<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended February 27, 1994 or
Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from __________________ to _________________
Commission file number 0-1118
DEAN FOODS COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 36-0984820
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
3600 North River Road, Franklin Park, Illinois 60131
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (708) 678-1680
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
The number of shares of the Registrant's Common Stock, par value $1 per share,
outstanding as of the date of this report was 39,768,314.
Total number of pages 99.
<PAGE> 2
PART I - FINANCIAL INFORMATION
A. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On January 1, 1994, the Registrant acquired the assets and
certain liabilities of the Birds Eye Frozen Vegetable business of the
All-American Gourmet Company, a wholly-owned subsidiary of Kraft
General Foods, Inc. Accordingly, the unaudited condensed consolidated
financial statements include the results of operations from the date
of acquisition. Pro forma results of operations for periods covered
by this report reflecting this acquisition are disclosed in Notes to
the Condensed Consolidated Financial Statements. The impact of the
acquisition on the Registrant's financial position is disclosed in
Dean Foods Company and Birds Eye Pro Forma Condensed Combined
Financial Information contained in Form 8-K/A, Amendment No. 1 dated
March 14, 1994 previously filed by the Registrant.
In the opinion of the Registrant, all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of the
following unaudited condensed consolidated financial statements have
been included herein. Certain information and footnote disclosures
normally included in the financial statements have been omitted.
These unaudited condensed consolidated financial statements should be
read in conjunction with the Registrant's 1993 Annual Report on Form
10-K.
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ITEM 1.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE QUARTERS AND NINE MONTHS ENDED
FEBRUARY 27, 1994 AND FEBRUARY 28, 1993
(In Thousands Except for Per Share Amounts)
<TABLE>
<CAPTION>
Third Quarters Ended Nine Months Ended
---------------------- ------------------------
Feb. 27, Feb. 28, Feb. 27, Feb. 28,
1994 1993 1994 1993
-------- -------- --------- --------
(Unaudited)
<S> <C> <C> <C> <C>
Net sales $622,890 $566,565 $1,759,654 $1,682,118
-------- -------- ---------- ----------
Costs and expenses:
Costs of products sold 483,012 439,139 1,375,022 1,305,347
Delivery, selling and
administrative expenses 105,074 97,461 296,364 286,607
Interest expense 4,410 3,871 11,101 11,213
Other (income) expense, net 112 (491) (1,279) (2,602)
-------- -------- ---------- ----------
592,608 539,980 1,681,208 1,600,565
-------- -------- ---------- ----------
Income before income taxes
and cumulative effect of
changes in accounting
principles 30,282 26,585 78,446 81,553
Provision for income taxes 11,840 10,620 31,963 32,992
-------- -------- ---------- ----------
Income before cumulative
effect of changes in
accounting principles 18,442 15,965 46,483 48,561
Cumulative effect of changes
in accounting principles,
net of taxes - - 1,179 -
-------- -------- ---------- ----------
Net income $ 18,442 $ 15,965 $ 47,662 $ 48,561
-------- -------- ---------- ----------
-------- -------- ---------- ----------
Earnings per share*:
Earnings per common share
before cumulative effect
of changes in accounting
principles $0.46 $0.41 $1.17 $1.23
Cumulative effect per common
share of changes in
accounting principles - - .03 -
-------- -------- ---------- ----------
Earnings per common share* $0.46 $0.41 $1.20 $1.23
-------- -------- ---------- ----------
-------- -------- ---------- ----------
Dividends per share
(Declared and paid) $0.16 $0.30 $0.48 $0.45
-------- -------- ---------- ----------
-------- -------- ---------- ----------
</TABLE>
* Based upon weighted average common shares outstanding.
See accompanying Notes to Condensed Consolidated Financial Statements.
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CONDENSED CONSOLIDATED BALANCE SHEETS
FEBRUARY 27, 1994 AND MAY 30, 1993
(In Thousands)
<TABLE>
<CAPTION>
February 27, May 30,
1994 1993
------------ --------
(Unaudited)
ASSETS
------
<S> <C> <C>
CURRENT ASSETS:
Cash and temporary cash investments $ 13,489 $ 41,572
Accounts and notes receivable,
less allowance for doubtful
accounts of $4,438 and $5,331,
respectively 169,328 146,541
Inventories 287,375 178,996
Other current assets 29,253 38,993
---------- --------
Total Current Assets 499,445 406,102
---------- --------
PROPERTIES:
Property, plant and equipment, at cost 891,465 770,898
Accumulated depreciation 344,828 327,134
---------- --------
546,637 443,764
---------- --------
OTHER ASSETS 66,279 42,970
---------- --------
Total Assets $1,112,361 $892,836
---------- --------
---------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Short-term notes payable $ 147,121 $ -
Current installments of long-term
obligations 2,272 2,351
Accounts payable and accrued expenses 224,724 193,571
Dividends payable 6,464 5,953
Federal and state income taxes 4,100 5,834
---------- --------
Total Current Liabilities 384,681 207,709
---------- --------
LONG-TERM OBLIGATIONS (Less current
installments included above) 148,423 151,127
---------- --------
DEFERRED LIABILITIES 72,974 57,681
---------- --------
SHAREHOLDERS' EQUITY:
Common stock 41,017 40,946
Capital in excess of par value 5,367 3,955
Retained earnings 490,067 461,479
Less - Treasury stock - at cost 30,168 30,061
---------- --------
Total Shareholders' Equity 506,283 476,319
---------- --------
Total Liabilities and
Shareholders' Equity $1,112,361 $892,836
---------- --------
---------- --------
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR NINE MONTHS ENDED FEBRUARY 27, 1994 AND FEBRUARY 28, 1993
(In Thousands)
<TABLE>
<CAPTION>
Nine Months Ended
------------------------------
February 27, February 28,
1994 1993
------------ ------------
(Unaudited)
<S> <C> <C>
Net cash used for operations $ 55,922 $ 36,439
-------- ---------
Cash flows from investing activities:
Capital expenditures (63,450) (53,922)
Proceeds from disposition of property,
plant and equipment 5,675 2,759
Acquisitions of businesses, net of
cash acquired (154,523) (2,562)
Proceeds from a business divested - 550
-------- --------
Net cash used in investing activities (212,298) (53,175)
-------- --------
Cash flows from financing activities:
Increase in short-term obligations 147,121 30,200
Repayment of long-term obligations (2,889) (3,235)
Unexpended industrial revenue
bond proceeds 1,334 2,310
Cash dividends paid (18,756) (17,407)
Issuance of common stock 1,483 2,041
Purchase of treasury stock - (8,517)
-------- --------
Net cash provided from financing activities 128,293 5,392
-------- --------
Decrease in cash and temporary cash
investments (28,083) (11,344)
Cash and temporary cash investments -
beginning of period 41,572 33,993
-------- ---------
Cash and temporary cash investments -
end of period $ 13,489 $ 22,649
-------- --------
-------- --------
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
INVENTORIES
The following is a tabulation of inventories by class at February 27, 1994,
February 28, 1993 and May 30, 1993 (In Thousands).
<TABLE>
<CAPTION>
February 27, February 28, May 30,
1994 1993 1993
------------ ------------ --------
(Unaudited)
<S> <C> <C> <C>
Raw materials and supplies $ 71,614 $ 47,680 $ 46,666
Materials in process 61,111 49,738 28,473
Finished goods 168,884 148,036 121,400
-------- -------- --------
301,609 245,454 196,539
Less: Excess of current cost
over stated value of
last-in, first-out
inventories (14,234) (17,469) (17,543)
-------- -------- --------
Total inventories $287,375 $227,985 $178,996
-------- -------- --------
-------- -------- --------
</TABLE>
BUSINESS ACQUISITIONS
During the quarter ended February 27, 1994, the Registrant acquired the Birds
Eye Frozen Vegetable business for cash. This acquisition was accounted for as
a purchase and, accordingly, results subsequent to the acquisition are included
in the Condensed Consolidated Financial Statements. The following unaudited
pro forma summary represents the consolidated results of operations of the
Registrant had the acquisition occurred at the beginning of the 1993 fiscal
year:
<TABLE>
<CAPTION>
Nine Months Ended
1994 1993
---------- ----------
<S> <C> <C>
Net sales $1,877,038 $1,820,374
Income before cumulative effect of
changes in accounting principles 47,645 53,395
Earnings per common share before cumulative
effect of changes in accounting principles $1.20 $1.35
</TABLE>
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The above results are based on certain assumptions and estimates which the
Registrant believes are reasonable but does not reflect benefits which might be
achieved from economies of the combined operations. The pro forma results do
not necessarily represent the results which would have occurred if the
acquisition had taken place on the basis assumed, nor are they indicative of
the results of future combined operations.
LEGAL PROCEEDINGS
See PART II, Item 1 for discussion of pending legal proceedings.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
A.) Liquidity and Capital Resources
The Registrant's liquidity and its capital resources are
described in the Management's Discussion and Analysis contained in the
Registrant's Annual Report on Form 10-K for the fiscal year ended May
30, 1993. The Registrant's current ratio at February 27, 1994 was
lower due to the use of short-term borrowings to finance business
acquisitions. Excluding the acquisitions and the short-term financing
related thereto, described in the following working capital analysis,
the Registrant's current ratio at February 27, 1994 exceeded the May 30,
1993 current ratio.
Working capital at February 27, 1994 was $114.8 million
compared to $198.4 million at May 30, 1993. At February 27, 1994,
cash and temporary cash investments were $13.5 million, a decrease of
$28.1 million from the balance at May 30, 1993. Short-term borrowings
at February 27, 1994, were $147.1 million, whereas there were no short-
term borrowings at May 30, 1993.
The decrease in cash and temporary cash investments and the
increase in short-term borrowings are principally the result of:
1.) Short-term borrowings to fund the
acquisitions of businesses during the current
fiscal year. Such borrowings at some future
date are expected to be refinanced into
longer maturities.
2.) Normal temporary seasonal cash
requirements of the Registrant's crop-related
vegetable and pickle processing operations,
3.) Cash outlays for capital expenditures, and
4.) Payment of cash dividends.
Other major changes in working capital items at February 27, 1994,
compared to May 30, 1993, including Accounts and Notes Receivable,
Inventories, and Accounts Payable and Accrued Expenses, are the result
of increased balances due to the current fiscal year acquisitions.
Inventories also increased due to the normal seasonal nature of the
Registrant's vegetable and pickle operations. The increased inventories
at February 27, 1994 compared to February 28, 1993 were principally due
to the current year's acquisitions.
The increase in Property, Plant and Equipment principally is
the result of businesses acquired and capital expenditures less
depreciation expenses. The increase in Other Assets is principally
the result of businesses
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<PAGE> 8
acquired during the year.
The Registrant's debt-to-capital ratio was 22.7% at
February 27, 1994 compared with 24.1% at May 30, 1993.
B.) Results of Operations
Overall sales for the quarter and the nine month period
ended February 27, 1994 increased 10% and 5% respectively,
compared to the same periods a year ago. Consolidated after-
tax earnings for the quarter ended February 27, 1994
increased 16% over the same period last year. Improved
margins by the Registrant's vegetable operations was the
principal reason for the increased earnings. Consolidated
earnings for the nine months ended February 27, 1994 were 2%
below the same period a year ago. Earnings for the nine
months included the following first quarter items:
1.) A charge of $1.5 million related to the
Revenue Reconciliation Act of 1993 including
the retroactive application thereof to
January 1, 1993 and the impact of the change
in income tax rate on deferred taxes, and
2.) A net after-tax credit of $1.2 million
related to the Registrant's implementation of
changes in accounting principles for income
taxes and post-retirement benefits other than
pensions.
Net sales of the Registrant's Dairy Products operations
for both the third quarter ($372.1 million) and the nine months
($1.1 billion) were slightly higher than sales of the same
periods a year ago. Both the quarter and the nine months
benefited from the sales of a small specialty dairy
acquisition during the second quarter of this year, as overall
unit sales volumes and average selling prices for both the
third quarter and the nine months were relatively flat
compared to the same periods a year ago.
Dairy Product's operating earnings for the third quarter
and nine months ended February 27, 1994 were both below last
year's results for the same periods as raw milk costs were
higher than year ago levels and increased competitive
conditions existed in certain markets. Raw milk costs for the
fourth quarter are projected to remain higher than last year's
levels.
Net sales of the Registrant's Specialty Food Products
operations for both the third quarter ($243.6 million) and the
nine months ($648.0 million) increased 23% and 14%,
respectively, over sales of the same periods a year ago. The
increased sales principally were the result of:
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<PAGE> 9
1.) The inclusion of sales of businesses acquired in the
third quarter last fiscal year and the third quarter
this fiscal year, and
2.) A slight increase in overall sales volumes.
Specialty Food Products earnings for the third quarter were
higher than third quarter earnings last year, principally the
result of:
1.) Continued improvement in margins of the
Registrant's canned and frozen vegetable
operations over this year's first and second
quarters margins and the third quarter
margins a year ago, as a result of less
promotional activities, increased selling
prices and increased consumer demand.
2.) The contribution of earnings of the
businesses acquired in both the third quarter
a year ago and this fiscal year.
Further vegetable earnings improvement is anticipated in the
fourth quarter as a result of the increased demand, firm selling
prices and the contribution of an acquired business. Earnings of
the Registrant's pickle operations for the third quarter improved
over first and second quarter results but were below last year's
third quarter results as weather-related cost increases and
competitive market conditions offset increased unit sales volumes.
Specialty Food Products earnings for the nine months were
slightly lower than the same period a year ago as a result of
lower earnings in this year's first and second quarters,
principally the result of increased product and processing costs
encountered by both the vegetable and pickle operations due to
weather-related harvest delays and reduced yields in the
Registrant's Midwest growing areas and competitive market conditions.
Delivery, selling and administrative expenses both for the
quarter and nine months ended February 27, 1994 increased slightly
over last year's expenses, principally the result of expenses of
acquired businesses.
The effective income tax rate for the third quarter was 39.1%
compared with a rate of 39.9% for the third quarter last year. The
decreased effective tax rate reflects the adoption in the first
quarter of this year of SFAS 109, "Accounting for Income Taxes"
offset by the increased statutory corporate income tax rate under
the Revenue Reconciliation Act of 1993. The effective income tax
rate for the nine months was 40.7% compared with 40.5% last year.
The increased effective tax rate for nine months this year reflects
the adoption of SFAS 109, the increased statutory corporate income
tax rate and the retroactive provisions of the Revenue
Reconciliation Act of 1993. The effective income tax rate for the
fourth quarter fiscal 1994 should be lower than last year's fourth
quarter's effective tax rate.
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<PAGE> 10
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
There has been no material change in the legal proceedings
reported on under Item 3 - Legal Proceedings, of the Registrant's
Annual Form 10-K, for the fiscal year ended May 30, 1993.
ITEM 6. Exhibits and Reports on Form 8-K
a.) Exhibits
Item 10 - Material Contracts
Asset Purchase Agreement by and among Kraft General
Foods, Inc., The All-American Gourmet Company and
Dean Foods Company dated October 30, 1993.
b.) Reports on Form 8-K
1.) Report on 8-K dated January 13, 1994
reporting the Registrant's acquisition of the
Birds Eye Frozen Vegetable business pursuant
to the asset agreement hereby filed as Item
10, Material Contracts to this Form 10-Q
report.
2.) Report on Form 8-K/A, Amendment No. 1
dated March 14, 1994 filed amending Item 7
Financial Statements and Exhibits to provide
the financial statements required to be
included in the Report on Form 8-K dated
January 13, 1994.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DEAN FOODS COMPANY
(Registrant)
DATE: April 12, 1994 /s/ Timothy J. Bondy
----------------------
TIMOTHY J. BONDY
Vice President, Finance
DATE: April 12, 1994 /s/ Dale I. Hecox
----------------------
DALE I. HECOX
Treasurer
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ITEM 10. MATERIAL CONTRACTS
ASSET PURCHASE AGREEMENT
by and among
KRAFT GENERAL FOODS, INC.
THE ALL AMERICAN GOURMET COMPANY
and
DEAN FOODS COMPANY
October 30, 1993
* This revised conformed version of the Agreement signed
October 30, 1993 is the definitive version and shall
constitute the form of the agreement among the parties
and replaces the conformed version previously
distributed.
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TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
ARTICLE 1
PURCHASE AND SALE OF ASSETS
<S> <C> <C>
Section 1.01 Basic Transaction..........................................17
Section 1.02 Consideration for Purchased Assets.........................23
Section 1.03 Assumption of Liabilities..................................26
Section 1.04 The Closing................................................30
Section 1.05 Procedures at Closing......................................31
<CAPTION>
ARTICLE 2
CONDITIONS TO CLOSING
<S> <C> <C>
Section 2.01 Conditions to Buyer's Obligations.........................32
Section 2.02 Conditions to Seller's and KGF's
Obligations...............................................37
<CAPTION>
ARTICLE 3
COVENANTS PRIOR TO CLOSING
<S> <C> <C>
Section 3.01 Affirmative Covenants of Seller and KGF...................40
Section 3.02 Negative Covenants of Seller and KGF......................41
Section 3.03 Covenant of Buyer.........................................42
<CAPTION>
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER AND KGF
<S> <C> <C>
Section 4.01 Corporate Organization and Power/
Subsidiaries..............................................43
Section 4.02 Authority; Authorization..................................44
Section 4.03 No Violation..............................................45
Section 4.04 Financial Statements......................................45
Section 4.05 No Undisclosed Liabilities................................46
Section 4.06 No Material Adverse Change................................46
Section 4.07 Absence of Certain Changes................................46
Section 4.08 Directors, Officers and Bank Accounts.....................48
Section 4.09 Accounts Receivable.......................................48
Section 4.10 Inventory.................................................48
Section 4.11 Insurance.................................................49
Section 4.12 Title to Purchased Assets.................................49
Section 4.13 Real Estate...............................................50
Section 4.14 Real Estate Leases........................................51
Section 4.15 Personal Property Leases..................................52
Section 4.16 Motor Vehicles............................................52
Section 4.17 Condition of Assets.......................................53
Section 4.18 Intellectual Property.....................................53
</TABLE>
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<TABLE>
Page
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<S> <C> <C>
Section 4.19 Material Contracts...............................54
Section 4.20 Employees........................................56
Section 4.21 Taxes............................................58
Section 4.22 Litigation.......................................59
Section 4.23 Compliance with Law, and Licenses and
Permits and Consents.............................60
Section 4.24 Environmental Matters............................61
Section 4.25 Adequacy of the Purchased Assets;
Location of Assets...............................61
Section 4.26 Adverse Restrictions.............................62
Section 4.27 Notice Re Business...............................62
Section 4.28 Complaints.......................................62
<CAPTION>
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
<S> <C> <C>
Section 5.01 Corporate Organization and Power.................62
Section 5.02 Authorization....................................63
Section 5.03 No Violation.....................................63
Section 5.04 Litigation.......................................63
<CAPTION>
ARTICLE 6
TERMINATION
<S> <C> <C>
Section 6.01 Termination......................................64
Section 6.02 Effect of Termination............................64
Section 6.03 Confidentiality..................................64
<CAPTION>
ARTICLE 7
ADDITIONAL AGREEMENTS
<S> <C> <C>
Section 7.01 Survival.........................................65
Section 7.02 Indemnification..................................65
Section 7.03 Hiring Employees of the Business.................68
Section 7.04 Continuing Assistance............................72
Section 7.05 Expenses and Transfer Taxes......................73
Section 7.06 Press Releases and Announcements.................74
Section 7.07 Retention and Access to Records..................74
Section 7.08 Non-Competition..................................75
Section 7.09 Bulk Transfer Laws...............................77
Section 7.10 Allocation of Purchase Price
and Assumed Liabilities..........................78
Section 7.11 Third Party Beneficiaries........................79
Section 7.12 Trademark License................................79
</TABLE>
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<PAGE> 15
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
Section 7.13 Non-Assignable Undertakings and Rights..............79
Section 7.14 Collection of Accounts Receivable...................80
Section 7.15 Tax Elections.......................................80
Section 7.16 Repayment of Inter-Company Loan.....................80
Section 7.17 New York Gains Tax..................................81
Section 7.18 Environmental Remediation...........................81
<CAPTION>
ARTICLE 8
MISCELLANEOUS
<S> <C> <C>
Section 8.01 Amendment and Waiver................................82
Section 8.02 Notices.............................................83
Section 8.03 Assignment..........................................83
Section 8.04 Severability........................................84
Section 8.05 No Strict Construction..............................84
Section 8.06 Captions............................................84
Section 8.07 Complete Agreement..................................84
Section 8.08 Governing Laws/Jurisdiction.........................85
Section 8.09 Counterparts........................................85
Section 8.10 Investment Advisors.................................86
Section 8.11 Disclaimer Regarding Projections....................86
Section 8.12 HSR Act Compliance..................................87
Section 8.13 Waiver of Trial by Jury.............................87
Section 8.14 Representation by Counsel, Interpretation...........88
Section 8.15 Attachments and Schedules...........................88
Section 8.16 Continuing Purchasing Relationship..................88
</TABLE>
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<PAGE> 16
LIST OF ATTACHMENTS AND SCHEDULES
---------------------------------
<TABLE>
<S> <C>
Attachment A Form of Legal Opinion of Seller's Counsel
Attachment B-1 Patent and Technology Agreement
Attachment B-2 Patent and Technology Agreement
Attachment C Transition Agreement
Attachment D Co-Pack Agreement
Attachment E Form of Legal Opinion of Buyer
Attachment F Trademark License Agreement
Schedule 4.01 Birds Eye Mexico
Schedule 4.04 Financial Statements
Schedule 4.07 Absence of Certain Developments
Schedule 4.08 Directors, officers and Bank Accounts
Schedule 4.10 Inventory
Schedule 4.11 Insurance
Schedule 4.13 Owned Real Estate
Schedule 4.14 Real Estate Leases
Schedule 4.15 Personal Property Leases
Schedule 4.16 Motor Vehicles
Schedule 4.17 Condition of Assets
Schedule 4.18 Intellectual Property
Schedule 4.19 Material Contracts
Schedule 4.20 Employees
Schedule 4.22 Litigation
Schedule 4.23 Compliance with Law, and Licenses and
Permits and Consents
Schedule 4.24 Environmental Matters
Schedule 4.25 Adequacy of the Purchased Assets
</TABLE>
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<PAGE> 17
ASSET PURCHASE AGREEMENT
------------------------
THIS AGREEMENT is entered into as of this 30th day of
October 1993 by and among Kraft General Foods, Inc., a Delaware
corporation ("KGF"), The All American Gourmet Company, a Delaware
corporation ("Seller"), and Dean Foods Company ("Buyer").
Subject to the terms and conditions set forth herein,
Buyer desires to purchase from Seller (or from KGF with respect
to the assets for which legal title is held in the name of KGF)
(subject to certain associated liabilities) and Seller and KGF
desire to sell to Buyer (subject to Buyer assuming such
liabilities) the business, assets and properties, operating as a
going concern, which constitute Seller's Birds Eye frozen
vegetable business, including frozen fruit products sold under
the Birds Eye trademark, but excluding Seller's foodservice juice
business sold under the Birds Eye trademark (the "Business").
The term "Business" includes the business conducted by Birds Eye
de Mexico, S.A. de C.V., a Mexican corporation ("Birds Eye
Mexico"); but it is understood that no assets or liabilities of
Birds Eye Mexico are being purchased or sold directly.
The parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
SECTION 1.01 BASIC TRANSACTION.
(a) PURCHASED ASSETS. Except as otherwise provided
below, on and subject to the terms established in this Agreement,
Buyer hereby agrees to purchase from Seller (or from KGF with
respect to such assets for which legal title is held ia the name
of KGF), and Seller and KGF hereby agree to sell, convey, assign,
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<PAGE> 18
transfer, and deliver on the Closing Date (as defined in Section
1.04 below) to Buyer all of the following properties, assets and
rights owned by Seller or KGF as well as all other properties,
assets, and rights of any kind owned by Seller or KGF, which are
used primarily in or primarily related to the Business (the
"Purchased Assets"):
(i) All notes and accounts receivable of the Business;
(ii) All of the issued and outstanding capital stock of
Birds Eye Mexico;
(iii) All Owned Real Estate (as defined in Section
4.13);
(iv) All rights existing under leases and licenses (of
real and personal property, whether tangible or intangible)
used primarily in the Business, including leasehold
improvements, contracts, licenses, permits, distribution
arrangements, sales and purchase agreements, and other
agreements and business arrangements used primarily in or
primarily related to the Business, including without
limitation, all leases, contracts and agreements described
in the Schedules to this Agreement;
(v) All vehicles, fixtures, machinery and equipment
used primarily in the Business (but not including vehicles,
machinery and equipment covered by leases) and furniture
located in any plant, warehouse, office or other space
leased, owned or occupied primarily by the Business;
(vi) All office supplies, production supplies, spare
parts (other than dedicated spare parts and an appropriate
portion of multi-use spare parts for the Waseca, Minnesota
Cool Whip production line), other miscellaneous supplies,
and other tangible property of any kind, located in any
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<PAGE> 19
plant, office or other space leased, owned or occupied by
the Business and used primarily in the Business;
(vii) All raw materials, work-in-process, finished
goods, packaging and other inventories, located in any
plant, office or other space leased, owned or occupied by
the Business and used primarily in the Business, but not
including the raw materials which are held from time to time
by the Business for other businesses of Seller;
(viii) All know-how, trade secrets, processes and
confidential information (including, without limitation,
ideas, compositions, inventions, whether patentable or
unpatentable and whether or not reduced to practice,
manufacturing and production techniques, research and
development information, designs, plans, proposals, and
copyrightable works) used exclusively in the Business and
the right to use perpetually and on a royalty-free basis all
other know-how, trade secrets, processes and confidential
information used in the Business;
(ix) The right to use perpetually and on a royalty-free
basis the patents and technology set forth on Schedule 4.18
which are marked as being used in the Business and also used
in other KGF businesses;
(x) All patents and trademarks (including, without
limitation, patent applications, patent disclosures,
invention disclosures, trade names and logos, and
applications for registration thereof) set forth on Schedule
4.18 which are marked as being included in the Purchased
Assets and all rights therein; all registered and
unregistered copyrights, service marks and trade dress used
primarily in the Business; and all registrations for, and
applications for registration of, any of the foregoing;
together with all rights thereunder, remedies against
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<PAGE> 20
infringement thereof, and rights to protection of interests
therein and rights to use all of the foregoing forever; and
all goodwill associated therewith and with the business and
all going concern value of the Business;
(xi) All formulae (secret or otherwise), data,
engineering, technical and shop drawings, blue prints, art
work, and specifications used primarily in the Business and
the right to use all other formulae (secret or otherwise),
data, engineering, technical and shop drawings, blue prints,
art work, and specifications used in the Business;
(xii) All deposits, prepayments, causes of action, chose
in action, rights of recovery, rights of set off, rights of
recoupment, rebates, refunds and claims of the Business (but
not claims for refunds of taxes relating to periods prior to
the Closing Date or claims relating to Excluded Assets or
Excluded Liabilities (as such terms are defined below));
(xiii) All rights to receive mail and other
communications relating primarily to the Business except
with respect to the Excluded Assets or the Excluded
Liabilities;
(xiv) All business records, tangible data, documents,
computer software, personal computer software models,
management information systems, files, customer and supplier
lists and information, operations or maintenance manuals,
personnel records, invoices, credit records and sales
literature, creative materials, studies and reports used
primarily in or related primarily to the Business;
(xv) All of Seller's right, title, and interest in and
to all licenses and permits of the Business;
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<PAGE> 21
(xvi) Seller's and KGF's rights to the name "Birds Eye";
and
(xvii) All other property not referred to above which is
reflected on the Latest Balance Sheet (as defined in Section
4.04) or acquired by the Business thereafter, except for
such property which has been sold or otherwise disposed of
in the ordinary course of business.
The Purchased Assets shall be conveyed free and clear of all
liabilities, obligations, liens and encumbrances excepting only
those liabilities and obligations which are expressly to be
assumed by Buyer hereunder and those liabilities, obligations,
liens and encumbrances securing the same which are expressly
permitted by the terms hereof.
(b) EXCLUDED ASSETS. Notwithstanding the foregoing,
the parties agree that the following assets of Seller or KGF are
expressly excluded from this purchase and sale and are not
included in the Purchased Assets (the "Excluded Assets"):
(i) Seller's and KGF's rights under or pursuant to
this Agreement and the other agreements with Buyer
contemplated hereby or under any side agreement with Buyer
hereafter entered into;
(ii) Seller's and KGFis minute books and stockholder
and stock transfer records and similar corporate records;
(iii) Any of Seller's or KGF's cash and cash
equivalents;
(iv) Insurance policies and claims thereunder, claims
for and rights to receive tax refunds, all tax returns of
the Business and any notes, worksheets, files or documents
related thereto;
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<PAGE> 22
(v) The Kraft, Kraft General Foods and The All
American Gourmet trademarks;
(vi) Any property of any description whatsoever located
at Seller's headquarters in Orange, California (except for
the "Least Cost Sourcing Software Program");
(vii) All general research and development work except
for (i) specific research and development work related
exclusively to the Business and (ii) know-how, trade
secrets, processes and confidential information included in
the Purchased Assets pursuant to Section 1.01(a)(viii);
(viii) All claims relating to Excluded Assets or Excluded
Liabilities;
(ix) The equipment which constitutes the Cool Whip
product line located at the Waseca, Minnesota plant,
including all dedicated and an appropriate portion of multi-
use spare parts, and the equipment which constitutes the
Quick Stir line located at the Fulton, New York plant, all
of which equipment shall be listed and described in Schedule
1.01(b)(ix) which Seller shall deliver to Buyer within ten
(10) business days of the date of this Agreement;
(x) Any deposits or prepayments the benefits of which
will not be directly realized by Buyer subsequent to the
Closing (including without limitation prepayments of
insurance premiums); and
(xi) Any other asset of Seller or KGF not to be
purchased by Buyer under Section 1.01(a) hereof.
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<PAGE> 23
SECTION 1.02 CONSIDERATION FOR PURCHASED ASSETS.
(a) AGGREGATE CONSIDERATION. At Closing (as defined
in Section 1.04), Buyer will pay to Seller $140,000,000.00;
increased dollar for dollar to the extent the amount set forth on
the Estimated Net Assets Statement (as defined in Section 1.02
(b)) exceeds Net Assets (as defined in Section 1.02(f)) as
reflected in the Latest Balance Sheet (as defined in Section
4.04), or decreased dollar for dollar to the extent the amount
set forth on the Estimated Net Assets Statement is less than Net
Assets reflected in the Latest Balance Sheet (the "Initial
Purchase Price"). The Initial Purchase Price will be paid by
wire transfer or equivalent means, in immediately available funds
in the United States as Seller shall direct to Buyer. The
Initial Purchase Price shall be adjusted as set forth in (c)
below. The Initial Purchase Price, as so adjusted, is referred
to as the "Purchase Price".
(b) DELIVERY OF ESTIMATED CLOSING BALANCE SHEET.
Seller shall deliver to Buyer no later than three business days
prior to the Closing Date a statement of Seller's good faith
estimate of the Net Assets at Closing (the "Estimated Net Assets
Statement"), accompanied by the calculation of the amount of the
Initial Purchase Price. The Estimated Net Assets Statement shall
be prepared by Seller on the basis set forth on Schedule 1.02(d).
(c) ADJUSTMENT OF INITIAL PURCHASE PRICE. The Initial
Purchase Price shall be (a) increased dollar for dollar to the
extent Net Assets reflected in the Adjusted Closing Date Balance
Sheet (as defined in Section 1.02(d)) exceeds Net Assets
reflected in the Estimated Net Assets Statement, or (b) decreased
dollar for dollar to the extent Net Assets reflected in the
Adjusted Closing Date Balance Sheet are less than Net Assets
reflected in the Estimated Net Assets Statement. Any adjustment
to the Initial Purchase Price made pursuant to this Section
1.02(c) shall bear simple interest from and including the Closing
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<PAGE> 24
Date to, but not including, the date of payment at 6% per annum,
based on a 365-day year, and shall, within five business days
after the Adjusted Closing Date Balance Sheet is agreed to by
Buyer and Seller or any remaining disputed items are ultimately
determined by the Neutral Auditors (as defined in Section
1.02(e)), be paid by wire transfer in immediately available funds
to the account in the United States specified by the party to
whom such payment is owed.
(d) PROCEDURES FOR DETERMINATION OF THE CLOSING DATE
BALANCE SHEET. As soon as practicable, but in no event later
than 60 days following the Closing Date, Seller shall prepare a
balance sheet of the Business as of the close of business on the
day prior to the Closing Date, and not later than 75 days
following the Closing Date Seller shall deliver the same to Buyer
together with a report thereon of Seller's independent public
accountants based on an examination conducted by such accountants
in accordance with generally accepted auditing standards (the
"Closing Date Balance Sheet"). The Closing Date Balance Sheet
shall reflect only Purchased Assets and Assumed Liabilities (as
defined in Section 1.03(a)) and the assets and liabilities of
Birds Eye Mexico, and shall fairly present the financial position
of the Business in accordance with United States generally
accepted accounting principles consistently applied other than
(and to the same extent) as set forth on Schedule 1.02(d).
Seller shall permit Buyer and Buyer's authorized
representatives to participate in, and shall provide Buyer with
reasonable advance notice of, all physical counts of inventories
undertaken by Seller and/or its independent public accountants in
connection with the preparation of the Closing Date Balance
Sheet. In addition, Seller shall provide Buyer with access to
final work papers of Seller and Seller's accountants used in the
preparation of the Closing Date Balance Sheet. During the
preparation of the Closing Date Balance Sheet and such
examination and the period of any dispute within the
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<PAGE> 25
contemplation of this Section 1.02, Buyer shall (i) provide
Seller and Seller's authorized representatives with full access
during normal business hours to the books, records (including
work papers, schedules, memoranda and other documents),
facilities and employees of the Business,, (ii) provide Seller as
promptly as practicable after the Closing Date (but in no event
later than 15 days after the Closing Date) with normal year-end
closing financial information for the Business for the period
ending on the date prior to the Closing Date, and (iii) cooperate
fully with Seller and Seller's authorized representatives,
including the provision on a timely basis of all information
necessary in preparing the Closing Date Balance Sheet.
(e) DELIVERY OF THE CLOSING DATE BALANCE SHEET;
DISPUTE RESOLUTION. Seller shall deliver to Buyer a copy of the
Closing Date Balance Sheet and the report thereon promptly after
they have both been prepared. After receipt, Buyer shall have 60
days to review the Closing Date Balance Sheet. Unless Buyer
delivers written notice to Seller on or prior to the 60th day
after Buyer's receipt of the Closing Date Balance Sheet
specifying in reasonable detail the characterization and amount
of all disputed items and the basis therefor, Buyer shall be
deemed to have accepted and agreed to the Closing Date Balance
Sheet. If Buyer so notifies Seller of its objection to the
Closing Date Balance Sheet, Buyer and Seller shall, within 30
days following such notice (the "Resolution Period"), attempt to
resolve their differences and any resolution by them as to any
disputed amounts shall be final, binding and conclusive.
If at the conclusion of the Resolution Period there
remain items in dispute, then all disputed items shall be
submitted to a firm of nationally recognized independent public
accountants (the "Neutral Auditors") selected by Seller and Buyer
within 10 days after the expiration of the Resolution Period. If
Seller and Buyer are unable to agree on the Neutral Auditors, a
"big six" accounting firm will be selected as the Neutral
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<PAGE> 26
Auditors by lot after eliminating any such firm which performs
audit services for Buyer or Seller or any affiliate of either.
All fees and expenses relating to the work, if any, to be
performed by the Neutral Auditors shall be borne equally by
Seller and Buyer. The Neutral Auditors shall act as an
arbitrator to determine, based solely on presentations by Seller
and Buyer, and not by independent review, only those issues still
in dispute. The Neutral Auditors' determination shall be made
within 30 days of their selection, shall be set forth in a
written statement delivered to Seller and Buyer and shall be
final, binding and conclusive. The term "Adjusted Closing Date
Balance Sheet," as herein used, shall mean the definitive Closing
Date Balance Sheet agreed to by Buyer and Seller in accordance
with this Section 1.02(e) or the definitive Closing Date Balance
Sheet resulting from the determinations made by the Neutral
Auditors in accordance with this Section 1.02(e) (in addition to
those items theretofore agreed to by Seller and Buyer).
(f) DEFINITION OF NET ASSETS. Net Assets shall mean
the Purchased Assets (other than the stock of Birds Eye Mexico)
plus the assets of Birds Eye Mexico, less the Assumed Liabilities
and the liabilities of Birds Eye Mexico (which shall not include
any inter-company debt other than any debt of Birds Eye Mexico to
KGFM, as described in Section 7.16).
SECTION 1.03 ASSUMPTION OF LIABILITIES.
(a) LIABILITIES ASSUMED. Subject to the conditions
specified in this Agreement, and as additional consideration for
the sale and transfer of the Purchased Assets, Buyer will assume
on the Closing Date and pay, discharge or perform when due the
following liabilities and obligations, whether fixed, absolute or
contingent, matured or unmatured, of Seller with respect to the
Business as they exist on the Closing Date, including any claims
with respect thereto (hereinafter referred to as the "Assumed
Liabilities"):
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<PAGE> 27
(i) Seller's and KGF's liabilities and obligations
reflected on the Latest Balance Sheet and liabilities and
obligations (other than inter-company liabilities and
obligations) incurred thereafter in the ordinary course of
business (other than liabilities or obligations resulting
from or arising out of any breach of contract, tort,
infringement or violation of law) to the extent not paid
prior to the Closing Date;
(ii) Seller's and KGF's liabilities and obligations
under the contracts and commitments relating to the Business
listed on the Schedules to this Agreement and under
contracts and commitments which are not required to be
listed thereon or herein because of materiality limitations
set forth herein, in each case to the extent such contracts
and commitments are assigned to Buyer or the benefits
thereof are obtained for Buyer as provided in Section 7.13
(other than liabilities or obligations resulting from or
arising out of any breach thereof prior to the Closing);
(iii) The liabilities and obligations of the Business
disclosed on the Schedules, including any related
litigation, claim or investigation, and liabilities and
obligations which are not required to be disclosed in the
Schedules because of materiality limitations set forth
herein;
(iv) All liabilities and obligations associated with or
incurred in connection with the Transferred Employees (as
defined in Section 7.03 of this Agreement) assumed by Buyer
pursuant to Section 7.03 hereof;
(v) All obligations and liabilities of Seller or KGF
associated with owning, operating and maintaining the Owned
Real Estate and with occupying the Leased Real Estate, other
than obligations and liabilities with respect to real estate
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<PAGE> 28
taxes that relate to periods prior to Closing (except real
estate taxes specifically allocated to, prorated to or
assumed by Buyer under this Agreement), including, without
limitation, all liabilities and obligations associated with
the presence, storage, escape, seepage, leakage, disposal,
discharge or release of waste, hazardous waste or any other
substance, matter or materials on or from the Owned Real
Estate and the Leased Real Estate;
(vi) All liabilities and obligations for all trade
promotion programs (including, without limitation, trade
allowance programs), non-coupon consumer promotions
(including, without limitation, sweepstakes), and other
marketing programs related to the Business regardless of
when incurred (other than liabilities or obligations arising
out of violation of law);
(vii) All liabilities and obligations for all consumer
coupons for products of the Business redeemed or submitted
for reimbursement by coupon redemption agents on or after
the Closing, regardless of when issued;
(viii) All liabilities and obligations for all consumer
or governmental complaints, trade complaints, product
liability claims, written product guarantees set forth on
the packaging therefor and returned unsalable merchandise;
and
(ix) All workers' compensation liabilities and
obligations related to injuries to Transferred Employees
assumed by Buyer pursuant to Section 7.03 of the Agreement.
(b) EXCLUDED LIABILITIES. Buyer will not assume or be
liable for any of the following liabilities or obligations
(herein referred to as "Excluded Liabilities") and,
notwithstanding any implication to the contrary above, none of
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<PAGE> 29
the following liabilities or obligations are "Assumed
Liabilities" for purposes of this Agreement:
(i) Any of Seller's or KGF's liabilities or
obligations under this Agreement and the other agreements
with Buyer contemplated hereby or under any side agreement
with Buyer hereafter entered into;
(ii) Any of Seller's or KGF's or Birds Eye Mexico's
liabilities or obligations for expenses or fees incident to
or arising out of the negotiation, preparation, approval, or
authorization of this Agreement or the consummation (or
preparation for the consummation) of the transactions
contemplated hereby, including without limitation,
attorneys' and accountants' fees;
(iii) Any liability or obligation of Seller or KGF with
respect to federal, state, local or foreign taxes; and any
liability for interest, penalties or additions to any of
such taxes (except taxes specifically allocated to, prorated
to or assumed by Buyer under this Agreement);
(iv) Except as otherwise expressly provided elsewhere
in Section 7.03, any of Seller's or KGF's obligations or
liabilities which relate to any bonus, retirement, retiree,
disability, pension, profit sharing, stock bonus, thrift,
incentive, deferred or other compensation or welfare benefit
plan, program or arrangement;
(v) Any of Seller's or KGF's liabilities or
obligations to indemnify any person by reason of the fact
that such person was a director, officer, employee or agent
of Seller, KGF or any affiliate of either or was serving at
the request of any such entity as a partner, trustee,
director, officer, employee or agent of another entity
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<PAGE> 30
(whether pursuant to stature, charter document, bylaw,
agreement or otherwise);
(vi) Any liability or obligation of Seller or KGF not
directly attributable to the Business imposed on it jointly
and severally on account of being an affiliate (including
without limitation a member of an Affiliated Group within
the meaning of Section 1504 of the Code (as hereinafter
defined)) of another entity;
(vii) Any liability or obligation of Seller or KGF which
relates to the Excluded Assets or to assets of the Business
excluded from the Purchased Assets because they do not
relate exclusively or primarily to the Business;
(viii) Any liability or obligation of Seller or KGF
resulting from or arising out of the matters described in
schedule 4.22 or from any breach of contract, tort,
infringement or misappropriation or violation of law (other
than for violations of environmental laws which are the
subject of Section 4.24), or any allegation thereof, except
to the extent reflected in the Latest Balance Sheet; and
(ix) Any other liability or obligation of Seller or KGF
not assumed by Buyer under Section 1.03(a) hereof.
SECTION 1.04 THE CLOSING.
The closing of the purchase and sale of the Purchased
Assets, the assumption of the Assumed Liabilities and the other
transactions contemplated by this Agreement (the "Closing") will
take place at the Northfield, Illinois offices of KGF, at 12:01
a.m. local time on January 1, 1994 or at such other place or on
such other date as is mutually agreeable to the parties;
provided, however, that Seller may elect to move the closing date
and time to December 27, 1993 at 9:00 a.m. by written notice to
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<PAGE> 31
Buyer no later than December 1, 1993 and provided further,
however, that if on the date on which Closing is scheduled any of
the conditions to Closing set forth in this Agreement have not
been satisfied or waived by the party entitled to the benefit of
such condition, the Closing will take place on the third business
day after all conditions have been satisfied or waived. The date
and time of the Closing are herein referred to as the "Closing
Date."
SECTION 1.05 PROCEDURES AT CLOSING. At the Closing, the
parties shall take the following steps in the order listed below
(provided, however, that upon their completion all such steps
shall be deemed to have occurred simultaneously):
(a) Seller and KGF shall deliver to Buyer evidence, in
such form as is reasonably satisfactory to Buyer, that each of
the conditions to the obligation of Buyer to consummate the
transactions contemplated by this Agreement has been satisfied.
(b) Buyer shall deliver to Seller and KGF evidence, in
such form as is reasonably satisfactory to Seller and KGF, that
each of the conditions to the obligations of Seller and KGF to
consummate the transactions contemplated by this Agreement has
been satisfied.
(c) Seller and KGF shall deliver to Buyer the
deliveries required pursuant to Section 2.01(h).
(d) Buyer shall deliver to Seller the deliveries
required pursuant to Section 2.02(g).
(e) Buyer shall deliver the Initial Purchase Price to
Seller, by wire transfer or equivalent means, in immediately
available funds in the United States as Seller shall have
directed to Buyer.
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<PAGE> 32
(f) Buyer, Seller and KGF shall execute and deliver a
cross receipt acknowledging receipt from the appropriate other
parties of the respective deliveries.
ARTICLE 2
CONDITIONS TO CLOSING
SECTION 2.01 CONDITIONS TO BUYER'S OBLIGATIONS. The
obligation of Buyer to consummate the transactions contemplated
by this Agreement are subject to the satisfaction of the
following conditions on or before the Closing Date:
(a) The representations and warranties set forth in
Article 4 hereof, both individually and considered as a whole,
shall have been true and correct in all respects as of the date
hereof and such representations and warranties shall be true and
correct in all respects at and as of the Closing Date, except, in
each case, where the failure to be true or correct would not have
a material adverse effect (a "MAE") on the Business;
(b) Seller and KGF will have performed in all material
respects all of the covenants and agreements required to be
performed by them prior to the Closing under this Agreement;
(c) Except for such changes that are attributable to
the public announcement of or third party knowledge with respect
to the transaction contemplated by this Agreement, there will
have been no material adverse change in the financial condition,
operating results, assets, or liabilities or employee, customer,
or supplier relations of the Business (exclusive of the Excluded
Assets and Excluded Liabilities), and there will have been no
casualty loss or damage to the Purchased Assets which is material
to the Purchased Assets taken as a whole (whether or not covered
by insurance);
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<PAGE> 33
(d) The consents, approvals, or other actions by third
parties that are required for the consummation of the
transactions contemplated hereby and are indicated in Schedule
4.23 as being a condition to Closing for Buyer will have been
obtained;
(e) The waiting period required pursuant to the Hart-
Scott-Rodino Antitrust Improvements Act of 1976 (as amended) and
the rules or regulations promulgated thereunder (the "HSR Act"),
will have expired or have been terminated;
(f) No action, suit or proceeding before any court or
governmental or administrative body and no investigation
initiated by a governmental or administrative body shall be
pending or overtly threatened wherein an unfavorable injunction,
judgment, order, decree, ruling or charge is reasonably likely to
occur that would (i) prevent consummation of any of the
transactions contemplated by this Agreement, (ii) cause any of
the transactions contemplated by this Agreement to be rescinded
following consummation, (iii) materially adversely affect the
right of Buyer to own the Purchased Assets, to operate the
Business or to control Birds Eye Mexico, or (iv) materially
adversely affect the right of Birds Eye Mexico to own its assets
and to operate its business (and no such injunction, judgment,
order, decree, ruling or charge shall be in effect);
(g) Buyer will have received from KGF's Associate
General Counsel (or, to the extent the matters therein relate to
Birds Eye Mexico or the ownership thereof, KGF's Mexican
counsel), an opinion with respect to the matters set forth in
Attachment A attached hereto, addressed to Buyer, dated the
Closing Date;
(h) On the Closing Date, Seller and KGF will have
delivered to Buyer the following:
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<PAGE> 34
(i) A certificate dated the Closing Date executed by a
Vice President of Seller and a Vice President of KGF,
stating that, to the best of such persons' knowledge after
due inquiry , the preconditions specified in subsections (a)
and (b) hereof have been satisfied;
(ii) Certified copies of the resolutions duly adopted
by Seller's and by KGF's board of directors,, authorizing the
execution, delivery and performance of this Agreement;
(iii) Good standing certificates for Seller and for KGF
from each's state of organization, dated not earlier than 15
days prior to the Closing Date;
(iv) Copies of all third party and governmental
consents (or other evidence reasonably satisfactory to
Buyer) that Seller or KGF is required by subsection (d) to
obtain in order to effect the transactions contemplated by
this Agreement;
(v) Certificates representing all of the outstanding
shares in Birds Eye Mexico duly endorsed for transfer to
Buyer;
(vi) A resignation from each director of Birds Eye
Mexico;
(vii) Such instruments of sale, transfer and assignment,
and such endorsements, as are required in order to transfer
to Buyer Seller's and KGF's right, title and interest in and
to the Purchased Assets, including without limitation
Seller's and KGF's rights under contracts and leases
included in the Purchased Assets with respect to which
consents are obtained;
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<PAGE> 35
(viii) Evidence of the absence of liens, claims or
encumbrances on the Purchased Assets (other than the Owned
Real Estate) and the assets of Birds Eye Mexico;
(ix) A certificate pursuant to Treasury Regulation
Section 1.1445-2 (b)(2) from Seller and KGF, under penalties
of perjury, stating that neither Seller nor KGF is a foreign
corporation, foreign partnership, foreign trust or foreign
estate and listing Seller's and KGF's U.S. Employer
Identification Number and address of its principal business
office;
(x) A patent and technology license agreement from KGF
to Buyer in the form of the agreement attached hereto as
Attachment B-1 and a patent and technology license agreement
from Buyer to Seller and KGF in the form of the agreement
attached hereto as Attachment B-2 (collectively referred to
as the "Patent and Technology Agreements");
(xi) A transition services agreement between Seller,
KGF and Buyer in the form of the agreement attached hereto
as Attachment C (the "Transition Services Agreement");
(xii) A Co-Pack Agreement for the production of Cool-
Whip between KGF and Buyer in the form of the agreement
attached hereto as Attachment D (the "Co-Pack Agreement");
(xiii) Certified copies of resolutions duly adopted by
the shareholders of Birds Eye Mexico at a duly authorized
meeting authorizing the sale of its stock to Buyer; and
(xiv) Such other documents as Buyer may reasonably
request in connection with the transactions contemplated
hereby.
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<PAGE> 36
(i) Buyer shall have received commitments for title
insurance from Chicago Title & Trust Company committing to
insure, subject only to the items identified in Schedule 4.13 and
ad valorem and other taxes which, if unpaid, would result in a
lien upon the subject property, Buyer's interest in the Owned
Real Estate and, with respect to the Birds Eye Mexico Real Estate
(as such term is defined in Section 4.13) an opinion of KGF's
Mexican counsel as to good and marketable title thereof and a
Certificate of Freedom of Laws issued by the Office of Public
Registry of Celaya.
(j) Buyer shall have received reports, obtained by
Seller from environmental consultants reasonably acceptable to
Buyer (the "Environmental Consultant"), of comprehensive Phase I
environmental reviews of each parcel of Owned Real Estate, Birds
Eye Real Estate and Leased Real Estate in which Seller or Birds
Eye Mexico is the sole tenant conducted by such consultants not
earlier than two months prior to the Closing Date, and such
reports (collectively, the "Phase I Environmental Report") shall
not indicate a reasonable probability of any environmental
liability or compliance cost related to any of such parcels which
is not reflected on Schedule 4.24 or for which Seller has not
assumed responsibility for remediation pursuant to Section 7.18;
(k) Buyer shall have received a certified survey of
the Owned Real Estate, dated as of a recent date, prepared by a
registered land surveyor, and including legal descriptions and
certifications, in form reasonably satisfactory to Buyer's
counsel, showing the boundary lines and location of the Owned
Real Estate and the location of all buildings and improvements
thereon in compliance with the standards of the American Land
Title Association and the title insurer's requirements for
issuance of its extended coverage endorsement, subject only to
the items identified in Schedule 4.13, and Buyer shall have
received corresponding evidence with respect to the Birds Eye
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<PAGE> 37
Mexico Real Estate as is customarily received in real estate
transactions in Mexico;
(l) Seller and Birds Eye Mexico shall have terminated
the Assembly (Maquils) and Technical Assistance Agreement between
them effective as of the Closing Date; and
(m) All proceedings to be taken by Seller and KGF in
connection with the consummation of the transactions contemplated
hereby and all documents required to be delivered by Seller and
KGF in connection with the transactions contemplated hereby will
be reasonably satisfactory in form and substance to Buyer.
Any condition specified in this Section 2.01 may be
waived by Buyer, provided that no such waiver will be effective
unless it is set forth in a writing executed by Buyer. Unless
expressly provided therein to the contrary, any such waiver by
Buyer shall be solely for the purposes of this Section 2.01 and
shall not constitute a waiver for purposes of any other Section
of this Agreement, including without limitation Section 7.02.
SECTION 2.02 CONDITIONS TO SELLER'S AND KGF'S OBLIGATIONS.
The obligation of Seller and KGF to consummate the transactions
contemplated by this Agreement is subject to the satisfaction of
the following conditions on or before the Closing Date:
(a) The representations and warranties set forth in
Article 5 hereof, both individually and considered as a whole,
shall have been true and correct in all respects as of the date
hereof and such representations and warranties shall be true and
correct in all respects at and as of the Closing Date except, in
each case, where the failure to be true or correct would not have
a MAE on the Business;
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<PAGE> 38
(b) Buyer will have performed in all material respects
all the covenants and agreements required to be performed by it
prior to the Closing under this Agreement;
(c) The consents, approvals, or actions by third
parties that are required for consummation of the transactions
contemplated hereby and are indicated in Schedule 4.23 as being a
condition to Closing for Seller and KGF will have been obtained;
(d) The waiting period required pursuant to the HSR
Act will have expired or have been terminated;
(e) No action or proceeding before any court or
governmental or administrative body initiated by a governmental
or administrative entity will be pending wherein a judgment,
decree or order is likely to be issued that would prevent the
consummation of the transactions contemplated by this Agreement;
(f) Seller and KGF will have received from Buyer's
Vice President, Secretary and General Counsel an opinion with
respect to the matters set forth in Attachment E attached hereto,
addressed to Seller dated the Closing Date;
(g) On the Closing Date, Buyer will have delivered to
Seller and KGF the following:
(i) An officers' certificate executed by the President
or a Vice President of Buyer dated the Closing Date,
stating, to the best of his or her knowledge after due
inquiry that the preconditions specified in subsections (a)
and (b) hereof have been satisfied;
(ii) Certified copies of the resolutions adopted by
Buyer's board of directors authorizing the execution,
delivery and performance of this Agreement and the other
agreements contemplated hereby;
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(iii) A good standing certificate of Buyer from its
state of organization, dated not earlier than 15 days prior
to the Closing Date;
(iv) Buyer will have executed such agreements or
instruments as are reasonably necessary to evidence Buyer's
assumption of the Assumed Liabilities;
(v) The Patent and Technology Agreements;
(vi) The Co-Pack Agreement;
(vii) A trademark license agreement from Buyer to KGF in
the form of the agreement attached hereto as Attachment F;
(viii) A Sales and Use Tax Certificate; and
(ix) Such other documents as Seller or KGF may
reasonably request in connection with the transactions
contemplated hereby.
(h) All proceedings to be taken by Buyer in connection
with the consummation of the transactions contemplated hereby and
all documents required to be delivered by Buyer in connection
with the transactions contemplated hereby will be reasonably
satisfactory in form and substance to Seller.
Any condition specified in this Section 2.02 may be
waived by Seller, provided that no such waiver will be effective
unless it is set forth in a writing executed by Seller.
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ARTICLE 3
COVENANTS PRIOR TO CLOSING
SECTION 3.01 AFFIRMATIVE COVENANTS OF SELLER AND KGF.
Prior to the Closing, unless Buyer has otherwise consented,
Seller and KGF will take the following actions, and will cause
Birds Eye Mexico to take the following actions, with respect to
the Business:
(a) Continue to conduct all operations of the Business
at all locations at which such operations are presently
conducted, and only in the ordinary and usual course of business;
(b) Use reasonable commercial efforts to retain its
employees and preserve its present business relationships with
customers and suppliers, and continue to compensate its employees
consistent with past custom and practice;
(c) Maintain the tangible Purchased Assets and
tangible assets of Birds Eye Mexico in customary repair, order
and condition and maintain the existence of and protect the
intangible Purchased Assets and the intangible assets of Birds
Eye Mexico;
(d) Maintain the books and accounts of the Business in
accordance with the principles used in the preparation of the
financial statements referred to in Section 4.04 hereof;
(e) Maintain the existence of and protect the
trademarks, service marks, trade names, corporate names,
copyrights, trade secrets, licenses, permits and other
proprietary rights of the Business;
(f) Comply in all material respects with applicable
legal requirements and contractual obligations;
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(g) Permit Buyer and its employees, agents,
appraisers, and accounting and legal representatives to have
reasonable access to the books, records, contracts, leases, key
personnel, accountants, plants and equipment of the Business,
including without limitation any information of KGF relating to
the allocation of KGF costs to the Business;
(h) Use reasonable commercial efforts to comply with
all conditions to Buyer's obligations to close and to obtain all
other third party consents and governmental approvals relating to
the transactions contemplated hereby; and
(i) Use its best efforts to take any action necessary
to prevent any of the representations and warranties made by
Seller and KGF in this Agreement from not being true and correct
in all material respects at and as of the Closing Date with the
same force and effect as if then made, subject only to exceptions
permitted by this Agreement.
SECTION 3.02 NEGATIVE COVENANTS OF SELLER AND KGF. Except
as disclosed in this Agreement or the Schedules, prior to the
Closing, without the prior written consent of Buyer, neither
Seller nor KGF will, nor will Seller or KGF permit Birds Eye
Mexico to, with respect to the Business:
(a) Take any action that would require disclosure
under Section 4.07 of this Agreement;
(b) Authorize or issue any share of capital stock of
Birds Eye Mexico or any option, warrant or right to acquire any
such capital stock;
(c) Grant any bonus or any wage, salary or benefit
increase to any employee or group of employees, except in
accordance with past custom and practice, not to exceed 5% of
salary (or 10% with respect to employees of Birds Eye Mexico);
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(d) Establish or contribute to any new plan, program
or arrangement covering employees of the Business;
(e) Sell or transfer any of the Purchased Assets or
the assets of Birds Eye Mexico other than in the ordinary course
of business;
(f) Obligate itself to make capital expenditures
aggregating more than $250,000;
(g) Accelerate the sale of any inventory (other than
pursuant to bona fide orders) or delay the payment of any
obligation;
(h) Cancel any receivables, debts or claims except in
the ordinary course of business;
(i) Purchase any property or assets other than in the
ordinary course of business;
(j) Amend or modify in any material respect the terms
of, or terminate, any material contract, engagement, agreement,
commitment or order;
(k) Enter into any contracts, commitments or
transactions other than in the ordinary course of business; or
(l) Agree to do any of the foregoing.
SECTION 3.03 COVENANT OF BUYER. Prior to the Closing,
Buyer will use reasonable commercial efforts to comply with all
conditions to Seller's or KGF's obligations to close.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER AND KGF
Seller and KGF, jointly and severally, hereby represent and
warrant as follows:
SECTION 4.01 CORPORATE ORGANIZATION AND POWER/
SUBSIDIARIES.
(a) Each of Seller and KGF is a corporation duly
organized, validly existing and in good standing under the laws
of Delaware, has the corporate power and authority to carry on
its business as now being conducted and to own and operate the
properties and assets now owned and being operated by it, and has
full power and authority to carry on the Business as now being
conducted and to own and operate the properties and assets of the
Business now being owned and operated by it. Each of Seller and
KGF is qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each
jurisdiction in which it owns or leases properties or conducts
any business so as to require such qualification. Each of Seller
and KGF has full corporate power and authority to execute,
deliver and perform this Agreement and the other agreements
contemplated hereby.
(b) With the exception of Birds Eye Mexico and except
as set forth on Schedule 4.2S, no affiliate of Seller or KGF is
involved in the ownership or operation of the Business. The
Purchased Assets do not include any capital stock or other
security of any partnership or entity other than Birds Eye
Mexico, and the assets of Birds Eye Mexico do not include any
capital stock or other security of any partnership or entity.
(c) Schedule 4.01 sets forth, with respect to Birds
Eye Mexico: (i) its jurisdiction of incorporation; (ii) the
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number of authorized shares of its capital stock; and (iii) the
number of shares of its capital stock which are issued and
outstanding. All outstanding shares of capital stock in Birds
Eye Mexico are owned by KGF (or by John F. Mowrer on behalf of
KGF) free and clear of all liens, pledges, encumbrances, claims
and equities of every kind.
(d) Birds Eye Mexico is a corporation duly organized
and legally existing in good standing under the laws of its
country of incorporation as more fully described in Schedule 4.01
and has full power and authority necessary to own or lease its
properties and to carry on its business as it is now being
conducted.
(e) All rights with respect to receiving dividends and
voting with respect to Birds Eye Mexico are vested exclusively in
its shares of common stock. There are no outstanding warrants,
options or rights of any kind to acquire from Birds Eye Mexico,
or from KGF or John F. Mowrer, any shares of its capital stock,
nor are there any plans, contracts or commitments providing for
the issuance of, or the granting of rights to acquire, any
capital stock of Birds Eye Mexico or securities convertible into
or exchangeable for capital stock of Birds Eye Mexico. All
issued shares of capital stock of Birds Eye Mexico (the "Stock")
are duly authorized, validly issued and outstanding and are fully
paid and non-assessable. KGF and John F. Mowrer have good and
marketable title to the Stock, and there are no unsatisfied
preemptive rights therein. True and correct copies of the
notarial deed of Birds Eye Mexico's incorporation and other
corporate documents evidencing the organization of Birds Eye
Mexico have been previously furnished to Buyer.
SECTION 4.02 AUTHORITY; AUTHORIZATION. The execution,
delivery and performance by Seller and KGF of this Agreement and
the other agreements contemplated hereby have been duly
authorized by Seller and KGF. This Agreement constitutes and
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each of the other agreements contemplated hereby when executed
and delivered will constitute a valid and binding obligation of
Seller and KGF, enforceable in accordance with its terms.
SECTION 4.03 NO VIOLATION. The execution, delivery and
performance of this Agreement and each of the other agreements
contemplated hereby by Seller and KGF and the consummation of the
transactions contemplated hereby or thereby do not and will not
(a) conflict with or result in any breach of any of, (b)
constitute a default under, (c) result in a violation of, (d)
result in the creation of any lien, security interest, charge or
encumbrance upon or adversely affect the Purchased Assets or any
assets of Birds Eye Mexico pursuant to, or (e) give any third
party the right to accelerate any obligation under the provisions
of, the charter or bylaws of Seller, KGF or Birds Eye Mexico or
any indenture, mortgage, lease, loan agreement or other
agreement, license or permit to which Seller, KGF or Birds Eye
Mexico is a party or by which Seller, KGF or Birds Eye Mexico is
bound or to which any of the Purchased Assets or any of the
assets of Birds Eye Mexico are subject, or any law, statute,
rule, regulation, judgment or decree to which Seller, KGF or
Birds Eye Mexico is subject.
SECTION 4.04 FINANCIAL STATEMENTS. Attached as Schedule
4.04 are copies of the unaudited balance sheet as of September
25, 1993 (the "Latest Balance Sheet"), and summary earnings and
balance sheet information for the two fiscal years ended December
28, 1991 and December 26, 1992 and for the thirty-nine weeks
ended September 25, 1993 relating to the Business. The Latest
Balance Sheet (including the notes thereto) and such summary
information (including the notes thereto) reflect only Purchased
Assets, Assumed Liabilities, and the assets and liabilities of
Birds Eye Mexico, are complete and accurate and in accordance
with the books and records of the Business, present fairly the
financial position of the Business at each of said dates and the
results of its operations for each of said periods covered and
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have been prepared in accordance with United States generally
accepted accounting principles consistently applied (except as
disclosed on Schedule 4.04).
SECTION 4.05 NO UNDISCLOSED LIABILITIES. Except as
disclosed herein or in the Schedules (or, in the case of
contracts and commitments, to the extent not required to be
disclosed in the Schedules because of materiality thresholds) and
except for Excluded Liabilities, and except as reflected or
reserved against in the Latest Balance Sheet or incurred
thereafter in the ordinary course of business, and, solely for
purposes of Section 7.02, except as reflected in Net Assets on
the Adjusted Closing Date Balance Sheet, the Business has no
liabilities or obligations.
SECTION 4.06 NO MATERIAL ADVERSE CHANGE. Since the date
of the Latest Balance Sheet and except as set forth in the
Schedules, Seller, KGF and Birds Eye Mexico have conducted the
Business only in the ordinary course and in conformity with past
practice, and there has been no material adverse change in the
financial condition, operating results, assets, or liabilities or
employee, customer or supplier relations of the Business
(exclusive of the Excluded Assets and the Excluded Liabilities),
except for such changes that are attributable to the public
announcement of or third party knowledge with respect to the
transactions contemplated by this Agreement.
SECTION 4.07 ABSENCE OF CERTAIN CHANGES. Except as set
forth in Schedule 4.07, since the date of the Latest Balance
Sheet, neither Seller, KGF nor Birds Eye Mexico has with respect
to the Business:
(a) created, incurred, assumed or guaranteed any
indebtedness or become subject to any liabilities, except current
liabilities incurred in the ordinary course of business and
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liabilities under contracts entered into in the ordinary course
of business;
(b) mortgaged, pledged or subjected to any lien,
security interest or other encumbrance, any of the Purchased
Assets or assets of Birds Eye Mexico, except liens for current
property taxes not yet due and payable;
(c) sold, assigned or transferred any material amount
of assets, except in the ordinary course of business and
consistent with past practices;
(d) sold, assigned, transferred or licensed any
patents, trademarks, trade names, copyrights, trade secrets or
other intangible assets;
(e) suffered any extraordinary losses, whether or not
covered by insurance;
(f) increased the compensation, bonuses, special
compensation, or benefits payable or to become payable by Seller
or Birds Eye Mexico to any officers of the Business or, except
for increases in the normal course of operations not exceeding
five percent (5%), to any employees (or ten percent (10%) with
respect to employees of Birds Eye Mexico);
(g) suffered any work stoppage or labor dispute;
(h) extended credit other than in the ordinary course
of business or permitted any change in its credit practices or in
its methods of maintaining its books, accounts or business
records;
(i) except as required by United States generally
accepted accounting principles changed any of its accounting
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principles or the methods by which such principles are applied;
or
(j) entered into any agreement to do any of the things
previously described in this Section 4.07.
SECTION 4.08 DIRECTORS, OFFICERS AND BANK ACCOUNTS.
Schedule 4.08 contains a complete and accurate list of all
officers and directors of Birds Eye Mexico and a complete and
accurate list (including addresses) of all bank accounts, safe
deposit boxes and lock boxes maintained by Seller and exclusively
used in the Business or maintained by Birds Eye Mexico and a
complete and accurate list of all powers of attorney and the like
outstanding with respect to any aspect of the Business.
SECTION 4.09 ACCOUNTS RECEIVABLE. All outstanding
receivables of the Business, including without limitation,
accounts receivable, trade receivables and notes receivable of
the Business on the Closing Date will be valid and enforceable
claims against customers for goods or services delivered or
rendered in the ordinary course of business, and will be
collectible in full within six months after the Closing in the
ordinary course without resort to court action or collection
agencies, except for valuation reserves relating to receivables
recorded on the Adjusted Closing Date Balance Sheet.
SECTION 4.10 INVENTORY. All inventories of the Business
(including, without limitation, finished goods, work in process,
raw materials, and supplies) on the Closing Date will be:
(a) properly valued on the Adjusted Closing Date
Balance Sheet in the manner set forth on Schedule 1.02(d); and
(b) in conformity with warranties heretofore given by
Seller, KGF or Birds Eye Mexico to purchasers of like products.
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Except as set forth on Schedule 4.10, no inventory is
held on consignment by or for the Business. All ingredients and
finished products in inventory (a) comply with the Federal Food,
Drug and Cosmetic Act, approved June 25, 1938 (the "Act") and all
acts amending or supplementing the Act (including, without
limitation, the Food Additive Amendment of 1958), (b) are not
adulterated or misbranded within the meaning of the Act, and (c)
are not prohibited from introduction into interstate coerce
under the provisions of Section 404 or 505 of the Act.
SECTION 4.11 INSURANCE. Schedule 4.11 contains a complete
and correct list and description (including the policy number,
coverage, and expiration date) of all policies of insurance which
relate exclusively to the Business. Such contracts are, and will
be through midnight of the Closing Date, in full force and effect
and provide insurance against loss or damage of the kinds
customarily insured against by similar businesses. Seller is not
in default under or in non-compliance with the terms or
provisions of any such insurance policy. Within ten (10)
business days of the date of this Agreement, Seller will provide
Buyer with a three-year survey of claims experience with respect
to the Business under all its forms of insurance.
SECTION 4.12 TITLE TO PURCHASED ASSETS. Except as set
forth in Schedules 4.13, 4.14, 4.15, 4.16 or 4.18, Seller is (or
KGF is with respect to the Purchased Assets for which legal title
is held in the name of KGF) the sole and exclusive legal and
equitable owner of all right, title and interest in and has good
and marketable title to all of the Purchased Assets and Birds Eye
Mexico has sole and exclusive title to all of the assets
purported to be owned by it, in each case free and clear of all
liabilities, obligations, liens and encumbrances, and the sale
and delivery of the Purchased Assets pursuant hereto shall vest
in Buyer good and marketable title thereto, free and clear of all
liabilities, obligations, liens and encumbrances, except for such
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liabilities, cbligations, liens or encumbrances that occur as a
result of an action of Buyer.
SECTION 4.13 REAL ESTATE. Schedule 4.13 sets forth a
complete description of each parcel of real estate owned by
Seller or KGF and used primarily in the Business (the "Owned Real
Estate"), and all real estate owned by Birds Eye Mexico (the
"Birds Eye Mexico Real Estate"). KGF has good and marketable
title to all Owned Real Estate and Birds Eye Mexico has good and
marketable title to all Birds Eye Mexico Real Estate including,
in each case, the buildings, structures, fixtures and
improvements situated thereon, in each case free and clear of all
security interests, liens, encumbrances, mortgages, pledges, or
defects in title, except as set forth in Schedule 4.13 and
referred to as "Permitted Exceptions". The Permitted Exceptions
are not violated by and do not interfere with the current use of
the Owned Real Estate or Birds Eye Mexico Real Estate.and the
current use and location of the improvements located thereon.
Except as set forth on Schedule 4.13, neither KGF nor Seller has
granted any option to purchase all or any part of the Owned Real
Estate and Birds Eye Mexico has not granted any option to
purchase all or any part of Birds Eye Mexico Real Estate. KGF,
Seller or Birds Eye Mexico has all easements and rights necessary
to conduct the Business in the manner it is presenting being
conducted. Neither the whole or any portion of any Owned Real
Estate or Birds Eye Mexico Real Estate has been condemned,
requisitioned or otherwise taken by any public authority, and no
notice of any such condemnation, requisition or taking has been
received. Except as disclosed in Schedule 4.13, neither KGF nor
Seller has received any notice from any city, village or other
governmental authority, or from any other third party, of any
zoning, building, fire or health code violation in respect of the
Owned Real Estate that has not been corrected and Birds Eye
Mexico has not received any such notice in respect of the Birds
Eye Mexico Real Estate.
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SECTION 4.14 REAL ESTATE LEASES. Schedule 4.14 sets forth
a description of each parcel of real estate leased by the
Business (the "Leased Real Estate"), including identification of
the lessor and location. Seller has previously furnished to
Buyer complete and accurate copies of all such leases. The
Leased Real Estate has all easements and rights necessary to
conduct the Business as it is currently being conducted. Neither
the whole or any portion of any Leased Real Estate has been
condemned, requisitioned or otherwise taken by any public
authority, and no notice of any such condemnation, requisition or
taking has been received. Except as disclosed in Schedule 4.13,
neither KGF nor Seller nor Birds Eye Mexico has received any
notice from any city, village or other governmental authority, or
from any other third party, of any zoning, building, fire or
health code violation in respect of the Leased Real Estate that
has not been corrected.
(a) Such leases are in full force and effect and are
valid, binding and enforceable in accordance with their
respective terms, except to the extent such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or
other laws relating to or affecting the enforcement of creditors'
rights or by general equitable principles;
(b) No amount payable under any of such leases is past
due;
(c) Each party thereto has complied with all
commitments and obligations on its part to be performed or
observed under each such lease; and
(d) Neither Seller, KGF nor Birds Eye Mexico has
received any notice of a default (which has not been cured),
offset or counterclaim under any such lease, or any other
communication calling upon any of them to comply with any
provision of any such lease or asserting noncompliance, and no
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event or condition has happened or presently exists which
constitutes a default or, after notice or lapse of time or both,
would constitute a default under any such lease.
SECTION 4.15 PERSONAL PROPERTY LEASES. Schedule 4.15
contains a complete and accurate list and summary description of
all leases of personal property used primarily in the Business
(the "Leases"). Seller has made available to Buyer true and
complete copies of all the Leases. With respect to the Leases:
(a) The Leases are in full force and effect and are
valid, binding and enforceable in accordance with their
respective terms, except to the extent such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or
other laws relating to or affecting the enforcement of creditors'
rights or by general equitable principles;
(b) No amount payable under any Lease is past due;
(c) Each party thereto has complied with all
commitments and obligations on its part to be performed or
observed under each Lease; and
(d) Neither KGF nor Seller nor Birds Eye Mexico has
received any notice of a default (which has not been cured),
offset or counterclaim under any Lease, or any other
communication calling upon any of them to comply with any
provision of any Lease or asserting noncompliance, and no event
or condition has happened or presently exists which constitutes a
default or, after notice or lapse of time or both, would
constitute a default under any Lease.
SECTION 4.16 MOTOR VEHICLES. All motor vehicles used
primarily in the Business, whether owned or leased, are listed in
Schedule 4.16. All licenses and permits necessary for the use of
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such vehicles have been obtained and are in full force and
effect.
SECTION 4.17 CONDITION OF ASSETS. Except as set forth on
Schedule 4.17, the assets and properties utilized in the
Business, whether owned or leased, are in satisfactory operating
condition and repair (reasonable wear and tear excepted) and are
suitable for the purposes for which they are presently being
used.
SECTION 4.18 INTELLECTUAL PROPERTY. Schedule 4.18
contains (i) a complete and accurate list of all patents,
trademarks and trademark rights currently used in connection with
the Business (whether or not included in the Purchased Assets),
identifying those which are included in the Purchased Assets,
(ii) a complete and accurate list and description of all licenses
and other agreements relating to any of the foregoing, and (iii)
summary descriptions of agreements between the Business and
Unilever with respect to the Birds Eye trademark (complete and
accurate copies of which have been delivered to Buyer prior to
the execution of this Agreement). Seller or KGF is, in the
United States, Canada and Mexico, the sole and exclusive owner of
the federally registered trademarks listed on Schedule 4.18, free
and clear of any rights of other persons, and has the sole and
exclusive right to use the same in the conduct of the Business.
Except as set forth on Schedule 4.18, with respect to the
foregoing items of intellectual property and the service marks,
copyrights, formula and trade dress currently used in the
Business:
(a) Seller or KGF is in the United States, Canada and
Mexico, and to the knowledge of Seller is everywhere else in the
world, the sole and exclusive owner free and clear of any rights
of other persons and has the sole and exclusive right to use the
same in the conduct of its business;
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(b) no proceedings have been instituted, are pending
or, to the knowledge of Seller, KGF or Birds Eye Mexico, are
threatened which challenge any rights in respect thereto or the
validity thereof;
(c) none of the aforesaid infringes upon or otherwise
violates the rights of others in the United States, Canada or
Mexico, or to the knowledge of Seller, anywhere else in the
world; or to the knowledge of Seller, KGF or Birds Eye Mexico is
being infringed upon by others, and none is subject to any
outstanding order, decree, judgment, stipulation or charge;
(d) no licenses, sublicenses or agreements pertaining
to any of the aforesaid have been granted or entered into by
Seller, KGF or Birds Eye Mexico; and
(e) Neither Seller, KGF nor Birds Eye Mexico has
received any notice of interference or infringement of any of the
foregoing.
SECTION 4.19 MATERIAL CONTRACTS. All contracts,
agreements, instruments and leases (other than those entered into
after the date hereof with the written consent of Buyer) related
to the Business, or to which any of the Purchased Assets are
subject, meeting any of the descriptions set forth below (the
"Material Contracts"), are listed in Schedule 4.19:
(a) any agreement obligating the Business to purchase
or sell any products or services and which either (i) was not
entered into in the normal course of business, or (ii) is not
terminable without payment or penalty upon 60 days' (or less)
notice, or (iii) is in an aggregate amount exceeding $25,000;
(b) any indebtedness, obligation or liability for
borrowed money, or liability for the deferred purchase price of
property in excess of $25,000 (excluding normal trade payables),
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or any instrument guaranteeing any indebtedness, obligation or
liability, or any obligation to incur any indebtedness,
obligation or liability;
(c) any joint venture, partnership or other
arrangement involving a sharing of profits involving the
Business;
(d) any sales agency, brokerage, distribution or
similar contract;
(e) any consulting agreement or arrangement;
(f) any agreement restricting the Business or any
employee of the Business from competition or requiring the
Business or any such employee to maintain the confidentiality of
information provided to the Business by a third party;
(g) any agreement under which the consequences of a
default or termination could have a MAE on the Business;
(h) any long-term or continuing agreement or
arrangement (other than with respect to "Every Day Low Price"
arrangements) with respect to discounts or allowances or extended
payment terms;
(i) any agreement granting, or which may have the
effect at any time in the future of granting, a lien, security
interest, mortgage or encumbrance against or on Purchased Assets;
(j) any agreement restricting, or purporting to
restrict, Seller from doing any business;
(k) any agreement between any of Seller, KGF or Birds
Eye Mexico and any affiliate of any of them (including without
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limitation any agreement between Birds Eye Mexico and either
Seller or KGF); and
(1) any other contract, arrangement or commitment
which is not in the ordinary and usual course of business of
Seller or which is material as to amount or effect on the
Business.
Except as set forth in Schedule 4.19:
(i) all Material Contracts and other contracts,
agreements, instruments and leases included in the Purchased
Assets are in full force and effect and are valid, binding
and enforceable in accordance with their terms, except to
the extent such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws
relating to or affecting the enforcement of creditors'
rights or by general equitable principles;
(ii) the Business is not, and, to the knowledge of
Seller, KGF and Birds Eye Mexico, no other party to any of
the foregoing is, in breach of any provision of, in
violation of, or in default under the terms of any of the
foregoing;
(iii) no event has occurred which, after the giving of
notice or passage of time or otherwise, would constitute a
default under or result in the breach of any of the
foregoing by the Business, or to the knowledge of Seller,
KGF and Birds Eye Mexico, by any other party; and
(iv) Seller has furnished to Buyer accurate and
complete copies of each Material Contract.
SECTION 4.20 EMPLOYEES. Schedule 4.20 contains a complete
and accurate list and description of all of the following to
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which Seller, KGF or Birds Eye Mexico is a party or by which they
are bound which relate to the Business:
(a) written employment contracts with employees of the
Business;
(b) oral contracts or understandings with any employee
of the Business which alter the "employee-at-will" relationship
with any such employee;
(c) collective bargaining agreements;
(d) incentive and bonus arrangements;
(e) pension and retirement plans;
(f) profit sharing plans;
(g) deferred compensation plans;
(h) multi-employer health and welfare or benefit
plans;
(i) medical, life or health insurance plans;
(j) stock purchase, stock option or similar plans; and
(k) severance plans or policies.
Except as set forth in Schedule 4.20, each of Seller,
KGF and Birds Eye Mexico has with respect to the Business
complied with its obligations related to, is not in default under
and no event has occurred which, after giving of notice or
passage of time or otherwise, would constitute a default under,
and the transactions contemplated hereby will not affect, any of
the foregoing. Seller has delivered to Buyer a true and complete
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list of the name, position and present rate of compensation of
each employee of the Business. Except as set forth in Schedule
4.20 or 4.22, there are no unfair labor practices, employment
related litigation, administrative proceedings or controversies
pending or, to the knowledge of Seller, KGF or Birds Eye Mexico,
threatened involving any employee of the Business. Each of
Seller, KGF and Birds Eye Mexico is with respect to the Business
in compliance in all respects with its obligations under all
statutes, executive orders and other governmental regulations
governing its employment practices, including without limitation,
provisions relating to wages, hours, equal opportunity,
discrimination in employment, and payment of social security and
other taxes. As of the date of this Agreement, the Business has
not suffered or sustained any labor disputes resulting in any
work stoppage and, to the knowledge of Seller, KGF and Birds Eye
Mexico, no such work stoppage is threatened. As of the date of
this Agreement, to the knowledge of Seller, KGF and Birds Eye
Mexico, there are no attempts being made to organize any
employees presently employed by the Business. All payments to
employees which would have been paid in the ordinary course of
business on or before the Closing Date shall have been paid as of
the Closing. Except as described in Schedule 4.20, deferred
compensation and accrued bonuses of employees of Seller and Birds
Eye Mexico existing at the Closing Date will be consistent with
the past compensation practices of Seller and will be set forth
in the Adjusted Closing Date Balance Sheet.
SECTION 4.21 TAXES.
(a) Ali federal, state, foreign and other tax returns,
reports and declarations of every nature required to be filed by
or on behalf of Seller or KGF (either separately or as part of a
consolidated group) prior to the Closing have been timely filed
and such returns, reports and declarations as so filed are
complete and accurate and disclose all taxes required to be paid
for the periods covered thereby, except for any such failure to
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file and except for such errors which would not have a MAE on the
Business. All taxes and all deficiency assessments, penalties
and interest relating to any period ending prior to the Closing
shall have been paid as of the Closing. All taxes, including
estimated taxes, for periods beginning before and ending on or
after the Closing have been paid as required by law in a timely
manner. There are no tax liens on any property included in the
Purchased Assets and no basis exists for any such liens.
(b) All federal, state, foreign and other tax returns,
reports and declarations of every nature required to be filed by
or on behalf of Birds Eye Mexico (either separately or as part of
a consolidated group) prior to the Closing have been timely filed
and such returns, reports and declarations as so filed are
complete and accurate and disclose all taxes required to be paid
for the periods covered thereby. All taxes and all deficiency
assessments, penalties and interest relating to any period ending
prior to the Closing shall have been paid as of the Closing. All
taxes, including estimated taxes, for periods beginning before
and ending on or after the Closing have been paid as required by
law in a timely manner. There are no tax liens on any property
of Birds Eye Mexico and no basis exists for any such liens.
SECTION 4.22 LITIGATION. Except as set forth in Schedule
4.22, neither Seller, KGF nor Birds Eye Mexico is engaged in or a
party to or, to the knowledge of Seller, KGF or Birds Eye Mexico,
threatened with any suit, action, proceeding, investigation or
legal, administrative, arbitration or other method of settling
disputes or disagreements or governmental investigation with
respect to the Business or the Purchased Assets or the assets of
Birds Eye Mexico. There are no actions, suits, proceedings,
orders or investigations pending or, to the knowledge of Seller,
KGF or Birds Eye Mexico, threatened against or affecting the
Business at law or in equity, or before or by any federal, state,
municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, which are
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reasonably likely to adversely affect Seller's performance under
this Agreement or any of the agreements contemplated hereby or
the consummation of the transactions contemplated hereby or
thereby.
SECTION 4.23 COMPLIANCE WITH LAW, AND LICENSES AND PERMITS
AND CONSENTS.
(a) Except as set forth in Schedule 4.23, neither
Seller nor KGF is with respect to the Business, and Birds Eye
Mexico is not, in violation of any law or regulation, including,
without limitation, any law or regulation pertaining to
occupational safety or health, environmental protection, equal
employment opportunity, employees retirement income security,
imports and exports, Maquiladora and PITEX status or other law,
ordinance, judicial decree, order or regulation. No notice (the
reason for which has not been corrected) has been served upon
Seller, KGF or Birds Eye Mexico with respect to the Business by
any governmental body or other person of any violation of any
law, ordinance, code, rule or regulation or requiring or calling
attention to the necessity of any work, repairs, new
construction, installation or alteration in connection with any
real or personal property or equipment of the Business.
(b) Seller, KGF and Birds Eye Mexico have all
licenses, permits, approvals and other authorizations as are
necessary in order to enable them to own and operate the
Business, and use the Purchased Assets and the assets of Birds
Eye Mexico as they are currently being owned, operated and used.
All such licenses, permits, approvals, franchises, clearances and
authorizations, true and correct copies of which have been
previously furnished to Buyer, are listed in Schedule 4.23, are
in full force and effect. Birds Eye Mexico has complied,with all
commitments and requirements relating to its Maquiladora and
PITEX status. Except as set forth in Schedule 4.23, no material
violations have been recorded or alleged in respect of any such
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licenses, approvals or authorizations, and no proceeding is
pending or, to the knowledge of Seller, KGF or Birds Eye Mexico,
threatened or contemplated with respect to the revocation or
limitation of the same.
(c) Except as set forth on Schedule 4.23, there are no
third party consents required in order to permit or allow Buyer
to own or operate the Purchased Assets or the Business after
Closing in the same way as they were operated prior to Closing,
except for third party consents, the failure of which to obtain,
would not have a MAE on the Business.
SECTION 4.24 ENVIRONMENTAL MATTERS. Except as disclosed
in Schedule 4.24, the use and operation by Seller, KGF and Birds
Eye Mexico of each facility used in the Business has been and on
the Closing Date will be in compliance with all applicable United
States and Mexican Federal, state, and local environmental laws,
respectively. Except as set forth on Schedule 4.24, neither
Seller, KGF nor Birds Eye Mexico is aware of any environmental
obligation or liability associated with owning, operating or
maintaining the Owned Real Estate or the Birds Eye Mexico Real
Estate or occupying the Leased Real Estate.
SECTION 4.25 ADEQUACY OF THE PURCHASED ASSETS; LOCATION OF
ASSETS. Except as set forth in Schedule 4.25, the Purchased
Assets and the assets owned by Birds Eye Mexico constitute, in
the aggregate, all of the property necessary for the conduct of
the Business in the manner in which and to the extent to which it
is currently being conducted. Such Schedule discloses all of the
services currently obtained by the Business from or provided by
the Business to, or provided or obtained on behalf of the
Business (whether or not at the expense of the Business) by,
Seller or KGF (exclusive of the Business) or any affiliate of
either of them. All of the assets of the Business (whether or
not Purchased Assets) are located at the Owned Real Estate, the
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Leased Real Estate, the Birds Eye Mexico Real Estate or, with
respect to inventory, outside storage locations.
SECTION 4.26 ADVERSE RESTRICTIONS. The Business is not
subject to any provision of any charter, regulation, mortgage,
lien, agreement, commitment, lease, order, judgment or decree,
which could reasonably be expected to have a material adverse
effect on the Purchased Assets, the assets of Birds Eye Mexico or
the existing or expected business or condition (financial or
other) or results of operations of the Business.
SECTION 4.27 NOTICE RE BUSINESS. With respect to the
Business, neither Seller, KGF nor Birds Eye Mexico has been
notified as of the date hereof by any person, firm or corporation
that it will stop business with the Business, or materially
decrease the amount of its business with the Business which could
reasonably be expected to have a MAE on the Business.
SECTION 4.28 COMPLAINTS. Within ten (10) business days of
the date of this Agreement, Seller will provide Buyer with a
listing of all consumer, governmental or trade complaints,
product liability claims or claims under written product
guarantees set forth on packaging received by Seller or KGF
during the past two years.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants as follows:
SECTION 5.01 CORPORATE ORGANIZATION AND POWER. Buyer is a
corporation duly organized, validly existing and in good standing
under the laws cf the jurisdiction of its incorporation. Buyer
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has full corporate power and authority to execute, deliver and
perform this Agreement and the other agreements contemplated
hereby.
SECTION 5.02 AUTHORIZATION. The execution, delivery and
performance by Buyer of this Agreement and the other agreements
contemplated hereby have been duly authorized by Buyer. This
Agreement constitutes and each of the other agreements
contemplated hereby when executed and delivered will constitute a
valid and binding obligation of Buyer, enforceable in accordance
with its terms.
SECTION 5.03 NO VIOLATION. The execution, delivery and
performance of this Agreement and the other agreements
contemplated hereby by Buyer and the consummation of the
transactions contemplated hereby or thereby do not and will not
(a) conflict with or result in any breach of, (b) constitute a
default under, (c) result in a violation of, or (d) give any
third party the right to accelerate any obligation under the
provisions of Buyer's certificate of incorporation or bylaws or
any indenture, mortgage, lease, loan agreement or other agreement
to which Buyer is party or to which Buyer is bound, or any law,
statute, rule, regulation, judgment or decree to which Buyer is
subject.
SECTION 5.04 LITIGATION. There are no actions, suits,
proceedings, orders or investigations pending or, to the
knowledge of Buyer, threatened against or affecting Buyer at law
or in equity, or before or by any federal, state, municipal or
other governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, which are reasonably
likely to adversely affect Buyer's performance under this
Agreement or the consummation of the transactions contemplated
hereby.
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ARTICLE 6
TERMINATION
SECTION 6.01 TERMINATION. This Agreement may be
terminated at any time prior to the Closing:
(a) by mutual written consent of Seller and Buyer;
(b) by either Seller and KGF on the one hand, or Buyer
on the other hand, if the Closing hereunder has not been
consummated by January 31, 1994, provided that if a party's
willful breach of this Agreement has prevented the consummation
of the transactions contemplated hereby, that party shall not be
entitled to terminate pursuant to this Section 6.01(b).
SECTION 6.02 EFFECT OF TERMINATION. In the event of
termination of this Agreement by either Seller or Buyer as
provided above, this Agreement will forthwith become void and
there will be no liability on the part of either Buyer or Seller,
except for material willful breaches of and intentional
misstatements in or pursuant to this Agreement prior to the time
of such termination. Notwithstanding the foregoing, the
obligations of the parties under Section 6.03, and liability of
the parties for breaches thereof, shall survive such termination.
SECTION 6.03 CONFIDENTIALITY. In the event of any
termination of this Agreement, each of Seller and KGF and Buyer
shall treat as confidential and not disclose, or use directly or
indirectly for its benefit in any manner whatsoever, or permit
others under its control to disclose, or to use, any information
concerning the other obtained pursuant to or in connection with
the transaction which is the subject of this Agreement which is
not a matter of public knowledge, and Seller and KGF and Buyer
shall each promptly return to the other or destroy upon written
request all written information and documents received from the
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other or its representatives, including all copies thereof. The
foregoing shall not preclude any party from disclosing
information which it is legally compelled to disclose.
ARTICLE 7
ADDITIONAL AGREEMENTS
SECTION 7.01 SURVIVAL. The representations, warranties,
covenants and agreements set forth in this Agreement, or in any
writing delivered in connection with this Agreement, will survive
the Closing Date and the consummation of the transactions
contemplated hereby, notwithstanding any examination made for or
on behalf of Buyer or Seller; provided, however, that the
representations and warranties of Seller and KGF contained in
Article 4 (other than those in Section 4.21, which shall survive
until the expiration of the respective statutes of limitation
governing claims with respect thereto, and other than those in
Section 4.24 which shall survive until December 31, 1996) and the
representations and warranties of Buyer contained in Article 5
shall survive only until December 31, 1994. No claim for the
recovery of indemnifiable damages based upon the inaccuracy of
such representations and warranties may be asserted by a party
after such representations and warranties shall be thus
extinguished; provided, however, that claims first asserted in
writing within the applicable period shall not thereafter be
barred.
SECTION 7.02 INDEMNIFICATION.
(a) Seller and KGF agree to jointly and severally
indemnify Buyer and its affiliates and hold them harmless against
any loss, liability, claim, damage or expense (including, without
limitation, costs of investigation and reasonable legal expenses
and costs) which Buyer or any of its affiliates may suffer,
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sustain or become subject to, as the result of a breach of any
representation, warranty, covenant, or agreement by Seller or KGF
contained in this Agreement or the other agreements contemplated
hereby, or the failure of Seller or KGF to pay, discharge or
perform any of the Excluded Liabilities; provided, however, that
neither Seller nor KGF will be liable for any such loss,
liability, claim, damage, or expense arising out of a breach by
Seller or KGF of any representation or warranty contained in
Article 4 (other than fraudulent acts or omissions) unless the
aggregate amount of all such losses, claims, damages,
liabilities, and expenses resulting to Buyer from all such
breaches or claims exceeds an amount equal to $2,000,000.00 (the
"Allowance"), in which case Seller and KGF will only be liable
for such amounts in excess of the amount of the Allowance; and
provided further, that in no event shall Seller's or KGF's
liabilities arising out of a breach by Seller or KGF of any
representation or warranty contained in Article 4 exceed one-half
of the Purchase Price.
(b) Buyer agrees to indemnify Seller and KGF and any
of their affiliates and hold them harmless against any loss,
liability, claim, damage or expense (including, without
limitation, costs of investigation and reasonable legal expenses
and costs) which Seller or KGF or any of its affiliates may
suffer, sustain or become subject to, as the result of a breach
of any representation, warranty, covenant, or agreement by Buyer
contained in this Agreement or the other agreements contemplated
hereby, or the failure of Buyer to discharge or perform any of
the Assumed Liabilities, and shall indemnify Seller and KGF and
any of their affiliates and hold them harmless against any and
all actions, suits, claims and other proceedings which arise
directly or indirectly out of the Buyer's operation of the
Business after the Closing, including without limitation the
manufacture, distribution, marketing and sale of products after
the Closing.
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(c) Promptly, but in no event later than 90 days,
after receipt by a management level employee of Buyer on the one
hand, or of Seller or KGF on the other hand, of written notice of
any claim or potential claim by any third party, which could give
rise to a right to indemnification pursuant to Section 7.02(a) or
(b), Buyer on the one hand, or Seller and KGF on the other hand,
as the case may be (in any such case, the "Beneficiary"), shall
give the party who may become obligated to provide
indemnification hereunder written notice describing such claim in
reasonable detail to the extent then known; provided, however,
that a failure to give or delay in giving any such notice will
not affect the indemnification obligation of the party to which
such notice is required to be given except to the extent such
party is actually prejudiced thereby. After the indemnifying
party has acknowledged in writing that it is indemnifying the
other party with respect to litigation involving any claim, the
indemnifying party will be entitled to assume the defense
thereof; provided, however, that the other party may at its
election participate in any such defense to the extent that it in
its sole discretion believes that the defense of such claim,
including the anticipated resolution, will materially affect its
ongoing business. At the indemnifying party's reasonable
request, the other party will cooperate with the indemnifying
party in the preparation of any such defense (including Seller's
and KGF's defense of an Excluded Liability or Buyer's defense of
an Assumed Liability), and the indemnifying party will reimburse
the other party for any expenses incurred in connection with such
request. Neither the indemnified party nor the indemnifying
party will settle any claims of a kind described in this
subsection without the consent of the other, which consent will
not be unreasonably withheld.
(d) Notwithstanding other provisions of this Section
7.02, if as of the Closing Date Buyer knows of any matter
described above and does not disclose to Seller and KGF the
existence of such matter prior to consummating the Closing, Buyer
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hereby waives all right to make a claim in respect of such matter
and all loss, liability, damage and expense which Buyer may
suffer or sustain or to which Buyer may become subject as a
result of or in connection with such matter shall not be deemed
to be Losses for the purposes of this Section 7.02.
(e) The indemnification rights provided in Sections
7.02, 7.03, 7.09, 7.17 and 8.10 shall be the sole and exclusive
remedy available to each of the parties to this Agreement as
against any other party for any misrepresentation, breach of
warranty or failure to fulfill any covenant or agreement
contained herein or in connection with any of the transactions
contemplated hereby, but not for any fraudulent act or omission,
provided that, in the event that monetary damages would
constitute an inadequate remedy for a failure to fulfill any
covenant or agreement contained herein or in connection with any
of the transactions contemplated hereby (for example, for a
failure to fulfill any covenant or agreement in Section 7.08),
nothing herein shall preclude injunctive or other equitable
relief in connection with such failure.
SECTION 7.03 HIRING EMPLOYEES OF THE BUSINESS.
(a) Seller and KGF agree to use reasonable commercial
efforts to assist Buyer in engaging such employees of the
Business who are employed by Seller at Closing, a list of which
is set forth as Schedule 7.03. Buyer reserves the right to
remove the name of any non-union employee from Schedule 7.03
prior to Closing, in which event, Buyer shall reimburse Seller
for Seller's cost of severing any such employee under Seller's
standard severance plan provided severance occurs at any time
prior to sixty (60) days after Closing. Buyer will prior to
Closing offer to employ, effective as of the Closing, all such
employees of the Business whose name is set forth on Schedule
7.03 (as revised) who are capable, as of the Closing, of
performing equivalent full-time employment duties at the same
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compensation rates and in the same positions as in effect
immediately prior to Closing and with benefits substantially
similar to those provided by Buyer to similarly situated
employees of Buyer; provided that the terms and conditions of
employment offered to each such employee covered by a collective
bargaining agreement will be those provided in such agreement.
Each such employee of Seller who accepts such offer is referred
to as a "Transferred Employee". Buyer agrees, with respect to
(i) each of such non-union employees of Seller who accept such
offer and (ii) each management level employee of Birds Eye
Mexico, in each case who is terminated for other than "Cause
within one year after Closing, to pay to such person, or cause
Birds Eye Mexico to pay, the greater of (x) one week's salary per
year of service, or (y) the amount of such person's annual
salary, plus prorated bonus (if any) to date of termination,
minus the aggregate amount of compensation such person has
received from Buyer or Birds Eye Mexico with respect to service
with Buyer or Birds Eye Mexico after Closing. For purposes
hereof, "Cause" shall, include without limitation, the employee's
misconduct or inability or refusal to perform his or her job
responsibilities, but shall not include the employee's refusal to
relocate his or her principal place of employment more than fifty
(50) miles from his or her current place of employment.
(b) Buyer agrees to assume the Collective Bargaining
Agreements of Seller set forth on Schedule 4.20.
(c) With respect to each Transferred Employee:
(i) Buyer shall waive pre-existing condition
requirements, evidence of insurability provisions, waiting
period requirements (but only to the extent of credited past
service) or any similar provisions under any employee
benefit plan or compensation arrangements maintained or
sponsored by or contributed to by Buyer for such individuals
after the Closing Date. Buyer shall also apply toward any
deductible requirements and out-of-pocket maximum limits
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under its employee welfare benefit plans any amounts paid
(or accrued) by each Transferred Employee under Seller's and
KGF's welfare benefit plans during the then current plan
year.
(ii) Seller's and KGF's plans shall be responsible for
any health and accident claims incurred prior to the Closing
Date, whether or not then known or payable. Buyer's plans
shall assume responsibility for all health and accident
claims incurred on or after the Closing Date relating to
Transferred Employees.
(iii) Seller and KGF agree to vest all Transferred
Employees in all benefits accrued through the Closing Date
under KGF's pension plans that are intended to qualify under
Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code") and under KGF's supplemental pension
plan.
(iv) Seller and KGF shall be liable for all post-
retirement welfare benefits for all retired and former
employees as of the Closing Date, and for all Transferred
Employees pursuant to the terms and conditions of such plans
to the extent that such benefits would have been vested
under KGF's plans as of the Closing Date had such
Transferred Employees retired from Seller or KGF on the
Closing Date.
(v) With respect to pension, savings, severance,
vacation, health and welfare, disability benefits, executive
compensation, incentive and bonus arrangements, Buyer shall
recognize for purposes of participation, eligibility and
vesting (but not for purposes of benefit accrual and
compensation arrangements) under its employee benefit plans,
the service of any Transferred Employee with Seller and KGF.
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(vi) With respect to all post-Closing Date employment
tax withholding responsibilities, Buyer shall elect to treat
all Transferred Employees as if they had been employed by
Buyer as of January 1, in the year on which the Closing
occurs. In addition, Buyer, Seller and KGF hereby agree to
follow the alternative procedure for employment tax
reporting as provided in Section 5 of Rev. Proc. 84-77,
1984-2 C.B. 753. Thus, Seller and KGF shall have no
employment tax reporting responsibilities for such
Transferred Employees after the Closing Date. Seller and
KGF shall reasonably assist Buyer in complying with its
obligation pursuant to this Clause (vi).
(vii) As of the Closing Date, Buyer will assume all
obligations of Seller and KGF to Transferred Employees for
any vacation entitlement to the extent reflected on the
Adjusted Closing Date Balance Sheet.
(d) Seller and KGF will be responsible for satisfying
obligations under Section 601 et. seg. of ERISA and Section 4980B
of the Code, to provide continuation coverage to or with respect
to any Transferred Employee in accordance with law with respect
to any "qualifying event" occurring on or before the Closing
Date. Buyer will be responsible for satisfying obligations under
Section 601 et. seq. of ERISA and Section 4980B of the Code, to
provide continuation coverage to or with respect to any
Transferred Employee in accordance with law with respect to any
"qualifying event" which occurs following the Closing Date.
(e) Buyer shall be responsible for all workers'
compensation benefits payable to Transferred Employees with
respect to injuries to Transferred Employees after the Closing
or, provided that neither Seller nor KGF had knowledge of such
injury, with respect to injuries which relate to an event or
circumstance or events or circumstances that straddles or
straddle the Closing if the date of the original claim relating
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to such injury is after the Closing, regardless of the date of
injury.
(f) Buyer shall indemnify Seller and KGF from and
against any loss, liability, claim or damage, including
attorneys' fees, for severance liability suffered by Seller or
KGF with respect to any employee of the Business who is not
offered employment by Buyer as required pursuant to Section
7. 03 (a) above.
(g) Except as otherwise expressly provided in this
Agreement and except for liabilities accrued as of the Closing
Date that are not assumed by Buyer under this Agreement, Buyer
shall be liable for and shall indemnify Seller and KGF and its
affiliates from and against any and all liabilities with respect
to Transferred Employees' compensation or employee benefits
resulting solely from acts, omissions or occurrences after the
Closing other than those of Seller or KGF.
(h) Buyer represents that it does not contemplate a
plant closing or mass lay-off of employees of the Business, or
any terminations that in the aggregate would constitute a mass
lay-off of employees of the Business, within 90 days of the
Closing.
SECTION 7.04 CONTINUING ASSISTANCE. Subsequent to the
Closing, Seller and KGF will refer all customer, supplier, and
other inquires relating to the Business to Buyer. Subsequent to
the Closing, Seller and KGF will provide to Buyer, promptly
following receipt thereof, copies (on which information unrelated
to the Business may be redacted) of all mail and other
communications relating to the Business not conveyed to Buyer
pursuant to Section 1.01(a)(iii) on account of not relating
primarily to the Business. At any time and from time to time
after the Closing, at Seller's request and without further
consideration or compensation whatsoever, Buyer will execute and
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deliver such assumption agreements and take such action as Seller
may reasonably deem necessary in order to more effectively assume
the Assumed Liabilities. At any time and from time to time after
the Closing, at Buyer's request and without further consideration
or compensation whatsoever, Seller and KGF will execute and
deliver such transfer documents and take such action as Buyer may
reasonably deem necessary in order to more effectively evidence
Buyer's title to the Purchased Assets.
SECTION 7.05 EXPENSES AND TRANSFER TAXES.
(a) Except as otherwise expressly provided herein,
each party will pay all of its expenses, including attorneys' and
accountants' fees, in connection with the negotiation of this
Agreement, the performance of its obligations hereunder (whether
or not the Closing occurs), and the consummation of the
transactions contemplated by this Agreement.
(b) Buyer and Seller shall each pay one-half of all
state, county or local sales, excise, value added, use,
registration, stamp or other transfer taxes and similar taxes,
levies, charges or fees required to be paid on the transfer of
any of the Purchased Assets. The parties will cooperate in
providing each other with appropriate resale exemption
certification and other similar tax and fee documentation.
(c) Seller shall be responsible for and shall pay any
income tax caused by the sale and transfer of the Purchased
Assets. Seller shall provide to Buyer: (i) not later than the
10th day of the calendar month immediately following the Closing
Date, a copy of the stock sale report for the sale of common
stock of Birds Eye Mexico to Buyer, prepared by an independent
public accountant registered with the Ministry of Finance and
Public Credit of Mexico and filed with the appropriate
authorities; and (ii) not later than thirty (30) days following
presentation of the notice referred to in (i) above, a copy of
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the income tax return evidencing Seller's payment of any tax due
in connection with such sale. With regard to the income tax
payable on the sale of the stock of Birds Eye Mexico, such tax
shall be based upon 30% of KGF's profit from such sale, the
allocated purchase price of which shall be determined as set
forth in Section 7.10.
SECTION 7.06 PRESS RELEASES AND ANNOUNCEMENTS. No press
releases, announcements or other disclosure related to this
Agreement or the transactions contemplated herein will be issued
or made without the joint approval of Buyer on the one hand, and
Seller and KGF on the other hand, except for any public
disclosure which Buyer or Seller and KGF in good faith believes
is required by law (in which case the disclosing party will to
the extent reasonably feasible consult with the other party prior
to making such disclosure), provided, however, that nothing set
forth above shall in any way prevent Buyer from making releases,
announcements, or other disclosures about the existence of this
Agreement and the transactions contemplated herein and/or the
operation of the Business after Closing. Buyer, Seller and KGF
will cooperate to prepare a joint press release to be issued on
the Closing Date and, upon the request of either Buyer on the one
hand, or Seller and KGF on the other hand, at the time after the
signing of this Agreement.
SECTION 7.07 RETENTION AND ACCESS TO RECORDS.
(a) The parties recognize that Seller and KGF will
require full access to all appropriate records and documentation
of the Business in connection with audits for tax periods in
which Seller and KGF owned the Business. The parties agree that
Seller and KGF may, solely for such purpose, (i) maintain copies
of any business records of the Business which are included in the
Purchased Assets, and (ii) prepare a comprehensive index and file
plan of any business records of the Business that are included in
the Purchased Assets (the "File Plan").
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<PAGE> 75
(b) Buyer agrees to maintain such records in a manner
consistent with the File Plan and keep such materials reasonably
accessible for a period of not less than ten years from the
Closing Date (plus any additional time during which Buyer has
been advised that there is an ongoing tax audit with respect to
periods period to the Closing Date).
(c) During such period, Buyer agrees to give Seller
and KGF at their expense reasonable cooperation, access
(including copies), and staff assistance, as needed, during
normal business hours with respect to books and business records
and other financial data delivered to Buyer hereunder for (i) the
preparation of tax returns and financial statements and (ii) the
management and handling of tax audits.
SECTION 7.08 NON-COMPETITION.
(a) Seller and KGF agree that for a period of four
years commencing with the Closing Date (the "Term"), it will not,
directly or indirectly, either for itself or for any other
person, partnership, corporation or company, permit its name to
be used by or participate in any enterprise involved in the
business of producing, manufacturing, marketing, distributing or
selling frozen vegetables anywhere in the United States of
America, Canada or Mexico (the "Territory"). For purposes of
this Agreement, the term "Participate" includes any direct or
indirect interest in any enterprise, whether as stockholder,
partner, or otherwise (other than by ownership of less than five
percent of the stock of a publicly-held corporation) or
otherwise. Seller and KGF agree that this covenant is reasonably
designed to protect Buyer's substantial investment and is
reasonable with respect to its duration, geographical area and
scope.
(b) During the non-competition period, neither Seller
nor KGF shall induce or attempt to induce any employee or
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customer of the Business to leave the employ of the Business or
cease or limit its business with the Business or in any way
interfere with the relationship between the Business and any
employee or customer of the Business.
(c) Notwithstanding anything set forth above to the
contrary:
(i) Seller or KGF may hereafter purchase, or otherwise
become affiliated with or participate in, an enterprise
producing, manufacturing, marketing or selling frozen
vegetables in the Territory if less than thirty (30%) of the
aggregate gross revenues in the Territory for its most
recently concluded fiscal year were derived from producing,
manufacturing, marketing or selling frozen vegetables in the
Territory;
(ii) Seller and KGF may continue to own and operate or
hereafter own, operate, acquire or otherwise become
affiliated with any wholesale or retail grocery business,
any grocery distribution business or any foodservice
distribution business;
(iii) Seller and KGF may engage in any joint marketing,
promotion or in-store merchandising program for any of
Seller's or KGF's other products and any frozen vegetable
products produced by or for any person not bound by this
paragraph provided that no such program shall be designed to
or executed in such a manner so as to create the impression
that Seller or KGF is engaged in the frozen vegetable
business;
(iv) Seller and KGF may continue to own, market and
sell Seller's existing frozen vegetable and sauce side dish
products as presently sold under The Budget Gourmet
trademark; and
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(v) Seller and KGF may continue to own, market and
sell, develop or acquire product lines that include frozen
vegetables so long as such products also include amounts of
other components such as legumes/beans (but excluding green
beans and lima beans and provided Seller has, acting
reasonably, determined that such product is to be marketed
as a "center of the plate" meal), rice, pasta, meat, fish or
shellfish (but not merely a sauce, including a cheese sauce)
in quantities sufficient to enable Seller or KGF to market
such product as a product containing such other component;
provided, however, in no event shall Seller or KGF market or
sell for a period of eighteen (18) months after the Closing
Date any product which contains frozen vegetables in a form-
filled, sealed, polymer bag unless such product also
contains sufficient quantities of meat, chicken, fish or
shellfish to enable Seller or KGF to market such product as
a product containing such other component.
(d) Seller and KGF agree and acknowledge (i) that in
the event any of the duration, geographical area, scope or other
limitations set forth above in this Section is deemed to be
unreasonable by a court of competent jurisdiction, then the
maximum limitation that such court deems reasonable shall be
substituted for the duration, geographical area, scope or other
limitation provided herein, and (ii) that any breach of the
provisions of this Section is likely to result in irreparable
injury to the Buyer and that a remedy at law alone will be an
inadequate remedy for such a breach, and that in addition to any
other remedy it may have, the Buyer shall be entitled to enforce
the specific performance of this Section and to seek both
temporary and permanent injunctive relief to prevent or redress
such injury (to the maximum extent permitted by law) without the
necessity of proving actual damages.
SECTION 7.09 BULK TRANSFER LAWS. Buyer hereby waives
compliance by Seller and KGF with the provisions of any so-called
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bulk transfer laws of any jurisdiction in connection with the
sale of the Purchased Assets. Notwithstanding anything to the
contrary in Section 7.02, Seller and KGF agree to indemnify Buyer
against all liability, damage or expense which Buyer may suffer
due to the failure to so comply or to provide notice required by
any such law.
SECTION 7.10 ALLOCATION OF PURCHASE PRICE AND ASSUMED
LIABILITIES. Prior to the Closing Date, Buyer, Seller and KGF
shall agree upon the portion of the Purchase Price to be
allocated to the stock of Birds Eye Mexico. As provided under
Section 7.17, Buyer, Seller and KGF shall agree upon the portion
of the Purchase Price to be allocated to the Fulton, New York
facility. If Buyer, Seller and KGF cannot agree on an allocation
for the Fulton, New York facility by December 1, 1993 or the
stock of Birds Eye Mexico by Closing, then the net book value as
shown on the Latest Balance Sheet (or on the balance sheet of
Seller in the case of such stock) shall be allocated to such
assets. No later than ninety (90) days after Closing, Buyer
shall prepare and submit to Seller and KGF for their approval,
which approval will not be unreasonably withheld, its proposed
allocation of the remainder of the Purchase Price and the Assumed
Liabilities. In the event Buyer, Seller and KGF agree on such
allocation, such allocation shall be reflected in an allocation
schedule which shall become part of this Agreement. Buyer,
Seller and KGF agree to allocate the remainder of the Purchase
Price and the Assumed Liabilities in accordance with such
schedule, to be bound by such allocation and the allocation in
the first sentence of this Section for all purposes, to account
for and report the purchase and sale contemplated hereby for all
purposes (including, without limitation, financial, accounting
and tax purposes) in accordance with such allocations, and not to
take any position (whether in financial statements, audits, tax
returns or otherwise) which is inconsistent with such allocations
without the prior written consent of the other, except to the
extent such consistency is not permitted by applicable law or
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generally accepted accounting principles. The parties will
exchange drafts of any information returns required by IRC
Section 1060 and any similar state statutes, at least sixty (60)
days prior to filing such returns and will discuss in good faith
any modifications suggested by the receiving party. In the event
Buyer, Seller and KGF fail to agree on the allocation of the
remainder of the Purchase Price and the Assumed Liabilities prior
to 150 days after the Closing, all references to an allocation of
the remainder of the Purchase Price and Assumed Liabilities in
this Agreement shall be of no force and effect.
SECTION 7.11 THRID PARTY BENEFICIARIES. This Agreement
does not create any rights in parties who are not a party to this
Agreement.
SECTION 7.12 TRADEMARK LICENSE. Effective as of the
Closing, Seller and KGF grant Buyer a non-exclusive, non-
assignable, royalty-free license to use the Kraft General Foods,
Kraft, General Foods, and The All American Gourmet Company
trademarks, and any other trademarks or names which appear
thereon, on existing packaging, stationery or signage for a
period of up to twenty-four months after Closing.
SECTION 7.13 NON-ASSIGNABLE UNDERTAKINGS AND RIGHTS. This
Agreement shall not constitute an agreement to assign any claim,
contract, license, lease, commitment, sales order or purchase
order which would otherwise be assigned hereunder if any
attempted assignment of such right or obligation without the
consent of the other party thereto would constitute a breach
thereof or would in any way affect the rights of Seller or KGF
thereunder. If such consent is not obtained, Buyer shall act as
the agent for Seller or KGF in order to obtain for Buyer the
benefit thereunder. To the extent that consents or waivers are
not obtained prior to Closing, Seller, KGF and Buyer shall
cooperate with each other to establish arrangements that are
reasonable and lawful as to both Seller and KGF on the one hand,
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and Buyer on the other hand, and which result in the benefits and
obligations under such assumed contracts, real property leases
and permits being apportioned in a manner that is in accordance
with the purpose and intention of this Agreement.
SECTION 7.14 COLLECTION OF ACCOUNTS RECEIVABLE. For
purposes of determining whether a receivable of a particular
customer has been collected, payments received from that customer
shall be applied on a first-in, first-out basis, except for cash
on delivery payments and except as otherwise directed by the
customer. Buyer shall assign to Seller all uncollected accounts
receivable for which it seeks indemnification, at the time such
indemnification is sought.
SECTION 7.15 TAX ELECTIONS.
(a) KGF and Seller acknowledge that, with respect to
Buyer's purchase of the stock of Birds Eye Mexico, Buyer may make
an election under Section 338 of the Code and may make actual or
deemed elections under similar state and local provisions.
(b) Buyer agrees not to permit Birds Eye Mexico to
make any distribution, or to undertake any extraordinary
transactions that would give rise to Subpart F income to Seller,
in Birds Eye Mexico's tax year in which the Closing takes place
without express written consent of Seller.
SECTION 7.16 REPAYMENT OF INTER-COMPANY LOAN. No later
than three business days prior to Closing, Seller shall deliver
to Buyer a statement setting forth the amount of the inter-
company loan from Kraft General Foods de Mexico, S.A. de C.V.
Mexico ("KGFM"), including interest to the Closing Date (the
"Loan Amount"). The Loan Amount will be the same amount as will
be set forth with respect to such indebtedness on the Estimated
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Net Assets Statement. On the Closing Date, immediately after
closing, Buyer will cause Birds Eye Mexico to repay to KGFM the
Loan Amount.
SECTION 7.17 NEW YORK GAINS TAX. No later than December
1, 1993, Buyer shall prepare and submit to Seller and KGF for
their approval, which approval will not be unreasonably withheld,
the appraised fair market value of the Fulton, New York facility.
When agreed upon, such amount will become part of the overall
allocation prepared in accordance with the provisions of Section
7.10. Seller agrees to comply as soon as practicable, after the
fair market value for Fulton has been agreed to, with the
requirements of Article 31-B of the tax law of the State of New
York and the regulations applicable thereto, as the same, from
time to time be amended (collectively the "Gains Tax Law").
Seller agrees to indemnify Buyer from the New York State Gains
Tax incurred as a result of the transactions contemplated by this
Agreement. Buyer agrees to cooperate with Seller in complying
with the Gains Tax Law in a timely manner.
SECTION 7.18 ENVIRONMENTAL REMEDIATION.
(a) In the event that the Phase I Environmental Report
discloses a condition or practice which could reasonably result
in liability or remediation cost to Buyer in the event the
Closing occurs under any applicable environmental law or
governmental regulation other than as disclosed in Schedule 4.24,
Seller shall have fifteen (15) days to exercise one of the
following options: (i) agree to further investigate such
condition or practice and to remediate any such condition or
practice that is found to exist in a manner reasonably acceptable
to Buyer, or (ii) elect to postpone Closing until the completion
of a Phase II Environmental Report. If Seller elects to take the
actions set forth in (i) above, Buyer may elect to postpone
Closing until the completion of a Phase II Environmental Report.
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<PAGE> 82
If the Phase II Environmental Report discloses conditions or
practices which could reasonably result in liability or
remediation cost under any applicable environmental law or
governmental regulations, Seller agrees to remediate such
condition or practice in a manner reasonably acceptable to Buyer;
provided that if the Phase II Environmental Report is completed
before Closing and the Environmental Consultant's good faith
estimate of the total cost of all required remediation is greater
than $15 million then either Buyer or Seller may elect to
terminate this Agreement by delivery of notice to the other party
within ten (10) days of the calculation of such good faith
estimate.
(b) Seller agrees to remediate the environmental
matters set forth in Schedule 4.24(2)(c) and 4.24(3)(d) in a
manner reasonably acceptable to Buyer.
(c) Buyer agrees to give Seller reasonable access to
the applicable real property in order to fulfill its obligations
under the Section 7.18.
ARTICLE 8
MISCELLANEOUS
SECTION 8.01 AMENDMENT AND WAIVER.
(a) This Agreement may be amended, or any provision of
this Agreement may be waived, provided that any such amendment or
waiver will be binding upon Seller and KGF only if set forth in a
writing executed by Seller and KGF, and any such amendment or
waiver will be binding upon Buyer only if set forth in a writing
executed by Buyer.
(b) No course of dealing between or among any persons
having any interest in this Agreement will be deemed effective to
modify, amend or discharge any part of this Agreement or any
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rights or obligations of any person under or by reason of this
Agreement.
SECTION 8.02 NOTICES. Except as otherwise expressly set
forth in this Agreement, all notices, demands and other
communications to be given or delivered under or by reason of the
provisions of this Agreement will be in writing and will be
deemed to have been given and to have been received when
delivered personally, or by documented overnight delivery
service, or sent by telecopy, telefax, or other electronic
transmission service, provided a confirmation copy is also sent
no later than the next business day by first class mail, return
receipt requested. Notices, demands and communications to Buyer,
Seller or KGF will, unless another address is specified in
writing, be sent to the address indicated below:
<TABLE>
<CAPTION>
NOTICES TO SELLER OR KGF: WITH A COPY TO:
<S> <C>
Kraft General Foods, Inc. Kraft General Foods, Inc.
Three Lakes Drive Three Lakes Drive
Northfield, IL 60093 Northfield, IL 60093
Attn.: General Counsel Attn.: John E. Kelly
FAX: (708) 646-4431 FAX: (708) 646-4431
NOTICES TO BUYER: WITH A COPY TO:
Dean Foods Company Dean Foods Company
3600 North River Road 3600 North River Road
Franklin Park, IL 60131 Franklin Park, IL 60131
Attn.: President Attn.: General Counsel
FAX: (708) 671-8744 FAX: (708) 671-8744
</TABLE>
SECTION 8.03 ASSIGNMENT. This Agreement and all of the
provisions hereof will be binding upon and inure to the benefit
of the parties hereto and their respective successors and
permitted assigns, except that neither this Agreement nor any of
the rights, interests or obligations hereunder may be assigned by
either party without prior written consent of the other party;
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<PAGE> 84
provided, however, that notwithstanding the foregoing Buyer may
assign its rights and obligations under this Agreement to one or
more wholly owned subsidiaries of Buyer which agrees in a writing
reasonably acceptable to Seller to be bound by and to perform
fully all of Buyer's obligations hereunder and, provided that, in
the event of any such assignment of Buyer, Buyer shall remain
liable hereunder for the performance of Buyer's obligations
hereunder notwithstanding such assignment. Nothing in this
Agreement, express or implied, shall confer upon any Person,
other than the parties hereto, and their successors and assigns,
any rights or remedies under or by reason of this Agreement.
Section 8.04 SEVERABILITY. Whenever possible, each
provision of this Agreement will be interpreted in such manner as
to be effective and valid under applicable law, but if any
provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provisions will be ineffective
only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining
provisions of this Agreement.
Section 8.05 NO STRICT CONSTRUCTION. The language used in
this Agreement will be deemed to be the language chosen by the
parties hereto to express their mutual intent, and no rule of
strict construction will be applied against any person.
Section 8.06 CAPTIONS. The captions used in this
Agreement are for convenience of reference only and do not
constitute a part of this Agreement and will not be deemed to
limit, characterize or in any way affect any provision of this
Agreement, and all provisions of this Agreement will be enforced
and construed as if no caption had been used in this Agreement.
Section 8.07 COMPLETE AGREEMENT. This document and the
documents referred to herein contain the complete agreement among
the parties and supersede any prior understandings, agreements or
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representations by or among the parties, written or oral, which
may have related to the subject matter hereof in any way.
SECTION 8.08 GOVERNING LAW/JURISDICTION.
(a) The substantive law (and not the law of conflicts)
of the State of Illinois will govern all questions concerning the
construction, validity and interpretation of this Agreement and
the performance of the obligations imposed by this Agreement.
(b) The parties hereby irrevocably and unconditionally
consent to submit to the exclusive jurisdiction of the courts of
the State of Illinois and of the United States of America located
in the City of Chicago for any actions, suits, or proceedings
arising out of or relating to this Agreement and the transactions
contemplated hereby (and agree not to commence any action, suit
or proceeding relating thereto except in such courts), and
further agree that service of any process, summons, notice or
document by U.S. registered mail to the address set forth above
shall be effective service of process for any action, suit or
proceeding brought by a party against a party in any such court
relating to this Agreement or the transaction contemplated
hereby. The parties hereby irrevocably and unconditionally waive
any objection to the laying of venue of any action, suit or
proceeding arising out of this Agreement or the transactions
contemplated hereby, in the courts of the State of Illinois or
the United States of America located in the City of Chicago, and
hereby further irrevocably and unconditionally waive and agree
not to plead or claim in any such court that any such action,
suit or proceeding brought in any such court has been brought in
an inconvenient forum.
SECTION 8.09 COUNTERPARTS. This Agreement may be executed
in one or more counterparts (including by means of FAXed
signature pages), any one of which need not contain the
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signatures of more than one party, but all such counterparts
taken together will constitute one and the same instrument.
SECTION 8.10 INVESTMENT ADVISORS. Buyer has not used an
financial advisor in connection with the transactions
contemplated by this Agreement, and there are no claims for
brokerage commissions, finders' fees or similar compensation in
connection with the transactions contemplated by this Agreement
based on any arrangement or agreement by or on behalf of Buyer,
except pursuant to an arrangement with J.P. Morgan Securities,
Inc. for which Buyer is solely responsible. Neither Seller, KGF
nor Birds Eye Mexico has retained any broker or finder or
incurred any liability or obligation for any brokerage
commissions or finder's fees or similar compensation in
connection with the transactions contemplated by this Agreement
based on any arrangement or agreement by or on behalf of Seller,
KGF or Birds Eye Mexico except pursuant to an arrangement with
Morgan Stanley & Co., for which Seller and KGF is solely
responsible. Notwithstanding anything to the contrary in Section
7.02, Buyer will indemnify Seller and KGF for any breach of its
representation in this Section, and Seller and KGF will indemnify
Buyer for any breach of their representation in this Section.
SECTION 8.11 DISCLAIMER REGARDING PROJECTIONS. In
connection with Buyer's investigation of the Business, Buyer has
received from Seller and KGF certain projections, including but
not limited to projected statements of income, balance sheets and
statements of changes in financial position of the Business for
the fiscal year ending December 31, 1988 and subsequent years and
certain business plan information for such and succeeding fiscal
years. This information includes the information contained in a
book entitled "Confidential Offering Memorandum", dated July
1993. Buyer acknowledges that there are uncertainties inherent
in attempting to make such projections and other forecasts and
plans, that Buyer is familiar with such uncertainties, that Buyer
is taking full responsibility for making its own evaluation of
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the adequacy and accuracy of all projections and other forecasts
and plans so furnished to it, and that Buyer shall have no claim
against Seller or KGF with respect thereto. Accordingly, neither
Seller nor KGF makes any representation or warranty with respect
to such projections and other forecasts and plans.
SECTION 8.12 HSR ACT COMPLIANCE. Buyer and KGF shall each
file or cause to be filed with the Federal Trade Commission and
the United States Department of Justice any notifications
required to be filed under the HSR Act with respect to the
transactions contemplated herein and will each bear the costs and
expenses of their respective filings. Buyer will pay the filing
fee. Each of Buyer and KGF will use its respective good faith
efforts to make such filings promptly, to respond to any requests
for additional information made by either of such agencies and to
cause the waiting periods under the Act to terminate or expire at
the earliest possible date and to resist in good faith, at each
of their respective cost and expense (including, without
limitation, the institution or defense of legal proceedings), any
assertion that the transactions contemplated herein constitute a
violation of the antitrust laws, all to the end of expediting
consummation of the transactions contemplated herein. Each of
the parties has independently concluded that the risk that the
transactions contemplated herein constitute a violation of the
antitrust laws (whether federal or state) is minimal;
accordingly, notwithstanding any other provision of this
Agreement, no party shall be required to indemnify any other
party with respect to any violation of, nor shall any opinion of
counsel delivered in connection herewith be deemed to address,
any antitrust laws.
SECTION 8.13 WAIVER OF TRIAL BY JURY. Buyer on the one
hand, and Seller and KGF on the other hand, each waive any right
to trial by jury with respect to any claim or action arising out
of this Agreement, any Schedule hereto or any action or omission
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of Buyer on the one hand, or Seller or KGF on the other hand, in
connection with the transactions contemplated hereby or thereby.
SECTION 8.14 REPRESENTATION BY COUNSEL, INTERPRETATION.
Seller and KGF on the one hand, and Buyer on the other hand, each
acknowledges that it has been represented by counsel in
connection with this Agreement and the transactions contemplated
by this Agreement. Accordingly, any rule of law or any legal
decision that would require interpretation of any claimed
ambiguities in this Agreement against the party that drafted it
has no application and is expressly waived. The provisions of
this Agreement shall be interpreted in a reasonable manner to
effect the intent of the parties
SECTION 8.15 ATTACHMENTS AND SCHEDULES. Disclosure of any
fact or item in any Attachment or Schedule hereto shall not
necessarily mean that such fact or item individually is material
to the Business or to its operations or assets.
SECTION 8.16 CONTINUING PURCHASING RELATIONSHIP. Buyer
and Seller shall negotiate in good faith to attempt to reach
agreement concerning the terms and conditions, including price,
pursuant to which Seller will continue to cooperate with the
Business after Closing beyond the period set forth in the
Transition Agreement in purchasing vegetables under existing
arrangements, including under that certain Processing and
Packaging Agreement with Agripac disclosed in Section 4.20.
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<PAGE> 89
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement on the day and year first above written.
KRAFT GENERAL FOODS, INC.
By: /s/ William J. Eichar
---------------------------
Name: William J. Eichar
Title: Vice President
THE ALL AMERICAN GOURMET COMPANY
By: /s/ Lawrence S. Benjamin
---------------------------
Name: Lawrence S. Benjamin
Title: President
DEAN FOODS COMPANY
By: /s/ Timothy J.Bondy
---------------------------
Name: Timothy J. Bondy
Title: Vice President, Finance
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<PAGE> 90
AMENDMENT NUMBER 1 TO
ASSET PURCHASE AGREEMENT
This AMENDMENT NUMBER 1 to that certain Asset Purchase
Agreement by and among Kraft General Foods, Inc., The All
American Gourmet Company, and Dean Foods Company dated as of
October 30, 1993 (the "Agreement") is entered into as of this
27 day of December, 1993.
WHEREAS KGF, Seller and Buyer wish to amend the Agreement as
hereinafter set forth to memorialize certain agreements reached
between them concerning the purchase and sale of the Business.
Now, therefore, the parties hereto agree to as follows:
1. Terms used in this Amendment Number 1 and not herein
defined shall have the meanings described to such terms in the
Agreement.
2. Section 1.01(a)(ii) is hereby amended to read as
follows:
(ii) All of the issued and outstanding capital stock of
Birds Eye Mexico (the "Birds Eye Mexico Shares");
3. Section 1.02(a) is hereby amended to read as follows:
(a) AGGREGATE CONSIDERATION. At Closing (as defined
in-Section 1.04), Buyer will pay to Seller $132,900,000;
increased dollar for dollar to the extent the amount set forth on
the Estimated Net Assets Statement (as defined in Section 1.02
(b)) exceeds Net Assets (as defined in Section 1.02(f)) as
reflected in the Latest Balance Sheet (as defined in Section
4.04), or decreased dollar for dollar to the extent the amount
set forth on the Estimated Net Assets Statement is less than Net
Assets reflected in the Latest Balance Sheet (the "Initial
Purchase Price"). The Initial Purchase Price will be paid by
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wire transfer or equivalent means, in immediately available funds
in the United States as Seller shall direct to Buyer. The
Initial Purchase Price shall be adjusted as set forth in (c)
below. On the Mexican Closing Date (as defined in Section 1.04),
Buyer will pay to Seller $7,000,000 (the "Mexican Purchase
Price"). The aggregate of the Initial Purchase Price, as so
adjusted, plus the Mexican Purchase Price, is referred to as the
"Purchase Price".
4. The first sentence of Section 1.02(d) is hereby amended
to read as follows:
(d) As soon as practicable, but in no event later than
sixty (60) days following the Closing Date, Seller shall prepare
a balance sheet of the Business as of the close of business on
the day prior to the Closing Date (or as of 12:01 a.m. on
December 25, 1993 if the Closing occurs on December 27, 1993),
and not later than seventy-five (75) days following the Closing
Date Seller shall deliver the same to Buyer together with a
report thereon of Seller's independent public accountants based
on an examination conducted by such accountants in accordance
with generally accepted auditing standards (the "Closing Date
Balance Sheet").
5. Section 1.04 is hereby amended to read as follows:
SECTION 1.04 THE CLOSING.
The closing of the purchase and sale of the
Purchased Assets, other than the Birds Eye Mexico Shares, the
assumption of the Assumed Liabilities and the other transactions
contemplated by this Agreement (the "Closing") will take place at
the Northfieid, Illinois offices of KGF, at 9:00 a.m. local time
on December 27, 1993 or at such other place or on such other date
as is mutually agreeable to the parties; and provided, however,
that if on the date on which Closing is scheduled any of the
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conditions to Closing set forth in this Agreement have not been
satisfied or waived by the party entitled to the benefit of such
condition, the Closing will take place on the third business day
after all conditions have been satisfied or waived. The date and
time of the Closing are herein referred to as the "Closing Date".
If the Closing shall occur on any day in 1993, then the purchase
and sale of the Birds Eye Mexico Shares (the "Mexican Closing")
shall take place at 1:00 a.m. Chicago time on January 1, 1994,
but if the Closing shall occur on any day in 1994, then the
Mexican Closing shall take place on the same day as the Closing
(the day on which the Mexican Closing occurs is referred to as
the "Mexican Closing Date").
6. Sections 1.05(e), (f) and (g) are hereby amended to
read as follows:
(e) Buyer, Seller, KGF and the Escrow Agent (as
defined in the Escrow Agreement) shall enter into a mutually
acceptable Escrow Agreement.
(f) Buyer shall deliver the Initial Purchase Price to
Seller, by wire transfer or equivalent means, in immediately
available funds in the United States as Seller shall have
directed to Buyer.
(g) Buyer, Seller and KGF shall execute and deliver a
cross receipt acknowledging receipt from the appropriate other
parties of the respective deliveries.
7. Sections 2.01((h)(v) and (h)(vi) are hereby amended to
read as follows:
(v) Certificates representing all of the Birds Eye
Mexico Shares duly endorsed for transfer to Buyer, delivered to
Buyer, or delivered into escrow, as appropriate;
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(vi) A resignation from each director of Birds Eye
Mexico (other than Mr. G. Rabago) delivered to Buyer, or
delivered into escrow, as appropriate;
B. Section 3.04 is an addition to the Agreement and reads
as follows:
SECTION 3.04 ADDITIONAL COVENANTS OF SELLER AND KGF.
During the period between the Closing and the Mexican Closing, if
any, Seller and KGF will cause Birds Eye Mexico to be operated in
the ordinary course of business for the account of Buyer.
9. The first paragraph of Section 4.18 is hereby amended
to read as follows:
SECTION 4.18. INTELLECTUAL PROPERTY. Schedule 4.18
contains (i) a complete and accurate list of all patents,
trademarks and trademark rights currently used in connection with
the Business (whether or not included in the Purchased Assets),
identifying those which are included in the Purchased Assets,
(ii) a complete and accurate list and description of all licenses
and other agreements relating to any of the foregoing, and (iii)
summary descriptions of agreements between the Business and
Unilever with respect to the Birds Eye trademark (complete and
accurate copies of which have been delivered to Buyer prior to
the execution of this Agreement). Seller or KGF is, in the
United States, Canada and Mexico, the sole and exclusive owner of
the federally registered trademarks listed on Schedule 4.18, free
and clear of any rights of other persons, and has the sole and
exclusive right to use the same in the conduct of the Business.
There is no written agreement or understanding, written or oral,
including, without limitation, that certain letter agreement
dated September 14, 1960 from General Foods Corporation,
predecessor in interest to KGF, to Unilever Limited ("Unilever"),
that in any way grants Unilever or any affiliate of Unilever or
any successor in interest to Unilever or to any such affiliate
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any right to or interest in the Birds Eye trademark in the United
States, Canada or Mexico. Except as set forth on Schedule 4.18,
with respect to the foregoing items of intellectual property and
the service marks, copyrights, formula and trade dress currently
used in the Business:
10. Section 7.01 is hereby amended to read as follows:
SECTION 7.01 SURVIVAL. The representations,
warranties, covenants and agreements set forth in this Agreement,
or in any writing delivered in connection with this Agreement,
will survive the Closing Date and the consummation of the
transactions contemplated hereby, notwithstanding any examination
made for or on behalf of Buyer or Seller; provided, however, that
the representations and warranties of Seller and KGF contained in
Article 4 (other than those in Section 4.21, which shall survive
until the expiration of the respective statutes of limitation
governing claims with respect thereto, and other than those in
the third sentence of Section 4.18 which shall survive
indefinitely, and other than those in Section 4.24 which shall
survive until December 31, 1996) and the representations and
warranties of Buyer contained in Article 5 shall survive only
until December 31, 1994. No claim for the recovery of
indemnifiable damages based upon the inaccuracy of such
representations and warranties may be asserted by a party after
such representations and warranties shall be thus extinguished;
provided, however, that claims first asserted in writing within
the applicable period shall not thereafter be barred.
11. Section 7.02(a) is hereby amended to read as follows:
(a) Seller and KGF agree to jointly and severally
indemnify Buyer and its affiliates and hold them harmless against
any loss, liability, claim, damage or expense (including, without
limitation, costs of investigation and reasonable legal expenses
and costs) which Buyer or any of its affiliates may suffer,
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<PAGE> 95
sustain or become subject to, as the result of a breach of any
representation, warranty, covenant, or agreement by Seller or KGF
contained in this Agreement or the other agreements contemplated
hereby, or the failure of Seller or KGF to pay, discharge or
perform any of the Excluded Liabilities; provided, however, that
neither Seller nor KGF will be liable for any such loss,
liability, claim, damage, or expense arising out of a breach by
Seller or KGF of any representation or warranty contained in
Article 4 (other than fraudulent acts or omissions and other than
claims for breach of the representations and warranties contained
in the third sentence of Section 4.18) unless the aggregate
amount of all such losses, claims, damages, liabilities, and
expenses resulting to Buyer from all such breaches or claims
exceeds an amount equal to $2,000,000.00 (the "Allowance"), in
which case Seller and KGF will only be liable for such amounts in
excess of the amount of the Allowance; and provided further, that
in no event shall Seller's or KGF's liabilities arising out of a
breach by Seller or KGF (i) of any representations or warranties
contained in Article 4 (other than claims for breach of the
representations and warranties contained in the third sentence of
Section 4.18) exceed one-half of the Purchase Price, or (ii) of
the representations and'warranties contained in the third
sentence of Section 4.18 exceed the Purchase Price.
12. Section 7.09 is hereby amended to read as follows:
SECTION 7.09 BULK TRANSFER AND SALES RECEIPTS AND USE
TAX LAWS. Buyer hereby waives compliance by Seller and KGF with
the provisions of any so-called bulk transfer laws of any
jurisdiction in connection with the sale of the Purchased Assets.
Notwithstanding anything to the contrary in Section 7.02, Seller
and KGF agree to indemnify Buyer against all liability, damage or
expense which Buyer may suffer (i) due to the failure to so
comply with any so-called bulk transfer laws or to provide notice
required by any such law, or (ii) due to the failure of Seller,
KGF or Buyer to satisfy the provisions of the New York Tax Laws
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<PAGE> 96
relating to any sales, receipts or use taxes arising out of the
transactions contemplated by this Agreement.
13. Section 7.16 is hereby amended to read as follows:
SECTION 7.16 REPAYMENT OF INTER-COMPANY LOAN. No
later than three business days prior to Closing, Seller shall
deliver to Buyer a statement setting forth the amount of the
inter-company loan from Kraft General Foods de Mexico, S.A. de
C.V. ("KGFM"), including interest through January 2, 1994 (the
"Loan Amount"). The Loan Amount will be the same amount as (i)
the amount that will be set forth with respect to such
indebtedness on the Estimated Net Assets Statement, plus (ii)
interest from December 25 through January 2, 1994. On the
Mexican Closing Date (or the first business day thereafter),
Buyer will repay on behalf of Birds Eye Mexico, to KGF, for the
account of KGFM, the Loan Amount, plus any additional interest,
if any, for any period between January 2, 1994 and the Mexican
Closing Date.
14. Section 7.18-(b) is hereby amended to read as follows:
(b) Seller agrees to remediate the environmental
matters set forth on Schedule 4.24(2)(c) and 4.24(3)(d) in a
manner reasonably acceptable to Buyer. Specifically, with
respect to the Number 6 fuel oil tank in Fulton, New York and the
underground storage tanks in Waseca, Minnesota which are referred
to in such Schedule references, Seller agrees to remove such
tanks, remediate any environmental problems caused by the
presence of such tanks and to pay to Buyer a cash allowance equal
to the cost of replacing such tanks with tanks of comparable
volume which meet current regulatory requirements for the
contents stored therein, as agreed to by the parties and based on
estimates of the costs for such replacements from reliable
contractors. Buyer agrees to use all reasonable commercial
efforts to insure that the removals, remediations and payments
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are made no later than August 31, 1994. Furthermore, the parties
agree that Seller will promptly pay to Buyer upon presentation of
reasonable documentation, one-half of the actual cost incurred by
Buyer to third party contractors for the disposal and replacement
of the Substation 1 transformer referred to in that certain Phase
I Environmental Site Assessment for the Fulton, New York facility
dated December, 1993 prepared by Metcalf & Eddy, Inc., which
contains a residual presence of PCBs with a transformer of
comparable capacity which meets current regulatory requirements.
15. A new Section 8.17 is added to the Agreement which
reads in its entirety as follows:
SECTION 8.17 AGREEMENT CONCERNING THE UNITED
REFRIGERATED SERVICES, INC. MASTER AGREEMENT.
(a) At Closing, Seller agrees to deliver to United
Refrigerated Services, Inc. ("United") a letter notifying United
that it has sold the Fulton production facility and is exercising
its option to purchase the Warehouse and the Parcel as those
terms are defined in that certain Master Agreement dated as of
November 5, 1987 by and between United and Seller, as successor
in interest to General Foods Manufacturing Corporation (the
"Master Agreement"), all in accordance with the terms and
conditions of the Master Agreement and that certain letter
agreement dated as of December 23, 1993 from Seller and Buyer to
United.
(b) Prior to the closing of the purchase and sale of
the Warehouse and the Parcel, Seller agrees to assign its right
to purchase the Warehouse and the Parcel to Buyer, and Buyer
agrees to assume and perform in all respects in a timely manner,
Seller's obligation to purchase the Warehouse and the Parcel.
(c) From and after the Closing, Seller will keep Buyer
fully informed about all aspects of the purchase and sale of the
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<PAGE> 98
Warehouse and the Parcel and shall use all reasonable commercial
efforts to carry out any reasonable instructions and directions
of Buyer with respect to such purchase and sale.
(d) Buyer agrees to indemnify KGF and Seller from and
against any and all costs, expenses or liabilities, including,
without limitation, the payment of the purchase price for the
purchase and sale of the Warehouse and the Parcel and including
attorney fees, in the event that Buyer fails for any reason to
satisfy any of its obligations to purchase the Warehouse and the
Parcel at the closing of such purchase and sale.
16. The first paragraph of Schedule 4.01 is hereby amended
to read as follows:
Birds Eye Mexico is incorporated under the federal laws
of Mexico under Public Instrument No. 44,017, dated July 14,
1967, certified by Mr. Enrique del Valle, Notary Public No. 21 of
Mexico City, recorded with the Public Registry of Commerce of
Celaya, Gto., as per entry numbers 241 and 242, Vol. XXVIII,
prior approval of the Foreign Relations Department granted as per
number 12,503, file 315,041.
17. Except as expressly amended hereby, the Agreement shall
continue in full force and effect in accordance with the
provisions thereof and effect on the date hereof.
18. The substantive law (and not the law of conflicts) of
the State of Illinois shall govern all questions concerning the
construction, validity and interpretation of this Amendment
Number 1 and the performance of the obligations imposed hereby.
19. This Amendment Number 1 may be executed in one or more
counterparts (including by means of faxed signature pages) any
one of which need not contain the signatures of more than one
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party, but all such counterparts taken together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto cause this Amendment
Number 1 to be duly executed by the respective authorized
officers as of the date and year first above written.
KRAFT GENERAL FOODS, INC.
By: WILLIAM J. EICHAR
------------------------
Name: William J. Eichar
Title: Vice President
THE ALL AMERICAN GOURMET
COMPANY
By: JOHN E. KELLY
------------------------
Name: John E. Kelly
Title: Vice President
DEAN FOODS COMPANY
By: TIMOTHY J. BONDY
------------------------
Name: Timothy J. Bondy
Title: Vice President
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