to provide for the Buyer the
benefit of such Insurance. Pace shall, promptly upon receipt of any insurance
or indemnification proceeds in respect of such loss, liability or damage, remit
to the Buyer the amount of such proceeds, less any deductible or reimbursable
amount owing by Pace to the insurer or indemnitor pursuant to the applicable
Insurance and less any expenses or retrospective premium adjustment incurred by
Pace in respect thereof. After the Closing, Pace shall not terminate any
insurance coverage or indemnification in favor of Pace in respect of
pre-Closing events.
5.16 Name Change. On or prior to the Closing Date, Pace
shall amend its name so as not to include the name "Pace" or any derivation
thereof.
ARTICLE 6
CONDITIONS
6.1 Conditions to Each Party's Obligation to Effect the
Transactions Contemplated Hereby. The respective obligation of each party to
consummate the transactions contemplated hereby shall be subject to the
fulfillment at or prior to the Closing of the following conditions:
71
<PAGE> 76
(a) The waiting period applicable to the
consummation of the transactions contemplated hereby under the HSR Act shall
have expired or been terminated, and all other consents or approvals of all
governmental departments, agencies, authorities and commissions which are
required by applicable law to be obtained prior to consummation of the
transactions contemplated hereby shall have been obtained and be in full force
and effect.
(b) Neither of the parties hereto shall be subject
to any order or injunction of a court of competent jurisdiction or other
administrative agency which prohibits the consummation of the transactions
contemplated by this Agreement or which would limit or adversely affect in any
material respect the Buyer's ownership of the Assets, and there shall not have
been threatened, nor shall there be pending, any action, suit or proceeding by
a third party alleging that this Agreement or consummation of the transactions
contemplated by this Agreement tortiously interferes or will tortiously
interfere with a contractual right of such third party, and it is reasonably
possible that such third party will prevail in such action, suit or proceeding.
6.2 Conditions to Obligation of Pace and Holder to Effect
the Transactions Contemplated Hereby. The obligations of Pace and Holder to
consummate the transactions contemplated hereby shall be subject to the
fulfillment at or prior to the Closing of the following condition:
72
<PAGE> 77
(a) The Buyer shall have performed in all material
respects its agreements contained in this Agreement required to be performed on
or prior to the Closing and the representations and warranties of the Buyer
contained in this Agreement shall be true and correct in all material respects
as of the date when made and (unless made as of a specified date) as of the
Closing, and Holder shall have received a certificate of the President or a
Vice President of the Buyer, dated the Closing Date, certifying to such effect.
6.3 Conditions to Obligation of the Buyer to Effect the
Transactions Contemplated Hereby. The obligations of the Buyer to consummate
the transactions contemplated hereby shall be subject to the fulfillment at or
prior to the Closing of the following conditions:
(a) Holder and Pace shall have performed in all
material respects their agreements contained in this Agreement required to be
performed on or prior to the Closing.
(b) The representations and warranties of Holder
and Pace contained in this Agreement shall be true and correct on and as of the
date when made and on and as of the Closing with the same force and effect as
though such representations and warranties had been made on, as of and with
reference to the Closing, except for such representations or warranties of
Holder and Pace which are expressly made as of a specified date, which shall be
true and correct as of the specified date.
73
<PAGE> 78
(c) The Buyer shall have received a certificate of
Holder and Pace, dated the Closing Date, certifying to the effects set forth in
Section 6.3(a) and 6.3(b).
(d) The Buyer shall have received from Fried,
Frank, Harris, Shriver & Jacobson and from Fulbright & Jaworski, L.L.P.,
counsel to Holder and Pace, legal opinions, dated the Closing Date, in form and
substance satisfactory to the Buyer, to the effects set forth in Section 3.2(a)
and 3.2(c) hereof.
(e) Holder shall have repaid in full in cash all
outstanding indebtedness owing by Holder to Pace and Pace shall have repaid in
full the Bank Debt.
(f) Pace's market share of the Mexican sauce
category for the 12-week and 52-week periods ending November 27, 1994, as
reported by Information Resources, Inc., shall have been at least 27.2% and
26.8%, respectively.
(g) The Buyer shall have received the releases
referred to in Section 5.7(h).
(h) All of the consents of third persons necessary
to effectuate the valid assignment to the Buyer of the contracts, agreements,
permits (including Environmental Permits) and licenses to which Pace is a party
or by which it or its assets are bound or affected, including without
limitation, the Third Party Consents, shall have been obtained in a form
reasonably satisfactory to the Buyer, without any diminution in the value of
the Assets.
74
<PAGE> 79
ARTICLE 7
TERMINATION; INDEMNIFICATION
7.1 Termination by Mutual Consent. This Agreement may be
terminated and the transactions contemplated hereby may be abandoned at any
time prior to the Closing by the mutual consent of the Buyer and Holder.
7.2 Termination by Either the Buyer or Holder. This
Agreement may be terminated and the transactions contemplated hereby may be
abandoned by the Buyer or Holder if (a) the Closing shall not have occurred by
March 31, 1995, or (b) a United States federal or state court of competent
jurisdiction or United States federal or state governmental, regulatory or
administrative agency or commission shall have issued an order, decree or
ruling or taken any other action permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement and such
order, decree, ruling or other action shall have become final and
nonappealable; provided, that the party seeking to terminate this Agreement
pursuant to this clause (b) shall have used all efforts required by this
Agreement to remove such injunction, order or decree; and provided, in the case
of a termination pursuant to clause (a) above, that the terminating party shall
not have breached in any material respect its obligations under this Agreement
in any manner that shall have proximately contributed to the occurrence of the
failure referred to in said clause.
75
<PAGE> 80
7.3 Termination by Holder. This Agreement may be
terminated and the transactions contemplated hereby may be abandoned at any
time prior to the Closing by Holder, if (a) there has been a breach by the
Buyer of any representation or warranty contained in this Agreement which,
individually or in the aggregate with other such breaches, would have a Buyer
Material Adverse Effect, or (b) there has been a material breach of any of the
covenants or agreements set forth in this Agreement on the part of the Buyer,
which breach is not curable or, if curable, is not cured within 30 days after
written notice of such breach is given by Holder to the Buyer.
7.4 Termination by the Buyer. This Agreement may be
terminated and the transactions contemplated hereby may be abandoned at any
time prior to the Closing by the Buyer if (a) there has been a breach by Holder
or Pace of any representation or warranty contained in this Agreement which
would have a Pace Material Adverse Effect, or (b) there has been a material
breach of any of the covenants or agreements set forth in this Agreement on the
part of Holder or Pace, which breach is not curable or, if curable, is not
cured within 30 days after written notice of such breach is given by the Buyer
to Holder.
7.5 Effect of Termination and Abandonment. In the event
of termination of this Agreement and the abandonment of the transactions
contemplated hereby pursuant to this Article 7, all obligations of the parties
hereto shall terminate, except the obligations of the parties pursuant to this
Section 7.5 and Sections 5.4, 5.6, 8.3, 8.4, 8.5, 8.6, 8.7, 8.8, 8.9, 8.10,
8.11
76
<PAGE> 81
and 8.14 and the Confidentiality Agreement referred to in Section 8.4.
Moreover, in the event of termination of this Agreement pursuant to Section 7.3
or 7.4, nothing herein shall prejudice the ability of the non-breaching party
from seeking damages from any other party for any breach of this Agreement,
including without limitation, attorneys' fees and the right to pursue any
remedy at law or in equity.
7.6 Extension; Waiver. At any time prior to the Closing,
any party hereto may, to the extent legally allowed, (a) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and warranties made
to such party contained herein and (c) waive compliance with any of the
agreements or conditions for the benefit of such party contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall
be valid only if set forth in an instrument in writing signed by or on behalf
of the party granting such extension or waiver.
7.7 Indemnification by Holder and Pace. Subject to
Section 7.10 hereof, Holder and Pace hereby agree, jointly and severally, to
indemnify, defend and hold harmless the Buyer, any subsidiary or affiliate of
the Buyer, and their respective directors, officers, partners, employees,
agents, representatives and shareholders (together the "Buyer Indemnified
Group"), from and against any and all claims, actions, suits, proceedings,
liabilities, obligations, losses, damages (including any penalty or punitive
damages), amounts paid in settlement, interests,
77
<PAGE> 82
costs (including Environmental Costs) and expenses (including reasonable
attorneys' fees, court costs and other out-of-pocket expenses incurred in
investigating, preparing or defending any of the foregoing or in enforcing
rights hereunder) (collectively, the "Losses") as and when incurred or suffered
by any member of the Buyer Indemnified Group by reason of or in connection with
or arising out of or relating to:
(a) any misrepresentation or breach of any
representation or warranty made by Holder or Pace in this Agreement or in any
certificate furnished or to be furnished to the Buyer pursuant hereto (for
purposes of determining whether there has been any such misrepresentation or
breach of a representation or warranty and for purposes of calculating the
amount of Losses arising therefrom, the representations and warranties of
Holder and Pace (including the certificate contemplated by Section 6.3(c), but
excluding the representations contained in the fifth, sixth, seventh and eighth
sentences of Section 3.5(a), the first sentence of Section 3.5(b), the first
and second sentences and clause (i) of the third sentence of Section 3.5(c),
the first sentence of Section 3.5(d), the first sentence of Section 3.7, the
last sentence of Section 3.9(j), clause (2) in the second sentence of Section
3.13, clause (m) and (n) of the first sentence of Section 3.14, the last
sentence of Section 3.18, clause (ix) of Section 3.19(b) and in Section 3.25)
shall be deemed not to be qualified by any concept of "material,"
"materiality," "Pace Material Adverse Effect" or similar qualification);
78
<PAGE> 83
(b) any failure to comply with any covenant made
by Holder or Pace in this Agreement or in any other agreement furnished or to
be furnished to the Buyer pursuant hereto or in connection with the
transactions contemplated hereby;
(c) the Excluded Assets and the Retained
Liabilities; and
(d) the Pace Family Lawsuits, any of the matters
which are or become the subject matter of the Pace Family Lawsuits, any other
claims by any relative of Amos Gideon Pace or of David Pace or any of their
respective affiliates or associates (as such terms are defined in Rule 12b-2
promulgated under the Securities Exchange Act of 1934, as amended) that they
have any interest in Pace, its business or any of its tangible or intangible
assets, including without limitation recipes, manufacturing and preservation
processes and other Intellectual Property, including the tradename and
trademark "Pace" as it was or could have been used by Pace and its predecessors
in the conduct of its business prior to the Closing, or are entitled to any
compensation from Pace or the Buyer for the use by Pace or the Buyer of any
such assets; or the failure by Pace to own or have the right to use, free and
clear of all Liens (including free of any obligation to pay any consideration
for the continued use of), the recipes, preservation and manufacturing
processes and the Pace tradename and trademark used in its business.
7.8 Buyer's Indemnification. The Buyer agrees to
indemnify, defend and hold harmless Holder and Pace from and against any and
all Losses incurred or suffered by Holder or Pace
79
<PAGE> 84
by reason of or in connection with or arising out of or relating to:
(a) any misrepresentation or breach of any
representation or warranty made by the Buyer in this Agreement or in any
certificate furnished or to be furnished to Holder pursuant hereto;
(b) any failure to comply with any covenant made
by the Buyer in this Agreement or in any other agreement furnished or to be
furnished to Holder or Pace pursuant hereto or in connection with the
transactions contemplated hereby; and
(c) the Assumed Liabilities.
7.9 General Third Party Claim Indemnification Procedures.
Except as provided in Section 7.11:
(a) A party seeking indemnification pursuant to
this Agreement (an "Indemnified Party") shall give prompt notice to the party
from whom such indemnification is sought (the "Indemnifying Party") of the
assertion of any claim, or the commencement of any action, suit or proceeding
by a third party which is not an affiliate of any party hereto in respect of
which indemnity may be sought hereunder (a "Third Party Claim"), and will give
the Indemnifying Party such information with respect thereto as the
Indemnifying Party may reasonably request, but failure to give such notice
shall not relieve the Indemnifying Party of any liability hereunder except to
the extent that the Indemnifying Party is actually prejudiced thereby.
80
<PAGE> 85
(b) The Indemnifying Party shall have the right,
exercisable by written notice to the Indemnified Party within 30 days of
receipt of notice from the Indemnified Party of the commencement or assertion
of any Third Party Claim in respect of which indemnity may be sought hereunder,
to assume and conduct the defense of such Third Party Claim with counsel
selected by the Indemnifying Party and reasonably acceptable to the Indemnified
Party; provided that (i) the defense of such Third Party Claim by the
Indemnifying Party will not have a material adverse non-monetary effect on the
Indemnified Party; and (ii) the Indemnifying Party has sufficient financial
resources to satisfy the amount of any adverse monetary judgment that is
reasonably likely to result (the conditions set forth in clauses (i) and (ii)
are collectively referred to as the "Litigation Conditions") and (iii) the
Indemnifying Party expressly agrees in writing that as between the Indemnifying
Party and the Indemnified Party, the Indemnifying Party shall be solely
obligated to satisfy and discharge the Third Party Claim; provided that if such
Third Party Claim seeks both monetary and equitable relief the Indemnified
Party and the Indemnifying Party shall cooperate in the defense of such Third
Party Claim and, to the extent possible, the Indemnified Party shall have the
right to control the defense of the Third Party Claim with respect to all
matters pertaining to equitable relief and the Indemnifying Party shall have
the right, subject to the satisfaction of the Litigation Conditions, to control
the defense of the Third Party Claim with respect to all other matters. If the
Indemnifying
81
<PAGE> 86
Party does not assume the defense of such Third Party Claim in accordance with
this Section 7.9, the Indemnified Party may continue to defend the Third Party
Claim. If the Indemnifying Party has assumed the defense of a Third Party
Claim as provided in this Section 7.9, the Indemnifying Party will not be
liable for any legal expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof; provided, however, that if (i) the
Litigation Conditions cease to be met, or (ii) the Indemnifying Party fails to
take reasonable steps necessary to defend diligently such Third Party Claim,
the Indemnified Party may assume its own defense, and the Indemnifying Party
will be liable for all reasonable costs or expenses paid or incurred in
connection therewith.
(c) The Indemnifying Party or the Indemnified
Party, as the case may be, shall have the right to participate in (but not
control), at its own expense, the defense of any Third Party Claim which the
other is defending as provided in this Agreement.
(d) The Indemnifying Party, if it shall have
assumed the defense of any Third Party Claim as provided in this Agreement,
shall not, without the prior written consent of the Indemnified Party, consent
to a settlement of, or the entry of any judgment arising from, any such Third
Party Claim which does not include as an unconditional term thereof the giving
by the claimant or the plaintiff to the Indemnified Party a complete release
from all liability in respect of such Third Party Claim, or which grants any
injunctive or equitable relief. The Indemnified Party shall have the right to
settle any Third Party
82
<PAGE> 87
Claim, the defense of which has not been assumed by the Indemnifying Party,
with the written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed. The written consent by an Indemnifying Party
to the settlement by the Indemnified Party of any Third Party Claim as set
forth in the preceding sentence shall not constitute an admission by the
Indemnifying Party that it is obligated to indemnify the Indemnified Party in
respect of the subject matter of such Third Party Claim.
(e) Amounts payable in respect of indemnification
obligations of the parties shall be treated as an adjustment to the Purchase
Price. Whether or not the Indemnifying Party chooses to defend or prosecute
any Third Party Claim, all the parties hereto shall cooperate in the defense or
prosecution thereof and shall furnish such records, information and testimony,
and attend such conferences, discovery proceedings, hearings, trials and
appeals, as may be reasonably requested in connection therewith.
7.10 Deductible; Limits on Certain Indemnification.
(a) Subject to Section 7.10(c) and Section 8.13
hereof, the Buyer shall not be entitled to be indemnified for Losses under the
terms of Section 7.7 (a) or with respect to Non-Income Taxes unless the
aggregate amount of such Losses exceeds Twelve Million Five Hundred Thousand
Dollars ($12,500,000) and then only to the extent of such excess. Subject to
Section 7.10(c) and Section 8.13, the maximum aggregate liability of Holder and
Pace to the Buyer for claims made under Section 7.7(a)
83
<PAGE> 88
and with respect to Non-Income Taxes shall not exceed $125,000,000.
(b) Subject to 7.10(c) hereof, no action or claim
for indemnification under Section 7.7(a) for breaches of representations or
warranties shall be brought or made after two years after the Closing Date,
except that such time limitation shall not apply to (i) claims for
misrepresentations or breaches of warranties relating to Taxes, which may be
asserted until the running of the applicable statute of limitations with
respect to the taxable period to which the particular claim relates, (ii)
claims for misrepresentations or breaches of warranties relating to Section
3.19 (Environmental Matters), which may be asserted until seven (7) years after
the Closing Date and (iii) any claims which have been the subject of a written
notice from the Buyer to Holder prior to the expiration of the relevant period,
which notice specifies in reasonable detail the nature of the claim.
(c) Notwithstanding anything to the contrary in
this Section 7.10, no limitation or condition of liability provided in this
Section 7.10 shall apply to Holder or Pace for claims for Losses based on a
breach by Holder or Pace of the representations contained in, or the
certificate to be delivered pursuant to Section 6.3(c) insofar as it relates
to, Sections 3.2 (Authorization), 3.3(b) (Ownership and Predecessors), 3.4 (No
Violation) (clause (v) only), 3.7 (Absence of Certain Changes) (clause (i) and
(x) of the second sentence, the fifth sentence
84
<PAGE> 89
and clause (ii) and (iii) of the last sentence only), 3.11 (Brokers) or 3.17
(Related Party Transactions) hereof.
(d) In calculating the amount of Losses hereunder,
there shall be taken into account (a) the present value of any income tax
benefits received by the Indemnified Party from making the payment which gave
rise to such Losses and (b) the present value of any income tax cost to the
Indemnified Party resulting from the receipt of any indemnification payment
hereunder or Net Insurance Proceeds (as defined below). For purposes of this
paragraph, income tax benefits and costs shall be based on the federal income
tax rate and the blended effective state and local income tax rate (net of the
federal income tax deduction therefor) applicable to Indemnified Party at the
time a Loss is incurred or at the time an indemnification payment is received,
and such benefits and costs shall be discounted to present value using a
discount rate of 5% per annum. For purposes of this Article 7, any insurance
proceeds actually received by an Indemnified Party (net of all costs and
expenses incurred by or on behalf of the Indemnified Party in connection with
the receipt of such insurance proceeds, including, without limitation, fees and
disbursements of counsel and any premium adjustments (whether retrospective or
prospective) arising out of or relating to the receipt of such insurance
proceeds (the "Net Insurance Proceeds") shall be taken into account in
determining the amount of Losses incurred by an Indemnified Party; it being
understood that if any insurance proceeds are received by an Indemnified Party
with respect to any matter for which such Indemnified Party has
85
<PAGE> 90
incurred Losses for which such Indemnified Party was previously indemnified by
an Indemnifying Party, the Indemnified Party shall promptly remit to the
Indemnifying Party the amount by which the sum of the indemnification amount
paid previously by the Indemnifying Party in respect of such Losses plus the
Net Insurance Proceeds in respect of such Losses exceeds the amount of such
Losses (but in no event shall the Indemnified Party be obligated to remit any
amount in excess of the indemnification payments received by the Indemnified
Party in respect of such Losses). Each Indemnified Party will use commercially
reasonable efforts to make an insurance claim under any policy of insurance
which provides coverage in respect of Losses for which such Indemnified Party
is seeking or has obtained indemnification from an Indemnified Party; provided
that such Indemnified Party need not use such efforts if in its reasonable
judgment it could be materially disadvantaged thereby.
7.11 Pace Family Lawsuits Indemnification Procedures.
Notwithstanding the provisions of Section 7.9 hereof, with respect to any Third
Party Claim described in Section 7.7(d), including the Pace Family Lawsuits:
(a) Holder shall assume and control the defense of
such Third Party Claim, provided that, and for so long as, Holder has
sufficient financial resources to satisfy the amount of any adverse monetary
judgment that is reasonably likely to result therefrom; and provided further
that (i) if the Third Party Claim seeks both monetary and equitable relief
against any member of the Buyer Indemnified Group, Holder and the Buyer shall
cooperate
86
<PAGE> 91
in defense of such Third Party Claim and, to the extent possible, the Buyer
shall have the right to conduct and control the defense of the Third Party
Claim with respect to all matters pertaining to equitable relief against any
member of the Buyer Indemnified Group, and Holder shall have the right to
conduct and control the defense of the Third Party Claim with respect to all
other matters; (ii) if the Third Party Claim seeks equitable relief against
only Pace and/or Holder (and not against any member of the Buyer Indemnified
Group) or seeks solely monetary relief, Holder shall conduct and control the
defense of such Third Party Claim; and (iii) Holder shall not, without the
prior written consent of the Buyer, consent to a settlement of, or the entry of
any judgment arising from, any such Third Party Claim which does not include as
an unconditional term thereof the giving by the claimant or the plaintiff to
the Buyer a complete release from all liability in respect of such Third Party
Claim, or which grants any injunction or equitable relief against any member of
the Buyer Indemnified Group. At the written request of the Holder, the Buyer
agrees to consent to the settlement of, or to the entry of a judgment arising
from, any such Third Party Claim, provided that (i) the Buyer is given an
unconditional complete release by the plaintiff or claimant from any and all
liability in respect of such Third Party Claim and that (ii) no member of the
Buyer Indemnified Group is subjected to any equitable relief or is otherwise
required to take, or forbear to take, any action pursuant to such judgment or
settlement.
87
<PAGE> 92
(b) The Buyer shall have the right to participate
fully in the defense of any such Third Party Claim (even if such Third Party
Claim does not seek equitable relief), with counsel of its choosing, and Holder
shall pay all of the Buyer's legal expenses incurred in connection with the
defense thereof, including the fees and disbursements of such counsel, when and
as such expenses are incurred. Holder shall agree with such counsel to pay
such fees and disbursements directly to such counsel upon submission to Holder
of such counsel's statement therefor. The Buyer agrees that (i) prior to the
selection by the Buyer of its counsel in such Third Party Claim, Buyer shall
consult with Pace's counsel with respect thereto; (ii) it shall instruct its
counsel to provide Holder with reasonable documentation supporting such
counsel's bills; and (iii) it will monitor the activities of its counsel in
substantially the same manner as it monitors counsel in other litigation
matters, except for invoice reviews. Holder and the Buyer each agree to
instruct their respective counsel in such Third Party Claim to consult with
each other so as to attempt to avoid unnecessary duplication of effort. Holder
agrees that Buyer's failure to comply with its obligations in the prior two
sentences shall not affect Holder's indemnification obligations hereunder
except with respect to Holder's obligations to pay Buyer's legal expenses
pursuant to the first sentence of this Section 7.11(b), and then only to the
extent such legal expenses are in excess of what they would have been had the
Buyer complied with such obligations.
88
<PAGE> 93
ARTICLE 8
GENERAL PROVISIONS
8.1 Survival of Representations and Warranties. Unless
this Agreement is terminated pursuant to Article 7, the representations and
warranties and covenants made in this Agreement shall survive the Closing,
subject to Section 7.10.
8.2 Notices. Any notice required to be given hereunder
shall be sufficient if in writing, and sent by facsimile transmission (with
confirmation postmarked on the same day) or by courier service (with proof of
service), hand delivery or certified or registered mail (return receipt
requested and first-class postage prepaid), addressed as follows:
If to Holder or Pace: If to the Buyer:
Christopher Goldsbury, Jr. Campbell Soup Company
207 Zambrano Campbell Place
San Antonio, Texas 78209 Camden, NJ 08103
Attention: General Counsel
Facsimile: (609) 342-5216
With a copy to: With a copy to:
Arthur Fleischer, Jr., P.C. Campbell Soup Company
Fried, Frank, Harris Campbell Place
Shriver & Jacobson Camden, New Jersey 08103
One New York Plaza Attention: Corporate Secretary
New York, NY 10004
Facsimile: (212) 747-1526 Facsimile: (609) 342-3936
or to such address as any party shall specify by written notice so given, and
such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
8.3 Assignment; Binding Effect; Benefit. Neither this
Agreement nor any of the rights, interests or obligations
89
<PAGE> 94
hereunder shall be assigned by any of the parties hereto without the prior
written consent of the other parties; provided, however, that following Closing
the Buyer may assign all or any part of its rights hereunder and under any
other document delivered pursuant hereto or executed in connection herewith to
any successor to all or substantially all the business of Pace; and provided
further that the Buyer may assign any of its rights and obligations hereunder
to any direct or indirect subsidiary of the Buyer, provided that no such
assignment shall relieve the Buyer of its obligations hereunder; and provided
further that at the request of the Buyer, the rights and obligations of Pace
under any contract or other agreement of Pace constituting an Asset shall be
instead assigned to and assumed by any direct or indirect subsidiary of the
Buyer. Subject to the preceding sentence, this Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns. Notwithstanding anything contained in this Agreement
to the contrary, nothing in this Agreement (including the provisions of Section
5.7) express or implied, is intended to confer on or give any person other than
the parties hereto or their respective heirs, successors, executors,
administrators and assigns any rights remedies, obligations or liabilities
under or by reason of this Agreement.
8.4 Entire Agreement. This Agreement, the Pace Disclosure
Letter, the EVSP Disclosure Letter and the Confidentiality Agreement dated
September 1994 between Pace and the Buyer constitute the entire agreement among
the parties with respect to
90
<PAGE> 95
the subject matter hereof and supersede all prior agreements and understandings
(oral and written) among the parties with respect thereto, including the Prior
Agreement. No addition to or modification of any provision of this Agreement
shall be binding upon any party hereto unless made in writing and signed by all
parties hereto. All representations contained in this Agreement (including,
without limitation, those contained in the Pace Disclosure Letter and the EVSP
Disclosure Letter) or any certificate delivered pursuant hereto shall
constitute representations and warranties hereunder of the party delivering the
same and shall be deemed incorporated and contained in this Agreement.
8.5 Amendment. This Agreement may be amended by the
parties hereto, but only by an instrument in writing signed by or on behalf of
each of the parties hereto.
8.6 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York without
regard to its rules of conflict of laws.
8.7 Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a
number of copies of this Agreement, each of which may be signed by less than
all of the parties hereto, but together all such copies are signed by all of
the parties hereto.
91
<PAGE> 96
8.8 Headings. Headings of the Articles and Sections of
this Agreement are for the convenience of the parties only, and shall be given
no substantive or interpretive effect whatsoever.
8.9 Interpretation. In this Agreement, unless the context
otherwise requires, words describing the singular number shall include the
plural and vice versa, and words denoting any gender shall include all genders
and words denoting natural persons shall include corporations and partnerships
and vice versa.
8.10 Waivers. No action taken pursuant to this Agreement
including, without limitation, any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants or agreements
contained in this Agreement. The waiver by any party hereto of a breach of any
provision hereunder shall not operate or be construed as a waiver of any prior
or subsequent breach of the same or any other provision hereunder. The failure
of a party hereto to insist upon strict adherence to any term of this Agreement
on one or more occasions will not be considered a waiver or deprive that party
of the right thereafter to insist upon strict adherence to that term or any
other term of this Agreement.
8.11 Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or otherwise affecting the validity or
enforceability
92
<PAGE> 97
of any of the terms or provisions of this Agreement in any other jurisdiction.
If any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
8.12 Enforcement of Agreement. The parties hereto agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof, this being in
addition to any other remedy to which they may be entitled at law or in equity.
8.13 Transfer Taxes. Notwithstanding any other provision
hereof to the contrary, all recording, transfer, sales, documentary stamp
transfer taxes, and similar taxes, charges and assessments resulting or arising
from the transactions contemplated hereby shall be paid by Holder.
8.14 Consent to Jurisdiction. Each party irrevocably
submits to the exclusive jurisdiction of any court located in the State of
Delaware, for purposes of any action, suit or other proceeding arising out of
this Agreement or any transaction contemplated hereby and agrees not to bring
suit in any court which is not located in the State of Delaware or to raise any
objection in any court located in the State of Delaware to the laying or
maintaining of the venue of any such action, suit or proceeding in such court;
provided that if the Delaware courts
93
<PAGE> 98
refuse to exercise jurisdiction over any such action, suit or proceeding, each
party agrees that such action, suit or proceeding shall be brought in any court
located in the State of New York and hereby submits to the jurisdiction of any
such court for such purpose; and provided further that if neither the Delaware
courts nor the New York courts exercise jurisdiction over any such action, suit
or proceeding, each party agrees that such action, suit or proceeding may be
brought in a court located in any state of the United States having personal
and subject matter jurisdiction, other than Pennsylvania, New Jersey, Texas or
Oklahoma. Holder hereby irrevocably designates, appoints and empowers each of
Arthur Fleischer, Jr. and Fried, Frank, Harris, Shriver & Jacobson as his true
and lawful agent and attorney-in-fact in his name, place and stead to receive
and accept on his behalf service of process in any action, suit or proceeding
in Delaware or New York with respect to any matters as to which he has
submitted to jurisdiction as set forth in the immediately preceding sentence.
Each party waives any right it may have to have a jury decide any action, suit
or other proceeding arising out of this Agreement or any transaction
contemplated hereby. In any action, suit or proceeding arising out of this
Agreement or any transaction contemplated hereby, the judge or other
decision-maker shall determine which party is the prevailing party, and the
extent to which such party has prevailed, based on the nature of the claims
asserted, the nature of the response to such claims, and the results obtained.
The non-prevailing party shall reimburse the prevailing party for the
attorneys' fees and costs
94
<PAGE> 99
incurred in and related to the proceedings to the extent to which the
prevailing party has prevailed.
8.15 Post Closing Use of Colorado Facility. During 1995,
Holder and Pace shall permit the Buyer, at no cost to the Buyer, to use the
Colorado Facility for business related purposes for up to 20 days. The days of
such use shall include February 25, 1995 to and including February 28, 1995 and
such other days as may be requested by the Buyer on reasonable advance notice.
8.16 Bulk Sales Laws. The Buyer hereby waives compliance
by Holder and Pace with the provisions of any so- called bulk sales or bulk
transfer law in any jurisdiction in connection with the transactions
contemplated hereby, provided that Holder and Pace shall jointly and severally
indemnify the Buyer Indemnified Group against any Losses in connection with or
arising out of or relating to the failure of Holder or Pace to comply with such
laws.
8.17 Further Assurances. At any time or from time to time
after the Closing, each party shall, at the request of the other party, execute
and deliver any further instrument or document and take all such further action
as the requesting party may reasonably request in order to evidence the
consummation of the transactions contemplated hereby. Without limiting the
generality of the foregoing, from time to time following the Closing, Pace
shall execute and deliver, or cause to be executed and delivered, to the Buyer
such additional instruments of conveyance and transfer as the Buyer may
reasonably request or as may be otherwise necessary to more effectively convey
or transfer
95
<PAGE> 100
to, and vest in, the Buyer and put the Buyer in possession of, any part of the
Assets. If following Closing Pace receives the proceeds of any Asset,
including any accounts receivable, Pace shall promptly remit such proceeds to
the Buyer.
8.18 Prior Agreement. Pursuant to Section 9.1 of the Prior
Agreement, the Buyer and Holder hereby consent to the termination of the Prior
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
and caused the same to be duly delivered on their behalf on the day and year
first written above.
<TABLE>
<S> <C>
CAMPBELL SOUP COMPANY
By: /s/ Ralph A. Harris
---------------------------
Name: Ralph A. Harris
Title: Vice President - Corporate Development
PACE FOODS, LTD.
By C.A.G. MANAGEMENT, INC.,
its general partner
By: /s/ Christopher Goldsbury, Jr.
----------------------------
Name: Christopher Goldsbury, Jr.
Title: Chief Executive Officer
/s/ Christopher Goldsbury, Jr.
-------------------------------
Christopher Goldsbury, Jr.,
individually
</TABLE>
96
