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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
ORANGE-CO, INC.
(NAME OF SUBJECT COMPANY)
ORANGE-CO, INC.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $.50 PER SHARE
(TITLE OF CLASS OF SECURITIES)
684177108
(CUSIP NUMBER OF CLASS OF SECURITIES)
DALE A. BRUWELHEIDE
ORANGE-CO, INC.
2020 U.S. HIGHWAY 17 SOUTH
POST OFFICE BOX 2158
BARTOW, FLORIDA 33831-2158
(941) 533-0551
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICE AND COMMUNICATIONS ON BEHALF
OF THE PERSON(S) FILING STATEMENT)
COPIES TO:
JEREMY P. ROSS
BUSH ROSS GARDNER WARREN & RUDY, P.A.
220 SOUTH FRANKLIN STREET
TAMPA, FLORIDA 33602
(813)224-9255
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ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is Orange-co, Inc. (the "Company") and it
is incorporated under Florida law. The address of the principal executive
offices of the Company is 2020 U. S. Highway South, Bartow, Florida 33831-2158.
The equity securities to which this statement relates are shares of the
Company's common stock, par value $.50 per share (the "Shares").
ITEM 2. TENDER OFFER OF THE BIDDER
This statement relates to the tender offer disclosed in a Tender Offer
Statement on Schedule 14D-1 (the "Tender Offer Statement"), dated October 1,
1999 (the "Schedule 14D-1"), of OJ Acquisition Corp., a Florida corporation
("Purchaser"), all of the stock of which is owned by Reservoir Capital Partners,
L.P., a Delaware limited partnership ("RCP"), Reservoir Capital Associates,
L.P., a Delaware limited partnership("RCA"), and Reservoir Capital Master Fund,
a limited partnership organized under the laws of the Cayman Islands ("RCMF"),
to purchase any and all of the outstanding Shares, not owned by them, at a
purchase price of $7.00 per Share in cash, without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
October 1, 1999 and the related Letter of Transmittal filed as exhibits to the
Schedule 14D-1 of the Purchaser (the "Reservoir Offer").
The general partner of each of RCP, RCA and RCMF is Reservoir Capital
Group, L.L.C., a Delaware limited liability company ("RCG"), whose managing
member is Reservoir Capital Management, L.L.C., a Delaware limited liability
company ("RCM" and, together with RCP, RCA, RCMF and RCG, the "Parent"). The
Reservoir Offer is being made pursuant to the Agreement and Plan of Merger,
dated as of September 27, 1999, by and among the Company, the Purchaser, RCP,
RCA and RCMF (the "Merger Agreement") pursuant to which, following consummation
of the Reservoir Offer and the satisfaction or waiver of certain conditions,
Purchaser will be merged with and into the Company (the "Merger"), with the
Company continuing as the surviving corporation. In the Merger, each outstanding
Share (other than the Shares held by Parent, Purchaser or any wholly-owned
subsidiary of Parent or Purchaser or in the treasury of the Company or by any
wholly-owned subsidiary of the Company, which Shares will be canceled with no
payment being made with respect thereto, and other than Shares, if any, held by
shareholders who perfect their appraisal rights under Florida law) will, by
virtue of the Merger and without any action by the holder thereof, be converted
into the right to receive $7.00 in cash, payable to the holder thereof, without
interest thereon (the "Merger Consideration"), upon the surrender of the
certificate formerly representing such Share.
Simultaneous with the execution of the Merger Agreement, Purchaser acquired
from affiliates of Ben Hill Griffin III, the Company's Chairman and Chief
Executive Officer (hereinafter sometimes referred to as "Mr. Griffin" or the
"Chairman") 5,405,660 Shares, representing 52.4% of the outstanding Shares, at a
price of $7.00 per Share.
The Schedule 14D-1 identifies the Purchaser's and the Parent's principal
executive offices as being located at 650 Madison Avenue, 26th Floor, New York,
New York 10022.
ITEM 3. IDENTITY AND BACKGROUND
(a) The person filing this statement is the Company, the address of which
is set forth in Item 1 above.
(b) (1) Certain contracts, agreements, arrangements or understandings
between the Company or its affiliates and its executive officers, directors or
affiliates and certain information concerning the ownership of Shares by
officers and directors of the Company are described in the Company's Proxy
Statement, dated January 22, 1999, as prepared and distributed in connection
with its Annual Meeting of Stockholders held on February 18, 1999 (the "1999
Proxy Statement"), specifically in the sections entitled "Securities Ownership
of Certain Beneficial Owners", "Election of Directors", "Executive Officers",
"Compensation Committee Report", "Compensation Committee Interlocks and Insider
Participation", "Summary Compensation Table", "Contingent Compensation",
"Approval of the 1998 Incentive Equity Plan", and "Transactions with Management
and Others." A copy of those portions of the 1999 Proxy Statement is filed as
Exhibit (c)(1) hereto and incorporated herein by reference. Certain actions
authorized by the Board of Directors of the
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Company with respect to employee plans, severance arrangements and other
employee benefits, and certain other matters having a relationship to the
transactions described in Item 4 below, were not reflected in the 1999 Proxy
Statement. These include:
TERMINATION OF DEFERRED COMPENSATION PLANS
On September 21, 1999, the Board of Directors of Orange-co of Florida, Inc,
a wholly owned subsidiary of the Company, approved the termination of its
non-qualified Deferred Compensation Plan, originally established in 1988, and
the separate termination of its Management Security Plan, an unfunded deferred
compensation plan activated in 1993. Each of the participants in such plans was
asked to and did waive any waiting period that otherwise may have applied to
such termination action.
APPROVAL OF CASH BONUSES
On September 21, 1999, the Company's Board of Directors approved
recommendations of the Board's Compensation Committee that financial year end
cash bonuses be paid to the Company's Chairman and Chief Executive Officer, and
its President and Chief Operating Officer, in the monetary amounts of $100,000
and $110,000, respectively, on or before September 30, 1999, and to nine of the
Company's more senior management employees, in the aggregate amount of $144,000,
payable either upon completion of the Merger or upon any earlier involuntary
termination of service effected prior to such completion. Included in that
latter group is the Company's Vice President and Chief Financial Officer who is
entitled to receive a $45,000 bonus, contingent, however, upon his willingness
to amend the terms of a 1992 Severance Benefit Agreement to which he and the
Company are parties so as to reduce the amount payable thereunder, in the event
of his future termination of service, by an amount equal to such bonus.
CONFLICTS OF INTEREST
Because of the ownership prior to September 27, 1999 by Ben Hill Griffin
Investments, Inc. ("BHGI") and the Griffin Family Limited Partnership ("GFLP"),
entities in which Mr. Griffin has either a controlling interest or substantial
affiliation, of the 52.4% Share interest identified in Item 2 above, an actual
or potential conflict of interest existed between the Company and the Chairman
during the period in which those Share interests were being marketed for
possible sale, the terms of the transactions described in Item 4 below were
being negotiated and the Company's Board of Directors was being asked to
consider the effect of such proposed transactions upon the Company's
shareholders. In recognition of such conflicts, the Board of Directors,
immediately following a presentation thereto by Mr. Griffin, made on July 9,
1999 for the purpose of declaring his intention to cause such interests to be
sold and transferred to the Purchaser and certain assets of the Company to be
sold to a separate entity, as described in Item 4 below, concluded that (a)
neither the Chairman nor any other director having an affiliation with or other
relationship to him, except as created by their mutual membership on the
Company's Board, should participate in the Board's further consideration of the
Share and asset sales that he was then proposing to be reviewed and acted upon,
and (b) a Special Committee of the Board of Directors, to be composed of
directors having no such affiliation or relationship, should be appointed and
activated for the purpose of reviewing and analyzing such sale proposals and
determining whether their terms and conditions were fair, from a financial point
of view, to the Company's unaffiliated shareholders.
STATUS OF EXISTING DIRECTORS
In addition to Mr. Griffin, the Company's Board of Directors currently
consists of Gene Mooney, the Company's President and Chief Operating Officer,
and seven outside directors. Under the Merger Agreement, as identified in Item
3(b)(2) below, the Company will, upon a request of the Parent, use its best
efforts to cause a majority of the Company's directors to consist of the
Parent's designees, either as a result of resignations being accepted from
incumbent directors or the number of directors being increased to accommodate
the election of additional nominations to be made by the Parent. None of the
existing directors have, as of the current date, tendered their resignations
from the Board, nor have been asked to do so. In the event any such resignation
shall be tendered or otherwise accepted in the future, an appropriate press
release advising of such an action will be promptly disseminated.
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(b) (2) On September 27, 1999, the Company, RCA, RCP, RCMF and Purchaser
executed the Merger Agreement, a copy of which is filed as an Exhibit to the
Schedule 14D-1 and is incorporated herein by reference, pursuant to which Parent
was required, within five business days following the date of its execution, to
undertake a tender offer to acquire all outstanding Shares not owned by Parent
or Purchaser, at a purchase price of $7.00 per share in cash, without interest
thereon, upon the terms and subject to the conditions set forth in the Reservoir
Offer. Following the conclusion of the Reservoir Offer, Purchaser will be merged
with and into the Company with the Company as the surviving corporation, without
the necessity of an intervening shareholder meeting and vote to approve the
Merger Agreement if the Reservoir Offer causes Purchaser to be the holder of at
least 80% of the Shares (such accelerated form of merger being authorized by
Florida law) or after such meeting and favorable vote if the Reservoir Offer
produces a lesser ownership interest, and, in either event, within the two
business days following completion of the Reservoir Offer period or, as
necessary, the referenced shareholder action. In connection with the Merger, the
non-dissenting holders of the then outstanding Shares (other than Purchaser)
will receive the Merger Consideration upon surrender of the certificate formerly
representing such Share.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) The recommendation being made by the Company is with respect to the
issue of whether the Company's unaffiliated shareholders should accept or reject
the Reservoir Offer, tender their respective Shares, and, if required by law,
vote in favor of or in opposition to the Merger Agreement. In that regard, at a
meeting held on September 9, 1999, the Company's Board of Directors, by
unanimous vote, resolved that each of the Merger Agreement and the Asset
Purchase Agreement (as described in subsection (b) below), and the transactions
contemplated by each, were advisable and in the best interests of the Company
and its unaffiliated shareholders; the consideration to be paid to each of the
Company's unaffiliated shareholders under the Merger Agreement for each of the
Company's common shares owned by such holder (or which would be owned upon
exercise of an outstanding stock option) was found to be fair; and the
consideration to be paid to the Company under the Asset Purchase Agreement, in
exchange for the assets to be acquired thereunder, was found to be fair to and
in the best interests of the Company and its unaffiliated shareholders; and that
the Board would therefore recommend to the Company's unaffiliated shareholders
that upon receipt of the tender offer to be made by Reservoir they should accept
the same, tender all of their shares of Company common stock pursuant to its
terms, and, if required by law, approve and adopt the Merger Agreement and the
transactions therein contemplated. ACCORDINGLY, THE COMPANY'S BOARD NOW
RECOMMENDS TO THE COMPANY'S UNAFFILIATED SHAREHOLDERS THAT UPON RECEIPT OF THE
RESERVOIR OFFER THEY ACCEPT THE SAME AND TENDER ALL OF THEIR SHARES PURSUANT TO
ITS TERMS. A copy of the press release relating to the Board's recommendation
and of a letter to the Company's shareholders containing the Company's
recommendations are being filed, respectively, as Exhibits (a)(1) and (a)(2) and
are incorporated herein by reference. The text of the Company's press release,
dated September 27, 1999, announcing the Purchaser's acquisition from the
Griffin Affiliates of their 52.4% Share interest in the Company and the intended
commencement of the Reservoir Offer appears in Section 10 ("Background of the
Offer; Purchase of Shares; Past Contracts with the Company") of the Reservoir
Offer.
(b) In reaching the conclusions referred to in Item 4(a), the Board gave
consideration to a variety of factors, principally including those hereinafter
described. At a meeting of the Company's Board of Directors held on July 14,
1999, Mr. Griffin reported on the status of his previously announced efforts to
locate a buyer of the Shares held by BHGI, GFLP, and another member of the
Griffin family (collectively the "Griffin Affiliates"), and of his interest in
entering into letters of intent with RCG, and separately with Pasco Acquisition,
Inc., a Delaware corporation more particularly identified below ("Pasco"), RCG
and the Company (the forms of which were presented to the Board and, as
executed, were filed as Exhibits to the Schedule 14D-1, and are incorporated
herein by reference) (collectively, the "Letters of Intent"). Following comments
by Mr. Griffin's corporate counsel, by a representative of RaboBank, the
investment banking firm engaged by Mr. Griffin and the Griffin Affiliates to
seek a buyer for those shares and to direct the due diligence process associated
with such a sale, and by the Company's President and Chief Operating Officer,
the Board determined that neither the Chairman nor any director having an
affiliation or other relation to him should participate in the Board's further
consideration of the matters presented. As a result, the Board
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appointed a Special Committee (the "Committee"), composed of four Board members
each affirming his independence from and lack of relationship with the Chairman,
or any affiliate thereof, and charged it with the responsibility of determining
the fairness, from a financial point of view, of the transactions contemplated
by the Letters of Intent, to the Company's unaffiliated shareholders.
Between July 15 and July 22, 1999, the Committee interviewed prospective
qualified independent financial advisors and on that latter date selected
Stephens Inc., of Little Rock, Arkansas (the "Advisor"), to undertake an
analysis of the transactions as proposed in the Letters of Intent and the
agreements derived therefrom, so as to aid the Committee in formulating and
providing to the Board of Directors the requested opinion as to financial
fairness. The Committee held its organizational meeting with representatives of
the Advisor on July 22 and the Committee's chairman, Richard Coonrod, continued
those discussions on July 23 for the primary purpose of reaching agreement as to
the proposed schedule for the Advisor's conduct of the due diligence activities
that would be necessary as a condition to its financial analysis of the offers
being made by Parent and Pasco. Thereafter, the Committee held formal meetings
with the Advisor by conference phone call on August 12 and August 25,
principally relating to a review of the process by which the Advisor was
performing its responsibilities, the progress being made in obtaining and
analyzing necessary financial information, the scope and structure of the
analysis being applied, and to receive and question the preliminary results of
that process, and in a face to face session on September 8, to review and
critique the final presentation of the Advisor's written analysis and
conclusions, to receive its written opinion (a copy of which is being filed as
Exhibit (a)(3) hereto and is incorporated herein by reference) (the "Opinion"),
and thereafter to determine whether the price proposed to be paid by Purchaser
to the Company's unaffiliated shareholders upon a purchase of their Shares was
fair from a financial point of view, and to formulate a report to be presented
to the entire Board. At the end of such process, the Committee concluded that
the Merger Agreement and Asset Purchase Agreement (the latter to be entered into
between the Company and Pasco, as more particularly described below), and the
transactions contemplated by each, were advisable and in the best interests of
the Company and its unaffiliated shareholders, the consideration to be paid to
each of the Company's unaffiliated shareholders under the Reservoir Offer and
the Merger for each of the Shares owned by such holder was fair; and the
consideration to be paid to the Company under the Asset Purchase Agreement, in
exchange for the assets to be acquired thereunder, was fair to and in the best
interests of the Company and its unaffiliated shareholders, and that it would
therefore recommend to the entire Board that it approve such transactions and
favorably recommend the same to the Company's unaffiliated shareholders.
In reaching its conclusions, the Committee gave consideration to a number
of factors relating to or in addition to the Advisor's analysis and opinion,
including:
1. the financial and other terms of and conditions of the Reservoir
Offer, the Merger Agreement and the Asset Purchase Agreement;
2. the proposed sale by Ben Hill Griffin, Inc. ("BHG Inc."), an
affiliate of Mr. Griffin and the Griffin Affiliates, to Lykes Pasco, Inc.,
an affiliate of Pasco, of a specific quantity of boxes of Valencia,
early/midseason and Mandarin oranges in each of the five annual growing
seasons commencing in the fall of 1999, in exchange for a current payment
of $4,750,000 and future payments to be calculated and made upon each
delivery and at the end of each applicable growing season;
3. Pasco's proposed engagement of Mr. Griffin to perform consulting
services for a term of five years and be restricted from engaging in or
being otherwise connected with citrus processing or the manufacture,
bottling, packaging, distribution or sale of juice, juice products or other
beverages, or dispensing equipment for the same, in the United States,
Canada or Europe, in exchange for a current payment of $2,000,000;
4. the fact that the only other proposal to acquire all of the
Company's outstanding Shares at a price higher than that offered by the
Parent, at a figure of $8.50 per Share, was made contingent upon the
receipt of future financing commitments and, when those commitments were
not forthcoming, was subsequently withdrawn;
5. the efforts by Mr. Griffin and his representatives in creating an
auction process to market the Shares owned by the Griffin Affiliates and to
maximize the value that might be received thereby, as well as by the
Company's unaffiliated shareholders through the process of a tender offer,
which involved
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contacts being made with 24 potential financial and strategic acquirors and
the distribution of substantial information to the marketplace for the
purpose of soliciting initial bids, which, in the judgment of the
Committee, well assured access to the transactions by any interested
person;
6. the historical market price of, and recent trading activity in, the
outstanding Shares which has reflected 52 week, 180 day and 90 day average
trading prices (with the respect to the 12 month period ended on September
3, 1999), respectively, of $5.80, $5.73 and $5.49, enabling shareholders to
realize premiums against those valuations of 17%, 18% and 22%; and the fact
that the average market valuation of the outstanding Shares, over the last
24 and 12 month periods, has been 62% and 56%, respectively, of the
Company's book value of approximately $10.50 per Share;
7. the possible alternatives to the Reservoir Offer and its related
transactions, including, without limitation, attempting to continue to
operate the Company as an independent entity in a period of substantial
consolidation activity in all components of the citrus industry, including
grove production, processing and packaging, distribution of fresh fruit,
concentrated bulk products and other juice products, and dispensing
equipment; or effecting a direct break-up or liquidation sale of the
Company's citrus grove properties and its processing, packaging and
beverage and food servicing businesses, given the difficulties associated
with maintaining operations during that period, particularly in light of
the near term commencement of the 1999-2000 growing season, retention of
the Company's employment force in the face of such an activity, the time
and expense involved in effecting such piece-meal sales efforts, the normal
discount valuations attaching to assets that are made the subject of such
liquidating sales, the excess capacity of processing plants throughout the
state of Florida, and the continued increase in foreign competition related
to the production and processing of citrus fruit; and
8. that no alternative transaction was likely to occur in light of the
Griffin Affiliates' desires to effect a sale of their majority equity
holdings in the Company.
The Committee did not assign relative weights to the factors or determine
that any factor was of particular importance. Rather, it viewed its
position and recommendations as being based on the totality of the
information presented to and considered by it.
On September 9, 1999, at a properly called meeting, the Board of Directors
carefully considered the Committee's report, which among other matters, affirmed
the Committee's review and consideration of the terms and conditions of:
(a) the proposed sale by the Griffin Affiliates of their Shares;
(b) the Merger Agreement and the Reservoir Offer that comprised an
integral part thereof (a detailed summary of which is set forth in the
Schedule 14D-1); and
(c) the separate Asset Purchase Agreement, by and between Pasco and
the Company, a copy of which is being filed as Exhibit (c)(2) hereto and is
incorporated by reference, pursuant to which, on the date of its execution,
Pasco would acquire the Company's beverage and food services business (the
"Food Service Business"), would pay to the Company $17,925,000 and an
additional amount constituting the estimated Food Service Business net
working capital, and would assume those liabilities of the Company relating
to such business; and thereafter, within the five business day period
following consummation of the Merger and the satisfaction of certain other
conditions, Pasco would acquire the Company's citrus processing and
packaging business, including the Company's principal processing plant in
Bartow, Florida (the "Processing Business"), at which time Pasco would pay
an amount based on the net working capital attributable to the Processing
Business and would assume those liabilities of the Company relating to the
Processing Business; a more detailed description of the Asset Purchase
Agreement follows at the end of this subsection.
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The Committee's report then described the assistance provided by the
Advisor in aiding the Committee's formulation of the requested opinion as to
financial fairness, and stated that the Committee had taken into account
detailed oral and written presentations made by the Advisor with regard to such
matters, as well as the Opinion given after applying selected financial criteria
to such transactions, to the effect that the Reservoir Offer and the Merger are
fair from a financial point of view to the Company's unaffiliated shareholders.
Finally, the Committee reported that it had separately reviewed the
proposed transactions, the business condition and prospects of the Company, and
applied thereto the experience and expertise of its members with regard to the
various components of the citrus industry in which the Company operated, and its
understanding as to the lack of financing contingencies or other substantive
uncertainties attaching to the Reservoir Offer, and the legal environment in
which the Reservoir Offer and the Merger proposals were made. After considering
its own independent review as well as the analysis of the Advisor, the Committee
unanimously concluded that the Merger Agreement and Asset Purchase Agreement,
and the transactions contemplated by each, were advisable and in the best
interests of the Company and its unaffiliated shareholders, the consideration to
be paid to each of the Company's unaffiliated shareholders under the Reservoir
Offer and the Merger for each of the Shares owned by such holder was fair and
the consideration to be paid to the Company under the Asset Purchase Agreement,
in exchange for the assets to be acquired thereunder, was fair to and in the
best interests of the Company and its unaffiliated shareholders. As a result,
the Committee recommended to the Company's Board of Directors that it, in turn,
recommend to the Company's unaffiliated shareholders that they accept the
Reservoir Offer, tender all of their Shares pursuant to its terms, and, if
required by law, approve and adopt the Merger Agreement and the transactions
contemplated therein.
After considering and discussing the report, and receiving a separate
report from the Committee's legal counsel, advising as to the Committee's
attention to and compliance with the legal principles applicable to an
undertaking of the nature assigned, the Board undertook the actions reflected in
subsection (a) of this Item 4.
THE ASSET PURCHASE AGREEMENT
Initial Closing. The Asset Purchase Agreement was executed by the parties
on September 27, 1999 and the closing of the sale of the Food Service Business
(the "Initial Closing") occurred on that date. Concurrently with such execution,
Pasco paid the Company the cash sum of $17,925,000, together with a separate
amount, $11,767,548, as payment for the estimated working capital of the Company
allocable to the Food Service Business, and also assumed certain of the
Company's liabilities relating to that business. At the Initial Closing, Pasco
acquired the Company's Food Service Business assets other than cash and certain
excluded assets.
Final Closing. The closing of the Company's sale and Pasco's purchase of
the Company's Processing Business (the "Final Closing") is required by the Asset
Purchase Agreement to take place no later than the first business day following
the satisfaction or waiver of certain conditions, including any required Company
shareholder approval of the transactions contemplated by the Asset Purchase
Agreement, consummation of the Merger, the absence of any material adverse
change, the absence of any proceeding, statute, rule or regulation that would
render such closing illegal, and performance by each party of its obligations
and agreements and compliance with its covenants as stated in the Asset Purchase
Agreement. At least five business days before such closing, the parties will use
their best efforts to agree upon a reasonable estimate of the Company's net
working capital allocable to the Food Service Business (as of the Initial
Closing) and the Processing Business (as of the Final Closing), failing which
the independent certified public accounting firm of Tedder, James, Worden &
Associates ("Tedder James") will make such determination. At the Final Closing
Pasco will be required to pay the Company, by wire transfer of immediately
available funds, an amount based on the net working capital allocable to the
Processing Business, and to assume certain of the Company's liabilities
allocable to the Processing Business, and will, in turn, acquire the Processing
Business and its related assets.
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Post Closing Purchase Price Adjustments. Within the 60 day period after
each closing, the Company will provide Pasco with a draft of the Company's
determination of the net working capital amount allocable to the components of
the Company's Processing Business and Food Service Business as of the particular
closing date, and an appropriate adjustment will be made to the cash payment
made at such closing, or, if the parties cannot agree upon such amount, the
Asset Purchase Agreement sets forth a procedure, involving arbitration, by which
such dispute may be resolved and a final payment amount fixed.
Representations and Warranties. Pursuant to the Asset Purchase Agreement,
the Company has made customary representations and warranties to Pasco with
respect to, among other matters, its organization and qualification, authority
with respect to the matters set forth in the Asset Purchase Agreement, public
filings, financial statements, the absence of brokers and finders, governmental
approvals, the actions taken by the Company's Board of Directors, the absence of
certain changes or events, litigation and other proceedings, material contracts,
its real and personal properties, its compliance with laws and the maintenance
of required permits, certain environmental matters, its intellectual properties,
year 2000 compliance, taxes, certain employee benefits, labor matters,
insurance, product warranties, suppliers and customers, accounts receivable,
inventory and the correctness of the warranties made by it in the Merger
Agreement. Pasco has also made customary representations and warranties to the
Company with respect to, among other matters, its organization and standing,
authority with respect to the matters set forth in the Asset Purchase Agreement,
approvals and consents, the absence of brokers and finders, and financing. The
representations of the parties will not survive the applicable closing and there
will be no liability in respect thereof, whether accrued prior to or after such
closing date, on the part of either party or its officers, directors, employees,
agents or affiliates.
Covenants. Prior to the Final Closing, the Company and its subsidiaries
covenant that Pasco will not be required to remove from the Company's premises
any assets purchased in the Initial Closing; the Company will make available to
Pasco's employees reasonable access to such assets; and that the Company will
(a) continue to supply the Food Service Business acquired from the Company by
Pasco with juice and beverage products at the unit values used by Tedder James
in the preparation of the net working capital statements as of August 31, 1999;
(b) operate the Processing Business in the ordinary course and use commercially
reasonable efforts to preserve intact, subject to terminations in the ordinary
course, the services of employees that Pasco has stated in writing it intends to
make offers of employment; (c) maintain assets and properties of the Processing
Business in the same order as on the date of the Asset Purchase Agreement; (d)
maintain insurance on such business and its tangible assets in such amounts and
against such risks and losses as are currently in effect; (e) preserve their
relationships with key customers and suppliers of the Processing Business and
others having significant business dealings with them; and (f) comply in all
material respects with all laws and orders of all governmental or regulatory
authorities applicable to them. The Asset Purchase Agreement also contains
specific restrictive covenants as to certain impermissible activities of the
Company from the date of the Asset Purchase Agreement until the final closing,
which provide, among other matters, that the Company will not (and will not
permit any of its subsidiaries to) (a) take certain actions, including acquiring
any business or material assets as a part of the Processing Business, except
inventory or other assets to be used or sold in the ordinary course; (b) dispose
of (other than in the ordinary course or to an immaterial degree) or encumber
its properties; (c) except to the extent required by law, permit, with respect
to the Processing Business, any material change in various specified business
practices and policies of the Company unless made with Pasco's consent; (d)
adopt, amend in any material respect or terminate any of the Company's employee
benefit plans or increase the compensation or fringe benefits of the Company's
directors, officers or other employees, subject to certain exceptions (e) make
any capital expenditures or commitments for additions to plant, property or
equipment in an aggregate amount exceeding $100,000 within the period preceding
January 1, 2000, or exceeding $100,000 for any calendar quarter thereafter
without Pasco's prior consent; (f) make any material change in the lines of
business in which the Processing Business participates; or (g) enter into any
contract, binding commitment or arrangement to do or engage in any of the
foregoing. In addition, the Asset Purchase Agreement obligates the Company to
confer with Pasco with respect to its business and operations and other matters
relevant to the Processing Business or the Asset Purchase Agreement and promptly
advise Pasco of any change or event having, or which, as could be reasonably
foreseen, could have, a material adverse effect on the Processing Business taken
as a whole or on the ability of the Company to complete the Final Closing.
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Publicity; Confidentiality. No press release, or other public announcement
to the Company's employees, customers, suppliers or others with whom the Company
has significant business relations, with respect to the Asset Purchase Agreement
or any of its related documents, may be made without the consent of both parties
unless the same is required by law or regulatory practice. For the five year
period following the final closing, the Company and its subsidiaries will,
subject to the same exceptions described in the preceding sentence, keep, and
will use its best efforts to cause its other affiliates to keep, confidential
all proprietary information concerning the other.
No Solicitation. Until the occurrence of the Final Closing or an earlier
termination of the Asset Purchase Agreement in accordance with its terms, the
Company will not, and will cause its subsidiaries not to, solicit, initiate,
participate in any negotiation or discussion or enter into any agreement in
respect of, any proposal (other than a proposal by Pasco or a proposal that
explicitly assumes the obligations of the Company under the Asset Purchase
Agreement) for the acquisition out of the ordinary course of any portion of the
assets comprising the Food Service Business and, the Processing Business or for
a merger, stock acquisition, consolidation or other business combination
pursuant to which any other person would acquire such business or any
substantial interest therein, or the assets, or any material portion, thereof.
Access. Until the Final Closing, the Company shall, and shall cause each
of its subsidiaries to, (a) afford Pasco and its representatives with access,
upon reasonable prior notice and during normal business hours, to all books and
records applicable to the Processing Business and the Food Service Business, and
to assets, properties and personnel relating thereto, but only in such a manner
as will not unreasonably interfere with the normal operations of the Company and
its subsidiaries, and (b) furnish promptly to such persons all information
concerning such businesses and their assets, properties and personnel as may
reasonably be requested by Pasco, except to the extent doing so would violate
any law or contract obligation. Further, for a period of five years following
the Final Closing, Pasco shall afford the Company's representatives access to
such books and records as it shall have obtained from the Company, and the
Company shall afford that same access by Pasco's representatives with respect to
books and records retained by the Company and relating to such businesses.
Certain Filings and Actions. The parties will cooperate with one another
in determining whether any governmental approval or other consent is required or
reasonably appropriate in connection with the consummation of the transactions
contemplated by the Asset Purchase Agreement, or any post-closing matters, and
will provide each other with such necessary information or reasonable assistance
as the other may reasonably request. They will also do all things necessary or
advisable to timely consummate the transactions contemplated by the Asset
Purchase Agreement; including, if the Reservoir Offer is not consummated by
November 15, 1999, convening a meeting of shareholders or taking action by
written consent to consider and vote upon the adoption of the Asset Purchase
Agreement and the approval of the transactions to be consummated at the Final
Closing, timely preparing and filing any required proxy or information statement
in connection therewith, using all appropriate efforts to have the same cleared
by the Securities and Exchange Commission, and promptly disseminating the same
to the Company's shareholders; to make all necessary filings, including tax
filings; to supply such information as is needed in connection with any of the
transactions contemplated by the Asset Purchase Agreement in a form that will
contain no untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading; to
correct all information found to be false or misleading in any material respect;
to supply such additional information as the circumstances may warrant;
cooperate with each other in the conduct of any proceeding related to the taxes
of or with respect to the businesses whose assets are the subject of the Asset
Purchase Agreement, or to any related tax matter (including the allocation of
the purchase price among the assets made the subject of Pasco's acquisition and
the Company's sale); and will not knowingly take or omit to take any action that
would reasonably result in any of the other party's conditions to the Final
Closing to remain unsatisfied.
Liabilities with Respect to Employees. As to any employees of the Company
to whom Pasco elects to offer employment, Pasco will be responsible for certain
employment related liabilities applicable to each, but the Company will
generally retain responsibility for all such liabilities that relate to all
other of its employees.
8
<PAGE> 10
Pasco shall, however, assume a percentage of any employment related liabilities
that are not directly allocable to individual employees.
Noncompetition. Subject to certain exceptions, until the occurrence of the
earlier of the Final Closing or the second anniversary of the Initial Closing,
neither the Company nor any of its subsidiaries will, directly or indirectly,
establish, or engage in the manufacturing, bottling, distribution or sale of,
juice, juice products or other beverages or food products or dispensing
equipment for the same, for institutional or food service use.
Certain Fruit Purchases. During the 1999-2000 citrus growing season, but
only subsequent to the Final Closing, the Company and its subsidiaries will sell
to Pasco or its designated subsidiary all citrus grown upon managed groves
located in the Joshua and Bermont groves on terms and conditions set forth in
the Asset Purchase Agreement.
Frank Carroll Oil Environmental Liabilities. To the extent that any
liabilities arise in the future pursuant to environmental laws which relate to
the Company's prior ownership of the capital stock of Frank Carroll Oil Company,
Inc., including liabilities arising out of the Company's sale of such stock to
Childs Oil Company, Inc., the Company will be required to defend the same, and
must afford Pasco the opportunity to participate in the negotiation of such
matters, provide Pasco with copies of all documentation relating to the same,
consult with Pasco in advance of finalizing any environmental reports or
submissions in any proceeding, and refrain from settling any such claim or
demand without Pasco's approval.
Grounds for and Effect of Termination. Prior to the Final Closing the
Asset Purchase Agreement may be terminated only by (i) the mutual written
agreement of both parties, (with the consent of the Parent and certain of its
affiliates); (ii) the Company (with the consent of the Parent and certain of its
affiliates) or Pasco, if the Final Closing shall not have occurred on or before
September 30, 2000, unless such failure is the result of a breach of the Asset
Purchase Agreement by the party seeking to terminate; or (iii) the Company (with
the consent of Parent and certain of its affiliates) or Pasco, if a court of
competent jurisdiction shall have taken final and non-appealable action to
permanently restrain, enjoin or otherwise prohibit the consummation of the Final
Closing. Upon any such termination, all provisions of the Asset Purchase
Agreement will be deemed void and of no further legal effect, other than those
relating to the post-closing price adjustments; the covenants related to tax
matters, liabilities with respect to employees, insurance, transfer of certain
materials, collection of accounts, noncompetition, and the inapplicability of
the bulk sale laws to the transactions contemplated by the Asset Purchase
Agreement, as well as the indemnification and miscellaneous provisions contained
within the Asset Purchase Agreement; provided that no party materially breaching
any of its covenants or other agreements set forth in the Asset Purchase
Agreement shall be relieved of liability therefor.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The Committee retained Stephens Inc. to act as its financial advisor with
respect to the Reservoir Offer and the other related transactions described in
Item 4 above, and to provide the Committee with a written opinion as to the
fairness to the Company's unaffiliated shareholders from a financial point of
view of the consideration to be received by such shareholders in the Reservoir
Offer. For such engagement, Stephens will receive $200,000 and will be
reimbursed for its reasonable out-of-pocket expenses, including fees and
disbursements of counsel. In addition, the Company has agreed to indemnify
Stephens against certain expenses and liabilities in connection with its
engagement, including liabilities which may arise under the Federal securities
law.
Except as stated above, neither the Company nor any person acting on its
behalf intends to employ, retain or compensate any other person to make
solicitations or recommendations to shareholders in connection with the
Reservoir Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
(a) Within the Company's knowledge, except as described in Section 4(b)
hereto, no transactions in Shares have been effected during the past 60 days by
the Company or by any executive officer, director, affiliate or subsidiary of
the Company.
9
<PAGE> 11
(b) Within the Company's knowledge, all of the Company's executive
officers, directors, affiliates or subsidiaries presently intend to tender all
of their Shares to the Bidders pursuant to the Offer.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) Except as described in Item 4 above, including the matters set forth in
the Reservoir Offer, no negotiation is being undertaken or is underway by the
Company in response to the Reservoir Offer which relates to or would result in
an extraordinary transaction such as a merger or reorganization, involving the
Company or any subsidiary; a purchase, sale or transfer of a material amount of
assets by the Company or any subsidiary; a tender offer for or other acquisition
of securities by or of the Company; or any material change in the present
capitalization or dividend policy of the Company.
(b) The Company is not a party to nor has knowledge of any transaction,
resolution, agreement in principle or signed contract entered into in response
to the Offer, other than as described in Items 3(b) and 4 above, which relates
to or would result in one or more of the matters referred to in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
None
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
(a)(1) Company press release, dated September 9, 1999.
(a)(2) Letter to shareholders, dated October 1, 1999, recommending approval of
the Reservoir Offer.+
(a)(3) Opinion letter, dated September 9, 1999, from Stephens Inc. to the
Special Committee of the Company's Board of Directors.+
(b) None
(c) Contracts, agreements arrangements and understandings:
(c)(1) Identified portions of the Company's Proxy Statement, dated January 22,
1999, for the Annual Meeting of Stockholders held on February 18, 1999.
(c)(2) Asset Purchase Agreement, dated September 27, 1999, by and between the
Company, as Seller, and Pasco Acquisition, Inc., as Purchaser.
* Agreement and Plan of Merger, by and among Reservoir Capital Partners,
L.P., Reservoir Capital Associates, L.P., Reservoir Capital Master Fund,
L.P., OJ Acquisition Corp., and the Company, a copy of which, as
executed, is being filed as Exhibit (c)(8) to the Schedule 14D-1 and is
incorporated herein by reference.
* Letter of Intent, dated as of July 14, 1999, by and among Ben Hill
Griffin III, Ben Hill Griffin, Inc., and Reservoir Capital Group, L.L.C.,
a copy of which, as executed, is being filed as Exhibit (c)(3) to the
Schedule 14D-1 and is incorporated herein by reference.
* Letter of Intent, dated as of July 14, 1999, by and among Pasco
Acquisition, Inc., the Company, Ben Hill Griffin III, Ben Hill Griffin,
Inc., and Reservoir Capital Group, L.L.C., a copy of which, as executed,
is being filed as Exhibit (c)(4) to the Schedule 14D-1 and is
incorporated herein by reference.
- ---------------
+ Included in copies of the Schedule 14D-9 mailed to shareholders.
10
<PAGE> 12
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
ORANGE-CO, INC.
By: /s/ Gene Mooney
----------------------------------
Gene Mooney,
President and Chief Operating
Officer
Dated: October 1, 1999
11
<PAGE> 13
ORANGE-CO, INC.
EXHIBIT INDEX
(a)(1) Company press release, dated September 9, 1999.
(a)(2) Letter to shareholders, dated October 1, 1999, recommending approval of
the Reservoir Offer.+
(a)(3) Opinion letter, dated September 9, 1999, from Stephens Inc. to the
Special Committee of the Company's Board of Directors.+
(b) None
(c) Contracts, agreements arrangements and understandings:
(c)(1) Identified portions of the Company's Proxy Statement, dated January 22,
1999, for the Annual Meeting of Stockholders held on February 18, 1999.
(c)(2) Asset Purchase Agreement, dated September 27, 1999, by and between the
Company, as Seller, and Pasco Acquisition, Inc., as Purchaser.
* Agreement and Plan of Merger, by and among Reservoir Capital Partners,
L.P., Reservoir Capital Associates, L.P., Reservoir Capital Master Fund,
L.P., OJ Acquisition Corp., and the Company, a copy of which, as
executed, is being filed as Exhibit (c)(8) to the Schedule 14D-1 and is
incorporated herein by reference.
* Letter of Intent, dated as of July 14, 1999, by and among Ben Hill
Griffin III, Ben Hill Griffin, Inc., and Reservoir Capital Group, L.L.C.,
a copy of which, as executed, is being filed as Exhibit (c)(3) to the
Schedule 14D-1 and is incorporated herein by reference.
* Letter of Intent, dated as of July 14, 1999, by and among Pasco
Acquisition, Inc., the Company, Ben Hill Griffin III, Ben Hill Griffin,
Inc., and Reservoir Capital Group, L.L.C., a copy of which, as executed,
is being filed as Exhibit (c)(4) to the Schedule 14D-1 and is
incorporated herein by reference.
- ---------------
+ Included in copies of the Schedule 14D-9 mailed to shareholders.
<PAGE> 1
EXHIBIT A1
ORANGE-CO, INC. ANNOUNCES EXTENSION OF
RESERVOIR CAPITAL PARTNERS STOCK PURCHASE OPTION
Bartow, Florida September 9, 1999
Mr. Gene Mooney, President and Chief Operating Officer of Orange-co, Inc.
announced that Ben Hill Griffin, Inc. and Ben Hill Griffin III have informed the
Company of their grant to Reservoir Capital Group, LLC, the private investment
partnership with whom they have been negotiating for the sale of their 52.4%
capital stock interest in Orange-co, of a second extension of time, ending at
midnight on September 17, 1999, within which to exercise and consummate the
stock purchase option that had been originally granted on July 15 for the 25
business day period expiring August 18, and then extended until September 10.
All of the substantive terms of the option, as originally granted, remain in
effect, including the requirement that Reservoir offer to purchase all of
Orange-co's remaining outstanding shares at the same $7.00 per share price that
the Griffin interests are to receive.
Mr. Mooney indicated that significant progress has been made in effecting
approval of these transactions and that Orange-co's Special Committee of
independent directors, and its engaged financial advisor, have completed their
review of those elements that must be approved by Orange-co in order for the
sale to be completed, that the Committee has concluded that such transactions
are fair to Orange-co unaffiliated shareholders from a financial point of view,
and that Orange-co's Board of Directors has, in reliance upon that conclusion,
reached a similar determination and will be recommending to the unaffiliated
shareholders that upon receipt of the tender offer to be made by Reservoir they
accept the same, tender all of their shares of Orange-co common stock pursuant
to its terms, and, if required by law, approve the merger of a Reservoir
acquisition subsidiary with and into the Company, as well as all transactions
contemplated by such merger activity.
Statements or estimates contained in this release which are not historical
facts are forward-looking statements subject to the Safe Harbor created by the
Private Securities Litigation Reform Act of 1995. Examples of forward-looking
statements are those containing words such as "hope", "may", "will", "expect",
"believe", "anticipate", or "intend", or words of similar import. We caution you
that, as a result of a number of factors, actual results could differ materially
from those set forth in this press release. All forward-looking statements
included in the press release or in any other press release of the company are
made as of the date of the release, and Orange-co, Inc. does not undertake any
obligation to update any such statements. Additional detailed information
concerning a number of these factors is readily available in statements and
reports that Orange-co, Inc. has filed with the Securities and Exchange
Commission. Copies of these reports are available from Orange-co, Inc.
A1-1
<PAGE> 1
(ORANGE-CO LOGO)
EXHIBIT A2
ORANGE-CO, INC.
2020 U. S. HIGHWAY 17 SOUTH
POST OFFICE BOX 2158
BARTOW, FLORIDA 33831-2158
OCTOBER 1, 1999
Dear Shareholder:
As you may be aware, on September 27 the Company executed an Agreement and
Plan of Merger (the "Merger Agreement") with affiliates of Reservoir Capital
Group, L.L.C., a Delaware limited liability company (collectively, "Parent"),
and OJ Acquisition Corp., a Florida corporation ("Purchaser") controlled by
Parent, and as of that same date Purchaser acquired from affiliates of Ben Hill
Griffin III, the Company's Chairman and Chief Executive Officer (the "Griffin
Affiliates"), 5,405,660 shares of the Company's common stock, $.50 par value,
comprising 52.4% of the 10,309,975 common shares presently outstanding.
Under the terms of the Merger Agreement, Parent is required, within five
business days following the date of its execution, to cause Purchaser to
commence a tender offer (the "Offer") to acquire any and all outstanding Company
shares, for the same $7.00 per share net cash price that was paid to the Griffin
Affiliates. Following the conclusion of the Offer, Purchaser will be merged with
and into the Company and the Company will thereafter continue in existence, with
Parent as its sole owner (the "Merger"). Detailed terms and conditions of the
Offer are set forth in an Offer to Purchase document, dated October 1, 1999, and
a related Letter of Transmittal which are being furnished to you concurrently
with this letter.
Also on September 27, the Company executed a separate Asset Purchase
Agreement with Pasco Acquisition, Inc., a Delaware corporation ("Pasco"),
pursuant to which Pasco acquired the Company's beverage and food servicing
business (the "Food Service Business") and agreed to acquire the Company's
processing and packaging business (the "Processing Business"). Concurrently with
that execution, Pasco paid to the Company $17,925,000, as well as the additional
sum of $11,767,548, which constituted the estimated value of the Food Service
Business working capital, and assumed those liabilities of the Company relating
to such business. The Asset Purchase Agreement further provides that within the
five business day period following consummation of the Merger and satisfaction
of certain other conditions, Pasco will acquire the Company's Processing
Business and will make a cash payment to the Company equal to the value of the
Company's net working capital associated with the Processing Business (with such
cash payments being subject to certain post-closing adjustments) and assume the
Company liabilities associated therewith.
AT ITS MEETING OF SEPTEMBER 9, 1999, ACTING IN RELIANCE UPON THE UNANIMOUS
RECOMMENDATION OF ITS SPECIAL COMMITTEE OF INDEPENDENT DIRECTORS, THE COMPANY'S
BOARD OF DIRECTORS CONCLUDED, BY UNANIMOUS VOTE, THAT EACH OF THE MERGER
AGREEMENT AND ASSET PURCHASE AGREEMENT, AND THE TRANSACTIONS CONTEMPLATED
THEREBY, WERE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND ITS
UNAFFILIATED SHAREHOLDERS; THE CONSIDERATION TO BE PAID TO EACH OF THE COMPANY'S
UNAFFILIATED SHAREHOLDERS UNDER THE MERGER AGREEMENT FOR EACH OF THE COMPANY'S
COMMON SHARES OWNED BY SUCH HOLDER WAS FAIR; AND THE CONSIDERATION TO BE PAID TO
THE COMPANY UNDER THE ASSET PURCHASE AGREEMENT FOR THE ASSETS TO BE ACQUIRED
THEREUNDER WAS ALSO FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND ITS
UNAFFILIATED SHAREHOLDERS. THE BOARD THEREFORE RESOLVED TO FAVORABLY RECOMMEND
TO THE COMPANY'S UNAFFILIATED SHAREHOLDERS THAT THEY ACCEPT THE OFFER AND TENDER
THEIR COMPANY SHARES.
A2-1
<PAGE> 2
In reaching its own recommendation the Special Committee of the Board
relied upon a formal written opinion (a copy of which is being furnished to you
as an exhibit to the Schedule 14D-9, Solicitation/Recommendation Statement, a
copy of which is also included with this letter and has separately been filed
with the Securities and Exchange Commission) of Stephens Inc., the qualified
independent financial advisor which it had engaged to undertake an analysis of
the transactions as proposed in the Agreements and the letters of intent upon
which they were based, given after applying selected financial criteria to such
transactions, to the effect that the Offer and the Merger are fair from a
financial point of view to the Company's unaffiliated shareholders, and also
gave careful consideration to a variety of factors which are disclosed in the
referenced Schedule 14D-9.
Accordingly, I am writing on behalf of the Company to encourage you,
following your review of the enclosed Offer to Purchase, dated October 1, 1999,
and the related Letters of Transmittal that are to be used to effect a tender of
your shares, to accept the Offer, tender all of your Shares pursuant to their
terms, and timely complete and return any documentation requested of you.
If you have questions concerning this matter, they may be addressed to me
or the Company's Vice President and Chief Financial Officer, Dale A.
Bruwelheide.
Yours truly,
/s/ Gene Mooney
------------------------------------
Gene Mooney, President and Chief
Operating Officer
A2-2
<PAGE> 1
EXHIBIT A3
STEPHENS INC.
September 9, 1999
Special Committee of the Board of Directors
Orange-co, Inc.
2020 U.S. Highway 17 South
P.O. Box 2158
Bartow, FL 33831
Gentlemen:
We have acted as your financial advisor in connection with the tender offer
by the acquisition subsidiary (the "sub") of Reservoir Capital Partners, L.P. to
acquire all the common shares of Orange-co, Inc. (the "Company"), excluding the
shares held by Ben Hill Griffin, Inc., or Ben Hill Griffin III, (collectively,
"the Griffin interests"), for a price of $7.00 per share, and a subsequent
merger of the sub into Orange-co. Inc. (the "Transaction"). The terms and
conditions of the Transaction are more fully set forth in the merger agreement.
You have requested our opinion as to the fairness to the disinterested
shareholders of the Company from a financial point of view of the consideration
to be received by such shareholders in the Transaction. For purposes of this
opinion, the term "disinterested shareholders" means holders of the Company's
one class of publicly traded common stock (the "Common Stock") other than (1)
directors of officers of the Company, (2) any holder of 10 percent or more of
the outstanding shares of Common Stock (assuming the exercise of convertible
securities beneficially owned by the holder) and (3) the Griffin interests and
its affiliates.
In connection with rendering our opinion we have:
(i) analyzed certain publicly available financial statements and
reports regarding the Company;
(ii) analyzed certain internal financial statements and other
financial and operating data (including financial projections) concerning
the Company prepared by management of the Company;
(iii) reviewed the reported prices and trading activity for the Common
stock;
(iv) compared the financial performance of the Company and the prices
and trading activity of the Common Stock with that of certain other
comparable publicly-traded companies and their securities;
(v) reviewed the financial terms, to the extent publicly available, of
certain comparable transactions;
(vi) reviewed the merger agreement, the asset purchase agreement, the
management agreement, the side agreement and related documents;
(vii) discussed with management of the Company the operations of and
future business prospects for the Company;
(viii) analyzed the value of the Company as if it were divided into
two separate entities; the processing facility and the citrus groves;
(ix) performed such other analyses and provided such other services as
we have deemed appropriate.
We have relied on the accuracy and completeness of the information and
financial data provided to us by the Company, and our opinion is based upon such
information. We have inquired into the reliability of such information and
financial data only to the limited extent necessary to provide a reasonable
basis for our opinion, recognizing that we are rendering only an informed
opinion and not an appraisal or certification of value. With respect to the
financial projections prepared by management of the Company, we have assumed
A3-1
<PAGE> 2
that they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the future financial performance of the
Company.
As part of our investment banking business, we regularly issue fairness
opinions and are continually engaged in the valuation of companies and their
securities in connection with business reorganizations, private placements,
negotiated underwritings, mergers and acquisitions and valuations for estate,
corporate and other purposes. We are familiar with the Company and have provided
investment banking services to it. In the ordinary course of business, Stephens
Inc. and its affiliates at any time may hold long or short positions, and may
trade or otherwise effect transactions as principal or for the accounts of
customers, in debt or equity securities or options on securities of the Company.
Stephens is receiving a fee in connection with the issuance of this fairness
opinion.
Based on the foregoing and our general experience as investment bankers,
and subject to the qualifications stated herein, we are of the opinion on the
date hereof that the consideration to be received by the disinterested
shareholders of the Company in the Transaction is fair to them from a financial
point of view.
Neither this opinion nor its substance may be disclosed by you to anyone
other than your advisors, and the Company's Board of Directors without our
written permission.
This opinion and a summary discussion of our underlying analyses and role
as your financial advisor may be included in communications to the Company's
shareholders provided that we approve of such disclosures prior to publication.
Very truly yours,
/s/ STEPHENS INC.
- -----------------------------
STEPHENS INC.
A3-2
<PAGE> 1
EXHIBIT C1
ORANGE-CO, INC.
2020 US HIGHWAY 17 SOUTH
P.O. BOX 2158
BARTOW, FLORIDA 33831-2158
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 18, 1999
PROXY STATEMENT
SOLICITATION
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of January 4, 1999, regarding
the ownership of the Company's Common Stock by each person known to the Company
to be the beneficial owner of more than five percent (5%) of the Company's
Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
------------------------------------ -------------------- ----------------
<S> <C> <C>
Ben Hill Griffin, III....................................... 5,405,160(1) 52.4%
700 S. Alternate Hwy. 27
Frostproof, Florida 33843
</TABLE>
- ---------------
(1) Includes 5,105,160 shares beneficially owned by Ben Hill Griffin, Inc.
through its wholly owned subsidiary Ben Hill Griffin Investments, Inc., and
300,000 shares beneficially owned by Ben Hill Griffin, III. Mr. Ben Hill
Griffin, III, Chairman and Chief Executive Officer of the Company,
beneficial owner of the majority of the voting stock of Ben Hill Griffin,
Inc., may be considered to be the indirect beneficial owner of the Company's
Common Stock owned by Ben Hill Griffin, Inc.
I. ELECTION OF DIRECTORS
At the Annual Meeting nine Directors will be elected to hold office for the
ensuing year or until their respective successors are duly elected and
qualified. Unless authority is withheld on the attached form of proxy card, such
proxy will be voted FOR the election of the nominees set forth below to serve as
such Directors. Each of the nine nominees is presently a member of the Board of
Directors, has consented to being named in this proxy statement and has notified
management that they intend to serve, if elected. If any of the nominees should
be unable to serve as a Director, the persons designated by proxies reserve full
discretion to cast their votes for another person in his place. A plurality of
votes will elect each Director.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE PROPOSAL
TO ELECT THE NINE NOMINEES LISTED ON PAGES 3 AND 4 AS DIRECTORS OF THE COMPANY.
2
<PAGE> 2
NOMINEES FOR ELECTION OF DIRECTORS
The information set forth below as to age, shareholdings, and business
experience for the past five years, including principal occupation or
employment, has been furnished by each nominee, all of which currently serve as
directors:
<TABLE>
<CAPTION>
SHARES
POSITION, PRINCIPAL BENEFICIALLY
OCCUPATIONS AND OTHER OWNED AS OF PERCENT
NAME AND AGE DIRECTORSHIPS JANUARY 4, 1999 OF CLASS
------------ --------------------- --------------- --------
<S> <C> <C> <C>
Ben Hill Griffin, III, 56(1)....... Director, Chairman of the Board and 5,405,160 52.4
Chief Executive Officer of the
Company since May 28, 1992. For
over five years, Chairman of the
Board, President and Chief
Executive Officer of Ben Hill
Griffin, Inc., (citrus production,
harvesting and packing, fertilizer
manufacturing and ranching).
Director, Chairman of the Board and
Chief Executive Officer of Alico,
Inc., (a publicly-owned
agribusiness company). Director of
SunTrust Bank, Central Florida, N.A
Richard A. Coonrod, 67............. Director of the Company since 1989. 1,000 *
For over five years, President and
Chief Executive Officer of Coonrod
Agriproduction Corporation (food
and agribusiness). General Partner
of The Food Fund (investment
partnership)
Paul E. Coury, M.D., 74............ Director of the Company since 1,000 *
December 15, 1992. Physician, from
May 1955 to January 1996, and
Managing Partner of Doctors Miller,
Coury & Nobo, P.A. (general
medicine and surgery practice)
George W. Harris, Jr., 64(1)....... Director of the Company since 1,000 *
December 15, 1992. For over five
years, Chairman of the Board and
Chief Executive Officer of Citrus
and Chemical Bank
W. Bernard Lester, 59.............. Director of the Company since May 3,100 *
28, 1992. Director, President and
Chief Operating Officer of Alico,
Inc. From 1988 to 1997, Director,
Executive Vice President and Chief
Operating Officer of Alico, Inc.(3)
Bobby F. McKown, 62................ Director of the Company since 1,000 *
November 1998. Trade Consultant for
Florida Citrus Mutual since
September 1998. From January 1980
to September 1998 Executive VP and
CEO of Florida Citrus Mutual.
Director of SunTrust Bank, Mid
Florida.
</TABLE>
3
<PAGE> 3
<TABLE>
<CAPTION>
SHARES
POSITION, PRINCIPAL BENEFICIALLY
OCCUPATIONS AND OTHER OWNED AS OF PERCENT
NAME AND AGE DIRECTORSHIPS JANUARY 4, 1999 OF CLASS
------------ --------------------- --------------- --------
<S> <C> <C> <C>
Gene Mooney, 55.................... Director of the Company since 2,206 *
October 14, 1993. President and
Chief Operating Officer of the
Company since November 13, 1992.
From November 1989 to April 1992,
Vice President of Operations &
Sales of Silver Springs Citrus
Cooperative, Inc. From April 1992
to November 1992, General Manager
of Winter Garden Citrus Products
Cooperative.
C.B. Myers, Jr., 77(4)............. Director of the Company since May 6,500 *
28, 1992. For over five years,
practicing attorney and President
of Peterson and Myers, P.A.
Thomas H. Taylor, Sr., 63.......... Director of the Company since May 1,000 *
28, 1992. For over five years,
Chairman of the Board and Chief
Executive Officer of Taylor Ranch,
Inc. (agribusiness).
</TABLE>
- ---------------
* Less than one percent.
(1) Messrs., Griffin and Harris are brothers-in-law.
(2) Includes 5,105,160 shares beneficially owned by Ben Hill Griffin, Inc. over
which Mr. Griffin has the power to direct its voting and disposition by
reason of his position as Chairman of the Board and Chief Executive Officer.
(3) 50.32% of the common stock of Alico, Inc. is beneficially owned by Ben Hill
Griffin, Inc. through its wholly owned subsidiary Ben Hill Griffin
Investments, Inc.
(4) Mr. Myers and other members of Peterson and Myers, P.A. provided legal
services to the Company during fiscal 1998 and continue to provide such
services as of the date of this proxy.
DIRECTOR'S COMPENSATION
Directors of the Company are paid $1,000 for each Board meeting and
separately scheduled committee meeting attended except for Executive Committee
meetings for which no fees are paid. Out-of-pocket expenses related to the
attendance of Directors at such meetings are reimbursed by the Company.
FURTHER INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Board of Directors conducts its business through meetings of the Board
and through its standing committees. In accordance with the By-Laws of the
Company, the Board of Directors currently has an Executive, an Audit, and a
Compensation Committee established as standing committees of the Board. The
Board of Directors held 5 meetings during fiscal 1998. Each Director attended at
least 75 percent of the total number of meetings of the Board of Directors and
the Committees on which they serve.
The Executive Committee, which exercises, to the extent permitted by
Florida Law, all the powers of the Board of Directors during intervals between
Board meetings, consists of Ben Hill Griffin, III, W. Bernard Lester, and Gene
Mooney. The Executive Committee met 24 times during fiscal 1998.
The Audit Committee, which is composed of C. B. Myers, Jr., Thomas H.
Taylor, Sr. and Richard A. Coonrod, has authority to recommend to the Board of
Directors the independent public accountants to serve as auditors, reviews with
the independent auditors the annual audit plan, the financial statements, the
auditor's report and their evaluation and recommendations concerning the
Company's internal controls and approves
4
<PAGE> 4
the types of professional services for which the Company may retain the
independent auditors. The Audit Committee met once during fiscal 1998.
The Compensation Committee reviews the compensation of the executive
offices of the Company and makes recommendations to the Board of Directors
regarding such compensation. It also administers the Company stock option plans
described herein in accordance with their terms. The members of the Compensation
Committee are C. B. Myers, Jr., Thomas H. Taylor, Sr. and Paul E. Coury. The
Compensation Committee met once during fiscal 1998.
EXECUTIVE OFFICERS
The Executive Officers shown below currently serve in the capacities
indicated. Executive Officers are normally appointed by the Board of Directors
and serve at the pleasure of the Board.
<TABLE>
<CAPTION>
POSITION, PRINCIPAL OCCUPATIONS
NAME AND AGE AND OTHER DIRECTORSHIPS
- ------------ -------------------------------
<S> <C>
Chairman of the Board and Chief Executive Officer and a
Director of the Company since May 1992. Since 1990, Mr.
Griffin has served as Chairman of the Board, President and
Chief Executive Officer of Ben Hill Griffin, Inc.
("BHGI"), a privately held agribusiness involved in the
production, harvesting, packaging and marketing of citrus
products. Prior to 1990, Mr. Griffin served for several
years as Vice Chairman and Senior Vice President of BHGI.
Also, since 1990, Mr. Griffin has served as Chairman of
the Board and Chief Executive Officer of Alico, Inc.
("Alico"), a publicly-owned agribusiness company.
Ben Hill Griffin, III,
56...................
President and Chief Operating Officer of the Company since
November 1992; Director of the Company since October 1993.
Mr. Mooney previously served as General Manager (in
transition) of Winter Garden Citrus Products Cooperative
from April 1992 to November 1992. Mr. Mooney served as
Vice President of Operations and Sales for Silver Springs
Citrus Cooperative, Inc. from November 1989 to April 1992.
Gene Mooney, 55........
Vice President, Chief Financial Officer, Treasurer since
December 1991, and Secretary of the Company since December
1998. Mr. Bruwelheide previously served as Vice President
and Controller of the Company from May 1991 to December
1991. Mr. Bruwelheide also served as Assistant Secretary
and Controller of the Company from January 1991 to May
1991. Mr. Bruwelheide previously held the position of Vice
President of Finance with Ewell Industries, Inc. for over
five years.
Dale A. Bruwelheide,
49...................
</TABLE>
STOCK OWNERSHIP OF ADDITIONAL EXECUTIVE OFFICERS NOT PREVIOUSLY NAMED AND
OF ALL EXECUTIVE OFFICERS AND DIRECTORS AS A GROUP, IS AS FOLLOWS:
<TABLE>
<CAPTION>
POSITION, PRINCIPAL SHARES BENEFICIALLY
OCCUPATION AND OTHER OWNED AS OF PERCENT
NAME AND AGE DIRECTORSHIPS 1/4/99 OF CLASS
- ------------ -------------------- ------------------- --------
<S> <C> <C> <C>
Dale A. Bruwelheide, 49........ Vice President and Chief Financial Officer 5,100(1) *
All Directors and Executive
Officers as a Group (10
Persons)..................... 5,427,066(2) 52.6
</TABLE>
- ---------------
* Less than one percent
(1) Consists of options to purchase 5,000 shares which are currently exercisable
and 100 shares owned directly by Mr. Bruwelheide.
(2) Includes the beneficial interest which Mr. Griffin, III may have in shares
of the Company's Common Stock beneficially owned by Ben Hill Griffin, Inc.,
through its wholly owned subsidiary Ben Hill Griffin
5
<PAGE> 5
Investments, Inc., which total 5,105,160 shares; also includes options to
purchase shares of the Company's Common Stock which are held by Executive
Officers and are exercisable within 90 days.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors (the "Committee") is
composed entirely of outside Directors and is responsible for developing and
making recommendations to the Board with respect to the Company's executive
compensation policies. The Committee has available to it an outside compensation
consultant and access to independent compensation data. The Committee thus has
access to industry and area compensation information on executives in similar
companies, both larger and smaller than the Company.
The Company's executive compensation program provides an overall level of
compensation that is competitive within the Florida citrus industry. Actual
compensation levels may be greater or less than average competitive levels in
surveyed companies based on annual long-term Company performance as well as
individual performance. The Compensation Committee uses discretion to set
executive compensation, including compensation for the Chief Executive Officer,
where in its judgment external, internal or individual circumstances warrant,
but considering the level of profits achieved, the relative relationship of each
Executive's contribution to the Company's success and each Executive's
performance of his assigned responsibilities. The Chief Executive Officer's
salary for fiscal 1998 was comparable to that of the previous year, with a bonus
award reflecting the Board of Directors' recognition of the Chief Executive
Officer's performance under the business circumstances.
The Company's executive compensation program is comprised of base salary,
annual cash incentive compensation and various benefits, including medical and
pension plans generally available to employees of the Company. In the
Committee's opinion, the Company's executives are properly compensated at the
present time when compared with others in similar positions in companies of the
same size in the Florida citrus industry.
No member of the Committee is a former or current officer or employee of
the Company or any of its subsidiaries.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDERS PARTICIPATION
The Compensation Committee is composed of C. B. Myers, Jr., Chairman;
Thomas H. Taylor, Sr. and Paul E. Coury, M.D. There were no interlocks of
executive officers or Board Members of the Compensation or equivalent committee
or another entity which has any executive officers serving on the Compensation
Committee of the Company. No executive officer of the Company serves as a
director of another entity, one of whose executive officers served on the
Compensation Committee of the Company. No executive officer of the Company
served as a member of the Compensation Committee of another entity, one of whose
executive officers served as a director of the Company. No executive officer of
the Company served as a member of the Compensation Committee of another entity,
one of whose executive officers served on the Compensation Committee of the
Company.
C.B. Myers, Jr., Chairman
Thomas H. Taylor, Sr.
Paul E. Coury, M.D.
6
<PAGE> 6
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1)
- --------------------------- ---- ------- ------- ---------------
<S> <C> <C> <C> <C>
Ben Hill Griffin, III.................................. 1998 180,200 110,000 8,200
Chairman of the Board and Chief Executive Officer 1997 170,337 58,000 9,000
</TABLE>
EXECUTIVE OFFICERS
<TABLE>
<S> <C> <C> <C> <C>
1996 150,083 142,000 15,755
Gene Mooney............................................ 1998 158,200 90,000 63,188
President and Chief 1997 157,242 70,000 60,070
Operating Officer 1996 150,191 80,000 46,757
John R. Alexander...................................... 1998 97,132 -- 104,196(2)
Senior Vice President 1997 96,446 17,000 51,482
Secretary 1996 95,538 40,000 56,859
Dale A. Bruwelheide.................................... 1998 97,100 21,000 15,058
Vice President, Chief 1997 95,096 21,000 14,612
Financial Officer and 1998 91,936 40,000 17,991
Secretary(3)
</TABLE>
- ---------------
(1) Includes: (a) Company contributions to the Company's Management Security
Plan of $54,988, $49,225 and $12,818 for Messrs. Mooney, Alexander and
Bruwelheide respectively; (b) Company contributions to the Company's Profit
Sharing Plan of $3,200, $3,200, $2,721 and $2,240 for Messrs. Griffin,
Mooney, Alexander and Bruwelheide respectively; and (c) Directors Fees in
the amount of $5,000 for each of Messrs. Griffin, Mooney and Alexander.
(2) Includes $47,250 severance paid in connection with the termination of Mr.
Alexander's employment.
(3) Secretary since December 14, 1998.
AGGREGATED OPTION/SAR EXERCISED IN FISCAL 1998
AND FY-END 1998 OPTION/SAR VALUES(1)
<TABLE>
<CAPTION>
NUMBER OF
UNEXERCISED DOLLAR VALUE OF
OPTIONS(2) UNEXERCISED IN
AT FISCAL THE MONEY OPTIONS
SHARES VALUE YEAR END FISCAL YEAR END
NAME ACQUIRED ON REALIZED 1998(#) 1998 ($)
---- ----------- ----------- ----------- -----------------
<S> <C> <C> <C> <C>
Ben Hill Griffin, III......................... -0- -0- -0- -0-
Gene Mooney................................... -0- -0- -0- -0-
Dale A. Bruwelheide........................... -0- -0- 5,000 $1,875
</TABLE>
- ---------------
(1) The Company does not have a stock appreciation rights plan.
(2) All options listed were exercisable as of September 30, 1998. There were no
options held by the named persons which were not exercisable as of September
30, 1998.
CONTINGENT COMPENSATION
The Company maintains several compensation plans under which the Executive
Officers and key employees of the Company and its participating subsidiaries and
affiliates are eligible for benefits, each of which is described as follows:
Company Stock Option Plan. The Company's 1987 Employee Stock Option Plan
(the "1987 Plan"), which expired during fiscal 1997, is administered by the
Company's Compensation Committee (the "Committee"), which is composed entirely
of persons who were not eligible to participate in the 1987 Plan.
7
<PAGE> 7
The 1987 Plan authorized the grant of incentive stock options within the meaning
of Section 422A of the Internal Revenue Code of 1986, as amended (the "Code"),
as well as non-qualified options that did not meet the requirements of incentive
stock options. A total of 750,000 shares of the Company's Common Stock were
reserved for issuance under the 1987 Plan. All outstanding options granted under
the 1987 Plan became immediately exercisable pursuant to their terms when Ben
Hill Griffin, Inc. and an affiliate acquired beneficial ownership of more than
50% of the Company's then outstanding voting securities on May 28, 1992. The
maximum term of each option granted under the 1987 Plan varied depending on the
type of option in question. In the case of incentive stock options, the maximum
term is 5 years if the option holder owns more than 10% of the voting power of
the Company, its parent or subsidiaries. In the case of non-qualified stock
options, the maximum term is 10 years and 1 day.
There are currently options on 18,825 shares issued and outstanding. Since
the 1987 Plan expired during fiscal 1997, no further options can be granted.
Payment for shares to be acquired on exercise of options granted under the
Company's 1987 Plan may be made in cash or, at the discretion of the Committee,
by surrender of previously-owned shares of Common Stock, which will be valued
for such purposes at the average of the highest and lowest selling price on the
New York Stock Exchange on the date of exercise. During fiscal 1998, none of the
current Executive Officers exercised any options.
The following table contains information regarding the shares of Common
Stock reserved under the Company's stock option plan, the year the stock option
plan terminates and the maximum term of options granted thereunder.
<TABLE>
<CAPTION>
SHARES RESERVED PLAN MAXIMUM
PLAN FOR ISSUANCE TERMINATION DATE TERM OF OPTION
- ---- --------------- ---------------- --------------
<S> <C> <C> <C>
1987 Plan................................. 750,000 1997 10 Years(1)(2)
</TABLE>
- ---------------
(1) 5 years for incentive stock options if the option holder owns more than 10%
of the voting power of the Company, its parent or subsidiaries.
(2) 10 years and 1 day for non-qualified stock options.
401(k) Plan. The Company has a Salary Deferral Plan which meets the
qualifications of Section 401(k) of the Code (the "401(k) Plan"). Employees may
elect to participate beginning on the first calendar quarter following date of
employment or the first of any subsequent calendar quarter and are eligible to
make tax-deferred contributions of up to the lesser of 15% of annual
compensation or that which is allowed under the Code (indexed annually). The
Company will match, in accordance with rates to be established annually by the
Board of Directors, those contributions made by participants who are employed by
the Company on the last day of the Plan Year. Under certain circumstances, if
the 401(k) Plan is considered "top-heavy" under applicable provisions of the
Code, the Company may be required to make a contribution to "non-key" employees
and the amount of compensation taken into account for key employees may be
limited. Contributions by the Company vest immediately. Withdrawals from
tax-deferred and employer contribution accounts can generally be made only after
reaching certain qualifications allowed under the Code. No amounts were accrued
for the benefit of the Company's Executive Officers during Fiscal 1998. The
401(k) Plan previously contained a profit sharing provision. Effective January
1, 1993, the 401(k) Plan was amended to provide that no further employer
discretionary contribution would be made to the 401(k) Plan and a separate
Profit Sharing Plan was adopted.
Profit Sharing Plan. Effective January 1, 1993, the Company established a
Profit Sharing Retirement Plan which meets the qualifications of Section 401(c)
of the Code (Profit Sharing Plan). All employees begin participation on the
later of January 1, 1993 or date of employment. Vesting is governed by a seven
year graduated vesting schedule, including credit for continuous service with
the Company prior to the effective date. Participants' accounts will fully vest
upon death, disability or attainment of retirement age. Withdrawals may be made
upon the occurrence of the earlier of death, total disability or retiring at age
65. The Company's discretionary contribution is determined annually by the Board
of Directors and is allocated among eligible participants' accounts in the
proportion that each participant's compensation bears to the total compensation
of all eligible employees during the year. Amounts accrued for the benefit of
the Company's Executive
8
<PAGE> 8
Officers during fiscal 1998 are reflected in the "Summary Compensation Table"
under "All Other Compensation".
Deferred Compensation Plan. Because the Company's Executive Officers are
effectively precluded from meaningful participation in the Company's 401(k)
Plan, the Company established a non-qualified, unfunded plan to permit Executive
Officers to defer receipt of a percentage of pre-tax annual compensation. The
Deferred Compensation Plan is administered by the Compensation Committee, which
selects, from senior management, top executive and highly compensated employees,
those employees who will participate in the Deferred Compensation Plan.
Participants are guaranteed a rate of return no less than the Moody's Seasoned
Long Term Bond Index. The Company matches, in accordance with rates established
annually by the Board of Directors, those contributions made by participants who
are employed by the Company on the last day of the Plan Year. In the event of
the death of an employee, a participant's beneficiary is entitled to the greater
of five times the amount deferred in the participant's initial year or the total
amount credited to the participant's account. Benefits are paid in ten
consecutive annual installments, or can be paid in a single lump sum with
Committee approval. Amounts accrued for the benefit of the Company's Executive
Officers during fiscal 1998 are reflected in the "Summary Compensation Table"
under "All Other Compensation".
Bonus Plan. The Board of Directors has a Bonus Plan to reward all
executive, management and supervisory personnel for contributions to the
operations and profits of the Company. The Plan is discretionary and all bonuses
will be awarded only at the discretion of the Board of Directors.
Group Long-Term Disability Plan. The Company's non-participating group
long-term disability insurance plan (the "LTDP") provides reimbursement to
disabled employees equal to 60% of their basic monthly earnings, subject to a
maximum monthly benefit of $9,000. No payments were made to the Company's
Executive Officers under the LTDP during fiscal 1998.
Management Security Plan. The Company has a non-qualified deferred benefit
retirement plan covering certain management and key personnel of the Company.
The Plan is designed to provide a set monthly benefit after the participant
reaches age 65. The participants are required to pay a portion of the cost of
the Plan and the Company pays the remaining amount. The expense and monthly
benefit amount is based on the participant's annual salary and age. Amounts
accrued for the benefit of the Company's Executive Officers during fiscal 1998
are reflected in the "Summary Compensation Table" under "All Other
Compensation".
II. APPROVAL OF THE 1998 INCENTIVE EQUITY PLAN
General. On December 3, 1998, the Board of Directors adopted the
Orange-co, Inc., 1998 Incentive Equity Plan (the "Incentive Plan") subject to
stockholder approval. The Incentive Plan is intended to provide participants
with an opportunity to increase their stock ownership in the Company and to give
them an additional incentive to achieve the Company's objectives. Officers,
Board members and other key employees of the Company and its subsidiaries and
affiliates who are responsible for the management, growth and/or profitability
of the business of the Company and/or its subsidiaries and affiliates are
eligible to receive stock option grants, stock appreciation rights ("SARs")
and/or restricted stock awards under the Incentive Plan. 750,000 shares of the
Company's Common Stock are reserved for awards under the Incentive Plan. No
grants have been made to date under the Incentive Plan.
Administration. The Incentive Plan will be administered by the Board of
Directors of the Company. The Board has full power to select, from among the
officers, Board members and other key employees eligible for awards, the
individuals to whom awards will be granted, to make any combination of awards to
any participants and to determine the specific terms of each award, subject to
the provisions of the plan. The Board of Directors has the right at any time to
terminate or amend the Incentive Plan, but no such action may terminate awards
already granted or otherwise affect the rights of any participant under an
outstanding award without the participant's consent. Without stockholder
approval, the Board may not amend the Incentive Plan to (i) increase the total
number of shares of stock subject to the plan, or (ii) change or modify the
class of eligible participants. The Board is authorized to make appropriate
adjustments in connection with outstanding awards under the Incentive Plan to
reflect stock dividends, stock splits, recapitalizations and similar events. In
9
<PAGE> 9
the event of a merger, liquidation or similar event, the Board in its discretion
may provide for substitution of or an adjustment in, or may accelerate or
adjust, such awards.
Stock Options. The Incentive Plan provides that options may be granted
only to those individuals, Board members and employees whose participation the
Board determines is in the best interests of the Company. The Company receives
no consideration upon the granting of an option. The options may be granted
either as incentive stock options (which qualify for certain favorable tax
consequences for the offering, as discussed below), or as non-qualified stock
options, but no options may be granted after December 3, 2008.
The Board also determines the number of shares, the exercise price, the
term, any conditions on exercise, the consequences of any termination of
employment, and other terms of each option. In the case of an option intended to
be an incentive stock option, the term of the option may not exceed ten years
from the date of grant and the option price may not be less than 100% of the
fair market value per share of the Common Stock on the date of grant. With
respect to non-qualified stock options, there is no limit on the term of the
option, and the option price may be as low as 50% of fair market value per share
on the date of grant. The option price is payable in full upon exercise, and
payment may be made in cash, by delivery of shares of Common Stock (valued at
their fair market value at the time of exercise), or by a combination of cash
and stock.
At the discretion of the Board, options under the Incentive Plan may
include a "reload option." A reload option, if included in the original option,
would be triggered when an optionee pays the exercise price of all or a portion
of the original option by delivering shares of Common Stock. In that event, the
optionee would automatically be granted an additional option to acquire the same
number of shares as had been delivered to pay such exercise price. The reload
option would be subject to all of the terms and conditions of the original
option, except that the option price per share would be equal to the fair market
value of the Common Stock on the date the original option was exercised, and
except that the Board could specify additional conditions or contingencies, such
as continued employment by the Company or holding of the shares acquired upon
exercise of the original option for a specified period of time.
Options granted under the Incentive Plan may not be transferred by an
optionee other than by will or by the laws of descent and distribution.
Stock Appreciation Rights. The Board may also grant non-transferable SARs
in conjunction with options, entitling the holder upon exercise to receive an
amount in cash and/or Common Stock (as determined by the Board) equal in value
to the increase since the date of grant in the fair market value of the Common
Stock covered by such right. Each SAR will terminate upon the termination or
exercise of the related option.
Restricted Stock. The Board may also award restricted stock subject to
certain conditions set forth in the Incentive Plan and such other conditions and
restrictions as the Board may determine which may include the attainment of
performance goals and the payment of a purchase price which may be equal to or
less than par value (and may be zero).
Prior to the lapse of restrictions on shares of restricted stock, the
participant will have all rights of a stockholder with respect to such shares,
including voting and dividend rights, subject to the conditions and restrictions
generally applicable to restricted stock (and the dividends on such shares) or
specifically set forth in the participant's restricted stock award agreement.
A recipient of restricted stock must enter into a restricted stock award
agreement with the Company, setting forth the restrictions to which such shares
are subject and the date or dates on which the restrictions will lapse. The
Board may permit such restrictions to lapse in installments within the
restricted period or may accelerate or waive such restrictions at any time.
Shares of restricted stock are non-transferable and the Board will have the
right to provide, in the event that a participant who holds shares of restricted
stock terminates employment for any reason (including death) prior to the lapse
or waiver of the restrictions, for the forfeiture of such restricted stock in
exchange for the amount, if any, which the participant paid for them.
10
<PAGE> 10
TRANSACTIONS WITH MANAGEMENT AND OTHERS
The Company handled 1,511,399 boxes of fruit under a marketing contract
during fiscal 1998 for Ben Hill Griffin, Inc., a company controlled by Ben Hill
Griffin, III, the Company's Chairman of the Board and Chief Executive Officer.
The marketing contract is equivalent to contracts with other growers. Under the
contract terms, Ben Hill Griffin, Inc.'s fruit is processed and marketed along
with fruit from the Company and from other growers. Proceeds from sales of
finished products and all by-products, less costs of processing and service
fees, are paid to growers on the basis of fruit delivered to the Company. The
Company makes advances on marketing contracts which are recovered from the final
fruit returns. The net amount paid to Ben Hill Griffin, Inc. under the terms of
this contract during the year ended September 30, 1998 was $2,426,880, with an
additional accrued balance of approximately $3,574,000 to be paid by March 1,
1999. Additionally, during fiscal 1998, the Company paid Ben Hill Griffin, Inc.
$165,329 for fruit purchased under a spot fruit contract. Also, the Company paid
Ben Hill Griffin, Inc. $2,716,031 for other goods and services, principally the
purchase of fertilizer and citrus trees at competitive market prices during
fiscal 1998.
11
<PAGE> 1
EXHIBIT C2
[EXECUTION COPY]
ASSET PURCHASE AGREEMENT
BETWEEN
ORANGE-CO, INC.
AND
PASCO ACQUISITION, INC.
DATED SEPTEMBER 27, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I DEFINITIONS............................................... 2
1.1 Definitions................................................. 2
ARTICLE II PURCHASE AND SALE........................................ 8
2.1 Purchased Assets............................................ 8
2.2 Excluded Assets............................................. 9
2.3 Assumption of Liabilities................................... 10
2.4 Excluded Liabilities........................................ 10
2.5 Assignment of Contracts and Rights.......................... 11
2.6 Consents; Delayed Assets.................................... 11
2.7 Unspecified Assets or Liabilities........................... 12
2.8 Closing Purchase Price...................................... 12
2.9 Initial Closing; Final Closing.............................. 13
2.10 Post-Closing Purchase Price Adjustment...................... 14
2.11 Right of Assignment of Purchaser............................ 15
2.12 Excess Inventory Offsets.................................... 15
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER................ 15
3.1 Organization, Active Status, Corporate Power and
Qualification............................................... 15
3.2 [Intentionally Omitted]..................................... 16
3.3 Corporate Authority; Approval............................... 16
3.4 Seller Reports; Seller Financial Statements................. 16
3.5 Financial Information....................................... 17
3.6 Brokers and Finders......................................... 17
3.7 Governmental Approvals; Noncontravention.................... 17
3.8 Board Recommendation........................................ 17
3.9 Material Contracts.......................................... 18
3.10 Absence of Certain Changes.................................. 18
3.11 Litigation.................................................. 19
3.12 Real Property............................................... 19
3.13 [Intentionally Omitted]..................................... 21
3.14 Assets; Personal Property................................... 21
3.15 Compliance with Laws; Permits............................... 21
3.16 Environmental Matters....................................... 22
3.17 Intellectual Property....................................... 23
3.18 Year 2000 Compliance........................................ 24
3.19 Taxes....................................................... 24
3.20 Employee Benefits........................................... 24
3.21 Labor Matters............................................... 25
3.22 Insurance................................................... 26
3.23 Product Warranties.......................................... 26
3.24 Suppliers and Customers..................................... 26
3.25 Accounts Receivable......................................... 26
3.26 Inventory................................................... 26
3.27 Seller's Representations in Merger Agreement................ 26
ARTICLE IV [INTENTIONALLY OMITTED].................................. 26
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER............... 27
5.1 Organization and Good Standing.............................. 27
5.2 Corporate Authority; Approval............................... 27
5.3 Government Approvals; Noncontravention...................... 27
5.4 Brokers and Finders......................................... 27
5.5 Financing................................................... 27
ARTICLE VI COVENANTS................................................ 27
6.1 Conduct of Business......................................... 27
6.2 Publicity; Confidentiality.................................. 29
6.3 No Solicitation............................................. 29
6.4 Access...................................................... 29
6.5 Certain Filings............................................. 30
6.6 All Necessary Action........................................ 30
6.7 Information Supplied........................................ 31
6.8 Other Actions............................................... 31
6.9 Tax Matters................................................. 31
6.10 Tax Allocation of Purchase Price............................ 31
6.11 Liabilities with Respect to Employees....................... 32
6.12 Notification of Certain Matters............................. 33
6.13 Insurance................................................... 33
6.14 Notices Regarding the Merger Agreement...................... 33
6.15 Transfer of Certain Materials............................... 33
6.16 Collection of Accounts...................................... 34
6.17 Noncompetition.............................................. 34
6.18 Bulk Transfer Laws.......................................... 34
6.19 Further Assurances.......................................... 34
6.20 Certain Fruit Purchases..................................... 34
6.21 Frank Carroll Oil Environmental Liabilities................. 34
ARTICLE VII CONDITIONS TO FINAL CLOSING............................. 35
7.1 Conditions to Seller's and Purchaser's Obligations to Effect
the Final Closing........................................... 35
7.2 Conditions to Seller's Obligation to Effect the Final
Closing..................................................... 35
7.3 Conditions to Purchaser's Obligation to Effect the Final
Closing..................................................... 35
ARTICLE VIII TERMINATION............................................ 36
8.1 Grounds for Termination..................................... 36
8.2 Effect of Termination....................................... 36
ARTICLE IX INDEMNIFICATION.......................................... 36
9.1 Agreement to Indemnify...................................... 36
9.2 Defense of Claims........................................... 36
9.3 Exclusive Remedy............................................ 37
9.4 Equitable Relief............................................ 37
ARTICLE X [INTENTIONALLY OMITTED]................................... 37
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE XI MISCELLANEOUS............................................ 38
11.1 Notices..................................................... 38
11.2 Amendment and Modification.................................. 39
11.3 Waiver of Compliance; Consents.............................. 39
11.4 Survival.................................................... 39
11.5 Expenses.................................................... 39
11.6 Assignment.................................................. 39
11.7 GOVERNING LAW............................................... 40
11.8 Jurisdiction................................................ 40
11.9 Counterparts................................................ 40
11.10 Interpretation.............................................. 40
11.11 Entire Agreement............................................ 40
11.12 No Third Party Beneficiaries................................ 40
11.13 Severability................................................ 40
11.14 WAIVER OF JURY TRIAL........................................ 40
11.15 Specific Performance........................................ 40
11.16 No Other Representations.................................... 40
</TABLE>
EXHIBITS
<TABLE>
<S> <C>
Exhibit A Form of Assumption Agreement
Exhibit B Form of Bill of Sale
Exhibit C [Intentionally Omitted.]
Exhibit D Form of Copyright Assignment
Exhibit E Form of Patent Assignment
Exhibit F Form of Assignment and Assumption of Leases
Exhibit G Form of Trademark Assignment
Exhibit H Fee Simple Deed
Exhibit I Form of Legal Opinion
</TABLE>
SCHEDULES
See Seller's Disclosure Letter of Even Date
iii
<PAGE> 5
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
SECTION
-------
<S> <C>
Acquisition Documents....................................... 1.1
Acquisition Proposal........................................ 6.3
Affiliate................................................... 1.1
Agreement................................................... Preamble
Allocation Objection Notice................................. 6.10 (b)
Allocation Statement........................................ 6.10 (a)
Arbitrating Accountant...................................... 2.10 (d)
Assignments and Assumptions of Leases....................... 1.1
Assumed Liabilities......................................... 2.3
Assumption Agreements....................................... 1.1
Ben Hill Griffin Entities................................... Recital B
BHG Share Purchase.......................................... Recital B
Bills of Sale............................................... 1.1
Board....................................................... Recital F
Books and Records........................................... 1.1
Business.................................................... 1.1
Business Accounts Receivable................................ 1.1
Business Contracts.......................................... 1.1
Business Day................................................ 1.1
Business Equipment.......................................... 1.1
Business Intellectual Property.............................. 1.1
Business Inventory.......................................... 1.1
Business Material Adverse Effect............................ 1.1
Business Material Contracts................................. 3.9
Business Permits............................................ 3.15 (a)
Business Real Property...................................... 1.1
Business Shared Liabilities................................. 2.3 (k)
Business Systems............................................ 3.18
Claim....................................................... 1.1
Closings.................................................... 2.9
Code........................................................ 1.1
Common Stock................................................ Recital B
Confidential Information.................................... 1.1
Consents.................................................... 2.6 (a)
Contracts................................................... 1.1
Copyright Assignments....................................... 1.1
Copyrights.................................................. 1.1
Current Business Balance Sheet.............................. 3.5 (a)
Damages..................................................... 1.1
Deemed Estimated Foodservice Working Capital Amount......... 2.8
Delayed Asset............................................... 2.6 (a)
Delayed Liability........................................... 2.6 (a)
DOJ......................................................... 6.5
Disclosure Letter........................................... Preamble to Article III
Environmental Laws.......................................... 1.1
ERISA....................................................... 3.20 (a)
ERISA Affiliate............................................. 3.20 (a)
Estimated Net Working Capital............................... 2.8 (a)
Excess Inventory Amount..................................... 2.10(a)
</TABLE>
iv
<PAGE> 6
<TABLE>
<CAPTION>
SECTION
-------
<S> <C>
Excess Inventory Offsets.................................... 1.1
Exchange Act................................................ 3.4
Excluded Assets............................................. 2.2
Excluded Liabilities........................................ 2.4
Expenditures................................................ 1.1
Filed Seller Reports........................................ 3.4
FDA......................................................... 3.15 (a)
Fee Simple Deeds............................................ 1.1
Final Assets................................................ 1.1
Final Closing............................................... 2.9 (b)
Final Closing Date.......................................... 2.9 (b)
Final Liabilities........................................... 1.1
Final Payment............................................... 2.8 (b)
Financial Advisor........................................... 1.1
Food Service Intellectual Property.......................... 1.1
Food Service IP Licenses.................................... 3.17(b)
Frank Carroll Oil Environmental Liabilities................. 1.1
FIRPTA Affidavits........................................... 1.1
FTC......................................................... 6.5
GAAP........................................................ 1.1
Governmental Approval....................................... 1.1
Governmental Authority...................................... 1.1
Grove Accounts Receivable................................... 1.1
Grove Business.............................................. 1.1
Grove Contracts............................................. 1.1
Grove Equipment............................................. 1.1
Grove Intellectual Property................................. 1.1
Grove Inventory............................................. 1.1
Grove Real Property......................................... 1.1
Hazardous Material.......................................... 1.1
HSR Act..................................................... 1.1
Improvements................................................ 3.12(e)
Income Taxes................................................ 1.1
Indemnified Party........................................... 9.2
Indemnifying Party.......................................... 9.2
Initial Assets.............................................. 1.1
Initial Closing............................................. 2.9 (a)
Initial Closing Date........................................ 2.9 (a)
Initial Liabilities......................................... 1.1
Initial Payment............................................. 2.9 (a)
Insurance Policies.......................................... 3.22
IP Licenses................................................. 3.17 (b)
IRS......................................................... 1.1
Knowledge................................................... 1.1
Laws........................................................ 3.15 (a)
Liability................................................... 1.1
Lien........................................................ 1.1
Marks....................................................... 1.1
Merger...................................................... Recital C
Merger Agreement............................................ Recital C
Net Working Capital Amount.................................. 1.1
</TABLE>
v
<PAGE> 7
<TABLE>
<CAPTION>
SECTION
-------
<S> <C>
Net Working Capital Estimate................................ 2.8 (b)
Net Working Capital Schedules............................... 1.1
Non-Transferable Business Permits........................... 3.15 (a)
Objection Notice............................................ 2.10(c)
Offered Employees........................................... 6.1
Order....................................................... 7.1 (j)
Owned Business Real Property................................ 3.12 (a)
Patent Assignments.......................................... 1.1
Patents..................................................... 1.1
Permitted Liens............................................. 1.1
Person...................................................... 1.1
Processing IP Licenses...................................... 3.17(b)
Processing Intellectual Property............................ 1.1
Products.................................................... 3.15 (b)
Product Compliance.......................................... 3.15 (b)
Proper Closing.............................................. 1.1
Proper Closing Date......................................... 1.1
Proxy Statement............................................. 6.6
Purchase Price.............................................. 2.8(a)
Purchased Assets............................................ 2.1
Purchaser................................................... Preamble
Purchaser Indemnitees....................................... 9.1(b)
Purchaser Material Adverse Effect........................... 1.1
Purchaser Plans............................................. 6.11
Purchaser's Determination................................... 2.10 (a)
Purchaser's Schedules....................................... 2.10 (a)
Real Estate Transfer Documents.............................. 1.1
Real Estate Transfer Tax Returns............................ 1.1
Real Property Business Leases............................... 3.12 (a)
Real Property Laws.......................................... 3.12(f)
Reference Rate.............................................. 1.1
Reservoir................................................... 1.1
Reservoir Subsidiary........................................ 1.1
Scheduled Employees......................................... 6.11
Seasonal Employees.......................................... 6.11
SEC......................................................... 3.4
Section 1060................................................ 6.10 (a)
Securities Act.............................................. 3.4
Seller...................................................... Preamble
Seller Business Entities.................................... 3.1
Seller Indemnitees.......................................... 9.1 (a)
Seller Plan(s).............................................. 3.20 (a)
Seller Reports.............................................. 3.4
Seller Requisite Vote....................................... 3.3
Software.................................................... 1.1
State Food Authorities...................................... 3.15 (b)
Stockholders Meeting........................................ 6.6
Subsidiary.................................................. 1.1
Taxes....................................................... 1.1
Tax Accountant.............................................. 6.10(c)
Tax Returns................................................. 1.1
</TABLE>
vi
<PAGE> 8
<TABLE>
<CAPTION>
SECTION
-------
<S> <C>
Tender Offer................................................ 1.1
Title Affidavits............................................ 1.1
Trademark Assignments....................................... 1.1
Trade Secrets............................................... 1.1
Transactions................................................ 1.1
Transferred Employees....................................... 6.11
USDA........................................................ 3.15 (b)
WARN Act.................................................... 6.11
Year 2000 Compliant......................................... 3.18
</TABLE>
vii
<PAGE> 9
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of September 27, 1999 (this
"Agreement"), is between ORANGE-CO, INC., a Florida corporation ("Seller") and
PASCO ACQUISITION, INC., a Delaware corporation ("Purchaser"). All capitalized
terms have the meanings ascribed to such terms in Article I or as otherwise
defined herein.
RECITALS:
A. Upon the terms and subject to the conditions set forth in this
Agreement, Purchaser desires to purchase from Seller, and Seller desires to sell
to Purchaser, the assets and liabilities associated with the citrus processing
and beverage and food servicing businesses of Seller and its Subsidiaries.
B. Concurrently with the execution of this Agreement, Reservoir Subsidiary
is acquiring (the "BHG Share Purchase") from Ben Hill Griffin Investments Inc.
and certain related persons (collectively, the "Ben Hill Griffin Entities") an
aggregate of 5,405,660 shares of common stock, par value $.50, of Seller
("Common Stock"), representing 52.4% of the outstanding Common Stock.
C. Concurrently with the execution of this Agreement, Reservoir, Reservoir
Subsidiary and Seller are entering into that certain Agreement and Plan of
Merger of even date herewith (as it may be amended from time to time, the
"Merger Agreement"), pursuant to which, immediately prior to the Final Closing
(unless the condition set forth in Section 7.2(a) of this Agreement is waived),
Reservoir Subsidiary will merge with Seller (the "Merger").
D. Concurrently with the execution of this Agreement, Purchaser and Ben
Hill Griffin, III are entering into that certain Noncompetition and Consulting
Agreement and Purchaser and Ben Hill Griffin Inc. are entering into that certain
Delivered Fruit Purchase Contract, each of even date herewith.
E. Concurrently with the execution of this Agreement, Purchaser, Reservoir
and Reservoir Subsidiary are entering into that certain Side Agreement of even
date herewith, pursuant to which, among other things, Reservoir and Reservoir
Subsidiary are required to vote (or give a consent in respect of) their shares
of Common Stock so as to satisfy the Seller Requisite Vote.
F. The Board of Directors of Seller (the "Board"), based on the unanimous
recommendation of a special committee of the Board consisting of four directors
unaffiliated with Reservoir or the Ben Hill Griffin Entities, has, in light of
and subject to the terms and conditions set forth herein and in the Merger
Agreement, (i) determined that this Agreement, the Merger Agreement and the
transactions contemplated hereby and thereby are advisable and in the best
interests of Seller and its unaffiliated stockholders, (ii) determined that the
consideration to be paid for each share of outstanding Common Stock pursuant to
the Tender Offer and the Merger is fair to Seller's unaffiliated stockholders,
(iii) determined that the consideration to be paid for the Purchased Assets and
the Assumed Liabilities pursuant to this Agreement is fair to Seller and its
unaffiliated stockholders, (iv) approved this Agreement, the Merger Agreement,
and the transactions contemplated hereby and thereby and (v) resolved to
recommend that the holders of the Common Stock adopt this Agreement and the
Merger Agreement and approve the transactions contemplated hereby and thereby
and tender their shares of Common Stock pursuant to the Tender Offer.
<PAGE> 10
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
representations, warranties, covenants and agreements hereinafter set forth, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. The following terms, as used herein, have the following
meanings:
"Acquisition Documents" means the Copyright Assignments, the Trademark
Assignments, the Patent Assignments, the Real Estate Transfer Documents, the
Bills of Sale and the Assumption Agreements and any other agreements,
instruments or other documents executed and delivered by any of the parties to
this Agreement in connection with either of the Closings, together with any
exhibits and schedules thereto, and in each case as modified, amended,
supplemented, restated or renewed from time to time. The Merger Agreement is not
an Acquisition Document.
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by or under direct or indirect common control
with such other Person.
"Assignments and Assumptions of Leases" means those certain Assignments and
Assumptions of Leases, to be dated as of the Initial Closing Date and the Final
Closing Date, and to be executed by Purchaser, Seller and its Subsidiaries a
party thereto in the form attached hereto as Exhibit F.
"Assumption Agreements" means those certain Assignment and Assumption
Agreements, to be dated as of the Initial Closing Date and the Final Closing
Date, to be executed by Purchaser and the Seller Business Entities in the form
attached hereto as Exhibit A.
"Bills of Sale" means those certain Bills of Sale, to be dated as of the
Initial Closing Date and the Final Closing Date, and to be executed by the
Seller Business Entities in favor of Purchaser in the form attached hereto as
Exhibit B.
"Books and Records" means with respect to any Person, all files, documents,
instruments, papers, books and records of such Person's operations, affairs,
financial condition, results of operations, prospects, assets or Liabilities,
including financial statements, Tax Returns, work papers and letters from
accountants and auditors, budgets, pricing guidelines, ledgers, journals, deeds,
title policies, minute books, contracts, licenses, customer lists, computer
files and programs, retrieval programs, operating data and plans, projections,
forecasts and environmental studies and plans.
"Business" means (i) the citrus processing and packaging business as
heretofore conducted and as currently conducted until the Final Closing Date by
Seller and its Subsidiaries and (ii) the beverage and food servicing businesses
as heretofore conducted and as currently conducted until the Initial Closing
Date by Seller and its Subsidiaries, in each case including all research,
development, manufacturing, marketing, sales and service and other activities
and operations of Seller and its Subsidiaries primarily relating thereto or
primarily in connection therewith, but excluding in any event in each case the
Grove Business.
"Business Accounts Receivable" means all the accounts, notes and finance
receivables generated by Seller and its Subsidiaries in connection with or
arising out of the Business, including all funds, refunds, receivables, credits,
offsets, or reimbursements, claims, debts, obligations and such other rights
arising therefrom, but excluding in any event any items constituting Grove
Accounts Receivable.
"Business Contracts" means Contracts that (a) are set forth or required to
be set forth in Section 3.9(a) of the Seller's Disclosure Letter (or are omitted
therefrom by reason of the size of thresholds specified in Section 3.9) or (b)
primarily relate to the Business, but excluding in any event the Grove
Contracts.
"Business Day" means each day other than a Saturday, Sunday or other day on
which commercial banks in the State of Florida or the State of New York are
authorized or required by law to close.
2
<PAGE> 11
"Business Equipment" means all equipment, machinery, motor vehicles, and
other tangible personal property, including all furniture and office equipment
(including desks, tables, chairs, file cabinets and other storage devices),
beverage dispensers, communicating equipment, personal computers and servers and
office supplies that are (a) set forth in Section 3.14(a) of the Seller's
Disclosure Letter, (b) located on the date hereof or at the time of the Proper
Closing at any of the locations set forth in Section 3.12(a)(i) or 3.12(a)(ii)
of the Seller's Disclosure Letter or (iii) used primarily in or related
primarily to the Business, but excluding in any event all Grove Equipment.
"Business Intellectual Property" means the items set forth or required to
be set forth in Section 3.17(b)(i) of the Seller's Disclosure Letter and all
other Copyrights, Marks, Patents, Software and Trade Secrets of the Seller or
its Subsidiaries used primarily in the Business, but excluding in any event any
Grove Intellectual Property.
"Business Inventory" means all inventory of Seller and its Subsidiaries,
wherever located, consisting of (a) juice, concentrate, bottles, by-products of
citrus processing, packaging or (b) raw materials, work in progress, recycled
materials, finished products, inventoriable supplies and noncapital spare parts
primarily as held for sale or use by the Business but excluding in any event
Grove Inventory.
"Business Material Adverse Effect" means any circumstance, change in, or
effect on the Business which, individually or in the aggregate, is (a)
reasonably likely in the future to be materially adverse to the business,
assets, properties, financial condition or results of operations of the
Business, whether individually or in the aggregate or (b) reasonably likely to
prevent, impair or materially delay the ability of Seller or any of its
Subsidiaries to consummate the Transactions or the transactions contemplated by
the Merger Agreement or otherwise perform its obligations under this Agreement
or the Acquisition Documents.
"Business Real Property" means all of the real property, land, buildings,
structures and other improvements set forth or required to be set forth on
Sections 3.12(a)(i) and 3.12(a)(ii) of the Seller's Disclosure Letter and all
other such property primarily used in the Business, but excluding the Grove Real
Property.
"Claim" means any action, cause of action, suit, claim, complaint, demand,
litigation or legal, administrative or arbitral proceeding or investigation.
"Closings" mean, collectively, the Initial Closing and the Final Closing.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information relating to the Business
that is not generally available to the public and that is treated as
confidential by Seller and its Subsidiaries, including, without limitation,
Trade Secrets, information pertaining to business operations and strategies, and
information pertaining to customers, pricing, and marketing.
"Contracts" means all contracts, agreements, joint venture agreements,
partnership agreements, assignments, settlement agreements, consent decrees,
stipulations, promissory notes, evidences of indebtedness, loan agreements,
indentures, security agreements, loan documents, insurance policies, options,
leases, licenses, sales and purchase orders, binding commitments and other
instruments of any kind, whether written or oral, to which such Seller or any of
its Subsidiaries is a party or its or their assets or properties are otherwise
bound and, in each case, as modified, amended, supplemented, restated or renewed
from time to time.
"Copyright Assignments" means those certain Copyright Assignments, to be
dated as of the Initial Closing Date or the Final Closing Date, as applicable,
and to be executed by Seller and its Subsidiaries a party thereto in favor of
Purchaser in the form attached hereto as Exhibit D.
"Copyrights" means all United States and foreign copyrights in both
published works and unpublished works, all registrations and applications
therefor and all renewals and extensions thereof.
"Damages" means all Claims, assessments, losses, damages, costs, expenses,
Liabilities, judgments, awards, fines, response costs, sanctions, Taxes,
penalties, charges and amounts paid in settlement, including (a) interest on
cash disbursements in respect of any of the foregoing at the Reference Rate in
effect from time to time, plus two percent (2%), compounded quarterly, from the
date each such cash disbursement is made
3
<PAGE> 12
until the date the Person incurring such cash disbursement shall have been
indemnified in respect thereof and (b) reasonable out-of-pocket costs, fees and
expenses (including reasonable costs, fees and expenses of attorneys,
accountants, auditors and other agents of, or other Persons retained by, such
Person), including, without limitation, those incurred in connection with
enforcing any rights under this Agreement.
"Environmental Laws" means Laws relating to pollution, protection of the
environment or worker health and safety.
"Excess Inventory Offsets" means Purchaser's liability to Seller for
compensation payable to Offered Employees for the period from the Initial
Closing Date to the Final Closing Date in accordance with Section 6.11(d).
"Expenditures" means amounts actually paid (i) for judgments, awards,
fines, penalties, response costs or sanctions; (ii) in settlement; (iii) for
investigation or remediation of environmental conditions, to the extent such
payments are required by Environmental Laws; and (iv) for the reasonable fees,
costs and expenses of Seller's attorneys and environmental consultants.
"Fee Simple Deeds" means those certain Fee Simple Deeds for the owned
properties listed in Section 3.12(a)(i) of the Seller's Disclosure Letter, to be
dated as of the Initial Closing Date or the Final Closing Date, as applicable,
and to be executed by the applicable Seller Business Entities in favor of
Purchaser in the form attached hereto as Exhibit I.
"Final Assets" mean the Purchased Assets primarily relating to the
Processing Business.
"Final Liabilities" mean the Assumed Liabilities primarily relating to the
Processing Business.
"Financial Advisor" means Stephens Inc.
"FIRPTA Affidavits" means affidavits that Seller is not a "foreign person"
within the meaning of Section 1445 of the Code.
"Food Service Business" means the portion of the Business described in
clause (ii) of the definition of the Business set forth above.
"Food Service Intellectual Property" means all rights in the items set
forth or required to be set forth in Section 3.17(b)(i) of the Seller's
Disclosure Letter and all other Copyrights, Marks, Patents, Software and Trade
Secrets of the Seller or its Subsidiaries primarily used in the Food Service
Business.
"Frank Carroll Oil Environmental Liabilities" means all Liabilities
pursuant to Environmental Laws arising out of or relating to Seller's ownership
of the stock of Frank Carroll Oil Company, Inc., including without limitation
any Liabilities pursuant to Environmental Laws arising out of the sale of the
stock of Frank Carroll Oil Company, Inc. to Childs Oil Company, Inc.
"GAAP" means generally accepted accounting principles in the United States
of America.
"Governmental Approval" means an authorization, consent, approval, permit
or license issued by, or a registration or filing with, or notice to, or waiver
from, any Governmental Authority.
"Governmental Authority" means any foreign or domestic, federal,
territorial, state or local governmental authority, quasi-governmental
authority, instrumentality, court, government or self-regulatory organization,
commission, tribunal or organization or any regulatory, administrative or other
agency, or any political or other subdivision, department, board, bureau or
branch or official of any of the foregoing.
"Grove Accounts Receivable" means all the accounts, notes and finance
receivables generated by Seller and its Subsidiaries arising from the sale of
fruit or the management of groves, including without limitation the items
designated as such in Section 1.1(a) of the Seller's Disclosure Letter.
"Grove Business" means the business of owning, maintaining, harvesting and
managing citrus groves, as heretofore or currently conducted by Seller and its
Subsidiaries.
4
<PAGE> 13
"Grove Contracts" means Contracts primarily related to the Grove Business
to which Seller or any of its Subsidiaries is a party (including without
limitation any Contracts respecting citrus grove management, caretaking,
marketing, irrigation or related Contracts), Contracts respecting the lease or
acquisition of any Grove Real Property or Grove Equipment, rights retained by
Seller or its Subsidiaries under this Agreement and any other Contracts not
primarily for the benefit of the Business to which Seller or any of its
Subsidiaries is a party, including without limitation the items designated as
such in Section 1.1(a) of the Seller's Disclosure Letter.
"Grove Equipment" means all of Seller's or its Subsidiaries' agricultural,
irrigation, fertilizing, grove maintenance and harvesting equipment and all
other equipment used primarily in the Grove Business, including without
limitation the items designated as such in Section 1.1(a) of the Seller's
Disclosure Letter.
"Grove Intellectual Property" means all rights to the Copyrights, Marks,
Patents, Software and Trade Secrets set forth in Section 1.1 of the Seller's
Disclosure Letter by Seller and its Subsidiaries, including without limitation
the "Orange-co" name and other Intellectual Property used primarily in the Grove
Business.
"Grove Inventory" means all fruit on any trees or citrus groves owned or
managed by Seller and its Subsidiaries, inventoriable supplies used in the Grove
Business, picked fruit, spare parts for Grove Equipment and other inventory of
Seller and its Subsidiaries primarily related to the Grove Business, but in no
event including any juice, other products derived from processing citrus or any
beverages.
"Grove Real Property" means any citrus groves or other real property owned
or leased by Seller and its Subsidiaries used primarily in the Grove Business.
"Hazardous Material" means any hazardous substance or hazardous waste,
industrial or toxic substance, material or waste, petroleum product, asbestos or
asbestos-containing material, PCB or PCB-containing material, medical or
infectious waste, pollutant, contaminant, radioactive material, urea
formaldehyde insulation, or any other substance the presence, handling, use,
disposal, generation or exposure to which is prohibited or limited by or
regulated under Environmental Laws.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"Income Taxes" means all net income, gross income, gross receipts, unitary,
capital gains, franchise or profit taxes.
"Initial Assets" mean the Purchased Assets other than the Final Assets.
"Initial Liabilities" mean the Assumed Liabilities other than the Limited
Assets.
"IRS" means the United States Internal Revenue Service.
"Knowledge" or "Knowledge" means, with respect to any Person, the actual
knowledge of such Person. With respect to any Person that is a corporation,
limited liability company, partnership or other business entity, actual
knowledge shall be deemed to include the actual knowledge of the directors (if
any) and executive officers for any such Person and, in addition, the senior
managers set forth in Section 1.1(c) of the Seller's Disclosure Letter.
"Liability" means, with respect to any Person, any liability or obligation
of such Person of any kind, character or description, whether known or unknown,
absolute or contingent, accrued or unaccrued, liquidated or unliquidated,
secured or unsecured, joint or several, due or to become due, vested or
unvested, executory, determined, determinable or otherwise and whether or not
the same is required to be accrued on the financial statements of such Person.
"Lien" means, with respect to any asset, any mortgage, title defect or
objection, deed of trust, claim, lease, option, right of first refusal,
easement, servitude, transfer restriction, lien, pledge, charge, security
interest, license, burden, hypothecation or other encumbrance in respect of such
asset or any other right or claim of others affecting such asset and any other
agreement, restriction or limitation in the use of such asset.
5
<PAGE> 14
"Marks" means all United States and foreign fictional business names,
Internet domain names, trade names, trade dress, designs, logos, registered and
unregistered trademarks and service marks (including, in each case, the goodwill
associated thereto), and applications therefor.
"Net Working Capital Amount" means the amount of the "Net Working Capital"
of the Business as of the Initial Closing Date (with respect to the Food Service
Business) and as of the Final Closing Date (with respect to the Processing
Business) as set forth under the Net Working Capital Schedules, as finally
determined in accordance with Section 2.10.
"Net Working Capital Schedules" means the net working capital schedules of
the Food Service Business as of the Initial Closing Date and the Processing
Business as of the Final Closing Date, reflecting operations after August 31,
1999 and the results of the physical count referred to in Section 2.10(a), in
the form of, and calculated on a basis consistent with, the statement of net
working capital of the Business as of August 31, 1999 as set forth in Section
1.1(d) of the Seller's Disclosure Letter, as finally determined in accordance
with Section 2.10, which August 31, 1999 statement shall (except as may be
affected by such physical count) be conclusive in all respects as of its date,
it being understood that no adjustments shall be made to the Net Working Capital
Statements to reflect assets or liabilities arising out of the provisions of
this Agreement.
For the avoidance of doubt, there is no requirement that such August 31,
1999 statement conform to generally accepted accounting principles.
"Patent Assignments" means those certain Patent Assignments, to be dated as
of the Initial Closing Date or the Final Closing Date, as applicable, and to be
executed by Seller and its Subsidiaries a party thereto in favor of Purchaser in
the form attached hereto as Exhibit E.
"Patents" means all United States and foreign patents, patent rights, and
patent applications (including any divisions, continuations,
continuations-in-part, substitutions or reissues thereof, whether or not patents
are issued on such applications and whether or not such applications are
modified, withdrawn or resubmitted).
"Permitted Liens" means (i) statutory liens of landlords and liens of
carriers, warehousemen, mechanics, materialmen, and other similar Persons and
other liens imposed by applicable Law incurred in the ordinary course of
business for sums not yet delinquent and not having a Business Material Adverse
Effect, (ii) Liens for Taxes not yet due or delinquent or being contested in
good faith by appropriate proceedings for which adequate reserves have been
established in accordance with GAAP, (iii) Liens which, individually or in the
aggregate, do not adversely affect in any material respect the value or use of
the property subject thereto and (iv) Liens respecting Assumed Liabilities but
not Liens respecting Excluded Liabilities.
"Person" means an individual, corporation, partnership, association,
limited liability company, trust, estate or other similar business entity or
organization, including a Governmental Authority.
"Processing Business" means the portion of the Business described in clause
(i) of the definition of the Business set forth above.
"Processing Intellectual Property" means all rights in the items set forth
or required to be set forth in Section 3.17(b)(ii) of the Seller's Disclosure
Letter and all other Copyrights, Marks, Patents, Software and Trade Secrets of
the Seller or its Subsidiaries used primarily in the Processing Business.
"Proper Closing" means (a) with respect to any Initial Asset or Initial
Liability, the Initial Closing and (b) with respect to any Final Asset or Final
Liability, the Final Closing.
"Proper Closing Date" means (a) with respect to any Initial Asset or
Initial Liability, the date hereof and (b) with respect to any Final Asset or
Final Liability, the Final Closing Date.
"Proxy Documents" means the Proxy Statement and any other documents
relating thereto that are required to be filed with the SEC and/or the New York
Stock Exchange under applicable Law.
"Purchaser Material Adverse Effect" means any circumstance, change, or
effect which, individually or in the aggregate, is reasonably likely to prevent,
impair or materially delay the ability of any Purchaser to
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consummate the Transactions or otherwise perform its obligations under this
Agreement or any of the Acquisition Documents.
"Real Estate Transfer Documents" means, collectively, the Fee Simple Deeds,
the Assignments and Assumptions of Leases, the Real Estate Transfer Tax Returns,
the Title Affidavits and the FIRPTA Affidavits.
"Real Estate Transfer Tax Returns" means Tax Returns which Seller and its
Subsidiaries are required by Law to execute and acknowledge and to deliver,
either individually or together with Purchaser, to any Governmental Authority as
a result of the transfer of the Business Real Property.
"Reference Rate" means the per annum rate of interest publicly announced
from time to time by Credit Suisse First Boston in New York, New York, as its
prime rate for loans in US Dollars. Any change in the Reference Rate shall take
effect at the opening of business on the day specified in the public
announcement of such change.
"Reservoir" means the parties to the Side Agreement referred to in Recital
B other than Purchaser and Reservoir Subsidiary.
"Reservoir Subsidiary" means "Sub" as defined in the Merger Agreement.
"Software" means all computer software programs, including, without
limitation, all source codes, object codes and documentation related thereto.
"Subsidiary" means, with respect to any Person, any corporation or other
Person (other than an individual) as to which more than fifty percent (50%) of
the outstanding stock (or similar equity interests) having ordinary voting
rights or power (and excluding stock (or similar equity interests) having voting
rights only upon the occurrence of a contingency unless and until such
contingency occurs and such rights may be exercised) is owned or controlled,
directly or indirectly, by such Person and/or by one or more of such Person's
direct or indirect Subsidiaries.
"Taxes" means (a) net income, gross income, gross receipts, sales, use, ad
valorem, value added, intangible, unitary, capital gain, transfer, franchise,
profits, license, lease, service, service use, withholding, backup withholding,
payroll, employment, estimated, excise, severance, stamp, occupation, premium,
property, prohibited transactions, windfall or excess profits, customs or other
taxes, duties, fees, assessments or charges of any kind whatsoever imposed by
any foreign, federal, state or local Governmental Authority, together with any
interest and any penalties, additions to tax or additional amounts with respect
thereto, (b) any Liability for payment of amounts described in clause (a)
whether as a result of transferee liability, of being a member of an affiliated,
consolidated, combined or unitary group for any period, or otherwise through
operation of law and (c) any Liability for the payment of amounts described in
clause (a) or (b) as a result of any tax sharing, tax indemnity or tax
allocation agreement or any other express or implied agreement to indemnify any
other person for Taxes; and the term "Tax" means any one of the foregoing Taxes.
"Tax Returns" means all returns, reports, forms or other information filed
or required to be filed with respect to any Tax.
"Tender Offer" means the "Offer" as defined in the Merger Agreement.
"Tender Offer Documents" means the Tender Offer Statement to be filed with
the SEC and the New York Stock Exchange by Reservoir on Schedule 14D-1, the
Solicitation/Recommendation Statement filed with the SEC and the New York Stock
Exchange by Seller on Schedule 14D-9 and any other documents relating to the
foregoing required to be filed with the SEC and/or the New York Stock Exchange
under applicable Law, in each case together with all amendments and supplements
thereto.
"Title Affidavits" means title affidavits which are sufficient to cause the
title company insuring Purchaser's title to the applicable property to remove or
omit as exceptions to Purchaser's title policy all of the Schedule B standard
printed exceptions relating to parties in possession (excluding only tenants in
possession pursuant to unrecorded leases, if any, identified on the Title
Affidavits), mechanics liens and the GAP.
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"Trademark Assignments" means those certain Trademark Assignments, to be
dated as of the Initial Closing Date or the Final Closing Date, as applicable,
and to be executed by Seller and its Subsidiaries a party thereto in favor of
Purchaser, in the form attached hereto as Exhibit G.
"Trade Secrets" means all know-how, trade secrets, proprietary concepts,
proprietary ideas, mask works, modifications, extensions and improvements
thereof, confidential information and other proprietary information (whether or
not patentable or subject to copyright or mask work protection).
"Transactions" means the transactions contemplated by this Agreement and
the Acquisition Documents.
ARTICLE II
PURCHASE AND SALE
2.1 Purchased Assets. Upon the terms and subject to the conditions of this
Agreement, including Section 2.6 hereof, at the Proper Closing, Purchaser agrees
to purchase from Seller and its Subsidiaries, and Seller agrees to, and to cause
its Subsidiaries to, sell, transfer, assign and deliver to Purchaser, free and
clear of all Liens other than Permitted Liens, all of Seller's and its
Subsidiaries' right, title and interest in, to and under the following assets,
as the same shall exist on the Proper Closing Date, other than the Excluded
Assets (the "Purchased Assets"):
(a) all rights, assets and properties, tangible and intangible,
included on the statement of net working capital of the Business as of
August 31, 1999 as set forth in Section 1.1(d) of the Seller's Disclosure
Letter, except to the extent such assets have been disposed of after August
31, 1999;
(b) all Business Intellectual Property;
(c) all Business Equipment, except that personal computers and
automobiles that are not used by Transferred Employees shall be allocated
as follows: personal computers and automobiles that are used by employees
who are primarily employed in the Grove Business shall be Excluded Assets
and all personal computers and automobiles that are used neither by
Transferred Employees or by employees who are primarily employed in the
Grove Business shall be divided 64% as Purchased Assets and 36% as Excluded
Assets and Purchaser and Seller shall equitably divide such items within
thirty (30) days following the Final Closing and in the event they are
unable to do so, such division shall be made by Tedder, James, Worden &
Associates ("Tedder, James").
(d) all Owned Business Real Property and all Real Property Business
Leases;
(e) all Business Inventory and any rights of Seller and its
Subsidiaries to the warranties received from suppliers and any related
claims, credits, rights of recovery with respect to such Business
Inventory;
(f) all of Seller's or any of its Subsidiaries' rights under all
Business Contracts (including rights to assert Claims arising thereunder or
relating thereto against any Person) to which Seller or any of its
Subsidiaries is a party, including the Business Material Contracts, other
than (i) Real Property Business Leases (which are addressed above) and (ii)
Insurance Policies;
(g) all mailing lists, customer lists, vendor data, equipment,
maintenance records, warranty information, records of plant operations and
the source and disposition of materials used and produced therein
(including environmental and worker health and safety records, reports,
assessments, audits, monitoring data and any other information or
documentation related to releases or threatened releases of hazardous
substances, remedial action under Environmental Laws or environmental or
worker health and safety matters), standard forms of documents, manuals of
operation or business procedures (including environmental and worker health
and safety management plans, compliance plans, contingency plans, emergency
plans and the like), and other similar information, to the extent the same
is used primarily in the conduct of the Business and, with respect to the
Owned Business Real Property, all building plans, blueprints, renderings
and surveys, specifications, drawings, and reports, including all
maintenance reports, and all items of personal property relating primarily
to the ownership or operation of same;
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provided, however, that Seller shall have the right to make copies of the
portions of any of the foregoing that relate to the Grove Business; and
provided, further, that Seller agrees to keep confidential pursuant to
Section 6.2(b) any Confidential Information contained in the foregoing of
which it obtains copies;
(h) all Books and Records of Seller and its Subsidiaries (including
all discs, tapes and other media-storing data and other information) used
primarily in the conduct of the Business, and, with respect to employees
hired by Purchaser, those employees' personnel records; provided, however,
that Seller shall have the right to make copies of the portions of any such
Books and Records that relate to the Grove Business; and provided, further,
that Seller agrees to keep confidential pursuant to Section 6.2(b) any
Confidential Information contained in the Books and Records of which it
obtains copies;
(i) all Business Permits other than the Non-Transferable Business
Permits;
(j) all of the Business Accounts Receivable existing as of the close
of business on the Proper Closing Date, together with all accrued interest
thereon existing as of the close of business on the Proper Closing Date;
(k) except to the extent relating to Excluded Liabilities, all rights
under open orders for the purchase or sale of assets, customer orders,
prepayments of every kind (including prepaid expenses), security deposits
and other deposits of every kind, in each case used or held for use
primarily in the Business;
(l) the goodwill of Seller primarily related to the Business;
(m) all of Seller's or any of its Subsidiaries' rights to defend
against any Assumed Liability; and
(n) all of the assets described on Section 2.1(n) hereto of the
Seller's Disclosure Letter.
2.2 Excluded Assets. Notwithstanding Section 2.1, the parties hereto
expressly understand and agree that the following assets and properties of
Seller and its Subsidiaries (the "Excluded Assets") shall not be sold,
transferred or assigned to Purchaser pursuant to Section 2.1 hereof:
(a) any cash (including checks received prior to the close of business
on the Proper Closing Date, whether or not deposited or cleared prior to
the close of business on the Proper Closing Date, but only to the extent
that any asset on the Net Working Capital Schedules is reduced accordingly
or any Liability included on the New Working Capital Schedules is increased
accordingly), commercial paper, certificates of deposit, treasury bills,
bank deposits or similar cash equivalents of Seller and its Subsidiaries
existing as of the close of business on the Proper Closing Date;
(b) any Books and Records (including those referred to in Section
2.1(g)) that Seller and its Subsidiaries are required by Law to retain or
that are not used primarily in the Business or relate primarily to Excluded
Liabilities; provided, however, that Purchaser shall have the right to make
copies of the portions of any such Books and Records that relate to the
Business or the Purchased Assets to the extent permitted under Section
6.4(b); provided, further, that if any confidential information related to
the Grove Business is contained in the Books and Records of which it
obtains copies, Purchaser agrees to take such actions with respect to such
information as are required to be taken by Seller under Section 6.2(b)
hereof with respect to Confidential Information;
(c) any claim, right or interest of Seller in or to any refund,
rebate, abatement or other recovery for Income Taxes and other Taxes the
liability for which Purchaser has not assumed under this Agreement;
(d) any Non-Transferable Business Permits;
(e) any rights of Seller and its Subsidiaries arising out of the
Merger Agreement, this Agreement and the Acquisition Documents;
(f) all Grove Accounts Receivable, Grove Equipment, Grove Contracts,
Grove Intellectual Property, Insurance Policies, Grove Real Property and
Grove Inventory;
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(g) all of the assets of Seller and its Subsidiaries described on
Section 2.2(g) of the Seller's Disclosure Letter; and
(h) all other assets of Seller and its Subsidiaries that are not
Purchased Assets.
2.3 Assumption of Liabilities. Upon the terms and subject to the
conditions of this Agreement, including Section 2.6 hereof, at the Proper
Closing, Purchaser agrees to assume, pay when due, perform and/or otherwise
discharge as and when obligated (subject to the right of Purchaser to contest
any such obligation in good faith), the Liabilities and obligations of Seller
and its Subsidiaries with respect to the following Liabilities, as the same
shall exist on the Proper Closing Date, other than the Excluded Liabilities (the
"Assumed Liabilities"):
(a) all of the Liabilities of Seller and its Subsidiaries
respectively, including all accounts payable and accrued payment
obligations relating to the Business that are accrued on the Net Working
Capital Schedules;
(b) all Liabilities set forth in Section 2.3(b) of the Seller's
Disclosure Letter, except to the extent such Liabilities have been disposed
of as of the close of business on the Proper Closing Date;
(c) all Liabilities of Seller and its Subsidiaries based on
negligence, theories of tort, product liability, breaches of Contract or
other like basis for liability, including personal injury or property
damage claims, to the extent such obligations or Liabilities primarily
relate to the Purchased Assets or arose out of the operation of the
Business;
(d) all Liabilities of Seller and its Subsidiaries arising under, or
incurred in order to comply with, any Environmental Law (or regulation or
order issued thereunder) pertaining to any condition existing on or in any
of the Business Real Property or otherwise relating primarily to the
Business;
(e) all obligations of Seller and its Subsidiaries under the Real
Property Business Leases;
(f) all obligations of Seller and its Subsidiaries under the Business
Contracts and Business Permits (other than the Non-Transferable Business
Permits);
(g) all obligations of Seller and its Subsidiaries for replacement of,
or refund for, damaged, defective or returned goods primarily related to
the Business;
(h) all obligations of Seller and its Subsidiaries with respect to any
security deposit held by Seller and its Subsidiaries as lessor or sublessor
under the Real Property Business Leases;
(i) all Liabilities of Seller and its Subsidiaries specifically
assumed by Purchaser pursuant to Section 6.11; and
(j) 50% of all Expenditures incurred in accordance with Section 6.21
with respect to Frank Carroll Oil Environmental Liabilities.
2.4 Excluded Liabilities. Notwithstanding any provision in this Agreement
or any of the other Acquisition Documents to the contrary, at the Proper
Closing, Purchaser will assume only the Assumed Liabilities and will not assume
any other Liabilities of Seller or any of its Subsidiaries (or any predecessor
owner of all or part of Seller's or any of its Subsidiaries' business and
assets) of whatever nature, whether presently in existence or arising hereafter.
All such other Liabilities shall be retained by and remain Liabilities of Seller
or its Subsidiaries, as the case may be, and Seller shall, or shall cause its
Subsidiaries to, pay when due, perform and/or otherwise discharge such
Liabilities as and when obligated (all such Liabilities not being assumed by
Purchaser being herein referred to as the "Excluded Liabilities"), subject to
the right of Seller and its Subsidiaries to contest any such Liability in good
faith. In addition to and without limiting the
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generality of the foregoing, none of the following Liabilities shall be assumed
by Purchaser pursuant to Section 2.3 hereof, and all of such Liabilities shall
be Excluded Liabilities for the purposes of this Agreement:
(a) any Liabilities primarily relating to Excluded Assets or the Grove
Business;
(b) any Liabilities for Income Taxes of Seller or of any other member
of a consolidated, combined or unitary group of which Seller is or was a
member;
(c) any Liabilities of Seller and its Subsidiaries caused by or
arising out of the execution or performance of the Merger Agreement, this
Agreement and the Acquisition Documents by Seller and its Subsidiaries or
the consummation by Seller and its Subsidiaries of the Merger (including
any Liabilities for appraisal rights incurred in connection therewith) and
the Transactions;
(d) [Intentionally Omitted];
(e) any Liabilities for payment of checks, drafts or other negotiable
instruments that are written against accounts of Seller and its
Subsidiaries unless the foregoing constitute accounts payable or other
Liability being assumed under Section 2.3(a) or the amount of assets
included on the Net Working Capital Schedules is reduced accordingly;
(f) [Intentionally Omitted];
(g) any professional fees, brokerage fees, commissions or finders'
fees of Financial Advisor in connection with the Transactions, the Merger
or the acquisition of any stock of Seller by any Person;
(h) any accounts payable and accrued payment obligations of Seller and
its Subsidiaries which are neither covered by Section 2.3(a) nor Section
2.3(i) nor Section 2.3(j) nor otherwise primarily related to the Business;
(i) any Liabilities of Seller or any other member of its "controlled
group" (as defined by Section 414(b) or (c) of the Code) relating to any
Seller Plan or any employee benefit plan subject to ERISA, except as
specifically assumed by Purchaser under Section 6.11;
(j) any Liabilities addressed under Section 6.11 that are not
specifically assumed by Purchaser under Section 6.11;
(k) any indebtedness of Seller and its Subsidiaries to any Person in
respect of borrowed money (including without limitation any such
indebtedness owed to John Hancock Mutual Life Insurance Company; Suntrust
Bank, Central Florida, National Association; and Farm Credit of Southwest
Florida, ACA), other than indebtedness in respect of capital leases set
forth in Section 2.4(k) of the Seller's Disclosure Letter or reflected on
the Net Working Capital Schedules;
(l) any Liabilities of Seller and its Subsidiaries arising as a result
of any breach of, or failure to comply with, any state or Federal
securities Law; and
(m) all Liabilities of Seller and its Subsidiaries that are not
Assumed Liabilities.
2.5 Assignment of Contracts and Rights. Anything in this Agreement
(including all exhibits, schedules and annexes attached hereto and incorporated
herein) or any other Acquisition Document to the contrary notwithstanding, this
Agreement shall not constitute an agreement to assign any Purchased Asset or
right or any benefit arising thereunder or resulting therefrom without the
consent of a party thereto (other than Seller or its Subsidiaries) if an
attempted assignment thereof, without such consent, would constitute a breach or
other contravention thereof or in any way adversely affect in any material
respect the rights of Purchaser or Seller thereunder.
2.6 Consents; Delayed Assets. (a) Seller and Purchaser shall use
commercially reasonable efforts to secure from any Person all consents, waivers,
permits and approvals (including Governmental Approvals) necessary to transfer
to Purchaser on the Proper Closing Date each of the Purchased Assets free and
clear of any Liens other than Permitted Liens (the "Consents"). All such
Consents shall be in writing and executed counterparts thereof shall be
delivered promptly to Purchaser. Seller shall not agree to any modification of
any
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Purchased Asset (including, without limitation, any Contract or Business Permit)
in the course of obtaining any Consent where such modification would adversely
affect the rights of Purchaser thereunder. To the extent any Consent with
respect to the transfer of any Purchased Asset has not been obtained on or prior
to the Proper Closing Date, such asset (a "Delayed Asset") shall not be
transferred hereunder and any related Liability that constitutes an Assumed
Liability (a "Delayed Liability"), shall not be assumed hereunder by Purchaser
(other than to the extent expressly provided in this Section 2.6) unless and
until such Consent has been obtained. Schedule 2.6 of Seller's Disclosure Letter
sets forth the Delayed Assets as of the date hereof. Seller shall advise
Purchaser in writing, not later than the fifth Business Day prior to the
scheduled Proper Closing Date, of any Purchased Asset that it anticipates will
be Delayed Assets and shall identify any related Delayed Liabilities.
(b) If there are any Delayed Assets, Seller will use commercially
reasonable efforts to provide Purchaser with the benefits intended to be
assigned under any such Delayed Asset, and (to the extent that Purchaser is so
provided with such benefits), Purchaser shall assume, pay when due and perform
any corresponding Delayed Liabilities as and when obligated (subject to the
right of Purchaser to contest any such obligation in good faith). Without
limiting the generality of the foregoing all benefits and obligations existing
thereunder shall be for Purchaser's account. Seller shall take or cause to be
taken at Purchaser's expense such action in its name or otherwise as Purchaser
may reasonably request so as to provide Purchaser with the benefits of each
Delayed Asset and to effect collection of money or other consideration to become
due and payable under the Delayed Asset, and Seller shall promptly pay over to
Purchaser all money or other consideration received by it in respect to each
Delayed Asset. With respect to each Delayed Asset, as of and from the Proper
Closing Date, Seller authorizes Purchaser, to the extent permitted by applicable
Law and the terms of the Delayed Asset, at Purchaser's expense, to perform all
the obligations and receive all the benefits of Seller under the Delayed Asset
and appoints Purchaser its attorney-in-fact to act in its name and on its behalf
with respect thereto.
(c) Following the Proper Closing Date, Seller and Purchaser shall continue
to use commercially reasonable efforts to secure all Consents necessary to
transfer the Delayed Assets to Purchaser as promptly as practicable. Until all
such Delayed Assets are transferred, Seller hereby agrees to enter into such
reasonable arrangements with Purchaser (in addition to the arrangements set
forth in Section 2.6(b)) that will reflect as nearly as possible the respective
benefits and obligations that would have been in effect had the Delayed Assets
and Delayed Liabilities been transferred and assumed on the Proper Closing Date.
At such time and on each occasion after the Proper Closing Date that a required
consent or waiver shall be obtained with respect to any Delayed Asset, such
Delayed Asset shall forthwith be transferred and assigned to Purchaser by
Seller, and all related Delayed Liabilities shall be simultaneously assumed by
Purchaser. Prior to any such transfer of Delayed Assets, Seller shall use
commercially reasonable efforts at Purchaser's expense to preserve and maintain
such Delayed Assets in all material respects pursuant to the terms thereof.
2.7 Unspecified Assets or Liabilities. If there shall be any assets or
Liabilities not expressly provided for in Sections 2.1 through 2.4 above, the
parties agree that all assets that relate primarily to the Business shall be
Purchased Assets, all other assets shall be Excluded Assets, all Liabilities
that relate primarily to the Business shall be Assumed Liabilities and all other
Liabilities shall be Excluded Liabilities.
2.8 Closing Purchase Price. (a) The purchase price (the "Purchase Price")
of the Purchased Assets shall be an amount equal to $17,925,000 plus the Net
Working Capital Amount. The amount of the Purchase Price to be paid at the
Initial Closing (the "Initial Payment") shall be (i) $17,925,000 plus (ii)
$11,767,548 (the "Deemed Estimated Foodservice Working Capital Amount") and the
amount to be paid at the Final Closing shall be the Net Working Capital Estimate
minus the Deemed Estimated Foodservice Working Capital Amount.
(b) On or before the fifth Business Day prior to the Final Closing Date,
Purchaser and Seller shall use their best efforts to agree in good faith to a
reasonable estimate of the Net Working Capital Amount (the "Net Working Capital
Estimate"), and if they fail to so agree, then the Net Working Capital Estimate
shall be determined not later than the Final Closing Date by Tedder, James. The
parties hereto and, if necessary, Tedder, James shall perform their calculation
of the Net Working Capital Estimate in the same manner as the
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statement of net working capital as of August 31, 1999 included in Section 1.1
of the Seller's Disclosure Letter and in the definition of Net Working Capital
Schedules.
(c) In the event that by the Final Closing, Seller is not able to deliver a
satisfaction in recordable form of that certain mortgage by and between American
Agronomics Corporation, American Orange Corporation and Myakka Processors, Inc.,
as mortgagor, and Great American Life Insurance Company, as mortgagee, dated
November 8, 1982 and recorded November 15, 1982 in Book 282, Page 342 of the
Public Records of Hardee County, Florida encumbering the Owned Business Real
Property located in Hardee County, Florida (the "Hardee County Real Property"),
which mortgage Seller acknowledges is not a Permitted Lien, then, at Purchaser's
option, the amount of the Purchase Price to be paid at the Final Closing shall
be reduced by an amount equal to $250,000, and Seller and its Subsidiaries shall
not be obligated to sell their interest in the Hardee County Real Property to
Purchaser. If Purchaser exercises the option set forth in the immediately
preceding sentence, at any time within two years following the Final Closing,
Seller or its Subsidiaries shall have the right to sell the Hardee County Real
Property to Purchaser, and, if Seller exercises such right, Purchaser shall
purchase the same, upon thirty days' prior delivery of a satisfaction that
complies with the requirements of this Section, provided that the Purchaser
shall not be obligated to purchase the same if any material defects in title or
material potential liability under Environmental Laws in each case not existing
on the Final Closing Date have arisen subsequent to the Final Closing.
2.9 Initial Closing; Final Closing. (a) The closing of the purchase and
sale of the Initial Assets and the assumption of the Initial Liabilities
hereunder (the "Initial Closing") shall take place at the offices of Paul,
Weiss, Rifkind, Wharton & Garrison, 1285 Avenue of the Americas, New York, New
York, concurrently with the execution of this Agreement on the date hereof, or
at such other place, at such other time or on such other date as the parties
hereto may agree in writing (the "Initial Closing Date"). At the Initial
Closing:
(i) Purchaser shall execute and deliver each of the Acquisition
Documents relating to the purchase and sale of the Initial Assets and the
assumption of the Initial Liabilities to which it is a party;
(ii) Seller shall, and shall cause each of its Subsidiaries a party
thereto to, execute and deliver each of the Acquisition Documents relating
to the purchase and sale of the Initial Assets and the assumption of the
Initial Liabilities to which it is a party;
(iii) Purchaser shall pay the Initial Payment to Seller by wire
transfer of immediately available funds;
(iv) Seller shall deliver or cause to be delivered to Purchaser all
third party consents, waivers and approvals theretofore obtained by Seller
and its Subsidiaries with respect to the consummation of the Initial
Closing; and
(v) Seller shall deliver an opinion of counsel in substantially the
form annexed hereto as Exhibit I.
(b) The closing of the purchase and sale of the Final Assets and the
assumption of the Final Liabilities hereunder (the "Final Closing") shall take
place at the offices of Paul, Weiss, Rifkind, Wharton & Garrison, 1285 Avenue of
the Americas, New York, New York, as soon as practicable but in no event later
than 10:00 a.m. New York City time on the first business day after the date on
which each of the conditions set forth in Article VII have been satisfied or
waived in writing by the party or parties entitled to the benefit of such
conditions, or at such other place, at such other time or on such other date as
the parties hereto may agree (the "Final Closing Date"). At the Final Closing:
(i) Purchaser shall execute and deliver each of the Acquisition
Documents relating to the purchase and sale of the Final Assets and the
assumption of the Final Liabilities to which it is a party;
(ii) Seller shall, and shall cause each of its Subsidiaries a party
thereto to, execute and deliver each of the Acquisition Documents relating
to the purchase and sale of the Final Assets and the assumption of the
Final Liabilities to which it is a party;
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(iii) Purchaser shall pay to Seller an amount equal to the Net Working
Capital Estimate minus the Deemed Estimated Foodservice Working Capital
Amount by wire transfer of immediately available funds; and
(iv) Seller shall deliver or cause to be delivered to Purchaser all
third party consents, waivers and approvals theretofore obtained by Seller
and its Subsidiaries with respect to the consummation of the Final Closing.
2.10 Post-Closing Purchase Price Adjustment. (a) Not later than two
business days following each Closing Date, Tedder, James shall conduct a
physical count of the Business Inventory transferred or to be transferred at the
Closing. If the physical count indicates that the total Business Inventory count
on hand at August 31, 1999 was in excess of the number of units carried on the
books of Seller and its Subsidiaries as of August 31, 1999, the lesser of
$4,000,000 in value or the value of such excess (the "Excess Inventory Amount")
less the amount of Excess Inventory Offsets will be included in the Net Working
Capital Schedules at 50% of value. If the physical count indicates that the
total Business Inventory count on hand at August 31, 1999 was less than the
number of units carried on the books of Seller and its Subsidiaries as of August
31, 1999, the lesser of $4,000,000 in value or the value of such deficit will be
included in the Net Working Capital Schedules at 50% of value. Any excess
greater than $4,000,000 in value will be included in the Net Working Capital
Schedules at 100% of value and will not constitute Excess Inventory Amount. Any
deficiency in excess of $4,000,000 in value will not be included in the Net
Working Capital Schedules. All references in this Section 2.10(a) to value means
(i) the per unit value as presented in Schedule 1.1(d) for bulk inventory and
(ii) the values used by Tedder, James in preparing the August 31, 1999
statements of working capital for finished goods and supplies. If the Final
Closing occurs within sixty (60) days of the Initial Closing, there shall be no
right by either party to require another physical count of Processing Inventory
in connection with the Final Closing. As soon as practicable, but in no event
more than 60 days after each Closing Date, Seller shall prepare and deliver to
Purchaser a draft of the Net Working Capital Schedules ("Seller's Schedules"),
which shall include Seller's draft determination of the Net Working Capital
Amount for the respective Business as of the Proper Closing Dates ("Seller's
Determination").
(b) At all times prior to the date on which there is a final determination
of the Net Working Capital Amount for each Business pursuant to Section 2.10(c)
or Section 2.10(d), the parties shall provide each other and their respective
accountants and counsel reasonable access to their books and records and work
papers (including all Books and Records acquired from Seller relating to the
respective Business) and permit each other to make copies of relevant portions
thereof; provided, however, that Persons reviewing the same shall treat such
information as confidential to the extent required of other information provided
to such party pursuant to this Agreement.
(c) In the event that Purchaser disagrees with Seller's Determination,
Purchaser shall deliver to Seller, within 20 Business Days after each delivery
by Seller of Seller's Schedules as set forth in Section 2.10(a), a written
notice (the "Objection Notice") which sets forth (1) the nature of and basis for
Purchaser's dispute with such Seller's Determination and (2) Purchaser's draft
determination of the Net Working Capital Amount for such Business, together with
any authority or documentation supporting its position. Any line items of
Seller's Schedules not expressly disputed in an Objection Notice shall be deemed
to have been agreed upon by Purchaser. In the event that no such Objection
Notice is timely received by Seller, Seller's Determination with respect to such
Business shall be deemed the final determination of the Net Working Capital
Amount.
(d) If an Objection Notice is timely delivered to Seller, Purchaser and
Seller shall promptly meet thereafter and attempt to resolve the dispute in good
faith. In the event that an Objection Notice is timely delivered to Seller and
the parties are unable to resolve the disagreement specified in the Objection
Notice, within 20 Business Days after the receipt thereof by Seller, the
disagreement (which shall be limited to the matters set forth in the Objection
Notice) shall be submitted to Tedder, James, or if such firm declines to act in
such capacity, by such other independent and nationally recognized public
accounting firm jointly chosen by Purchaser and Seller (or if the parties shall
fail to agree within such 20-Business-Day period, such other firm as shall be
appointed by the American Arbitration Association upon application of either of
the parties) (the
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"Arbitrating Accountant"). The Arbitrating Accountant shall follow such
procedures as it deems appropriate for obtaining the necessary information in
considering the respective positions of Purchaser and Seller and may, if it
deems appropriate, conduct an independent audit. The Arbitrating Accountant
shall have the right to review all accounting records of Purchaser and Seller
that it deems relevant to the determination of the Net Working Capital Amount.
The Arbitrating Accountant shall render its determination on the disagreement
submitted to it within 30 days of submission of the disagreement by Purchaser
and Seller. The Arbitrating Accountant's determination of either Net Working
Capital Amount shall be final, conclusive and binding upon Purchaser and Seller
and entitled to be enforced to the fullest extent permitted by law and entered
into any court of competent jurisdiction.
(e) Fees and expenses for the Arbitrating Accountant shall be paid by
Seller, on the one hand, and Purchaser, on the other hand, in proportion to the
amount by which their respective determinations of the Net Working Capital
Amount respecting a Business differed from the amount determined by the
Arbitrating Accountant.
(f) If the final determination of the Net Working Capital Amount under
Section 2.10(c) or 2.10(d) differs from the Deemed Estimated Working Capital
Amount in the case of the Food Service Business or from the Net Working Capital
Estimate determined under Section 2.8(b), in the case of the Processing
Business, not later than five Business Days following such final determination
pursuant to Section 2.10(c) or Section 2.10(d):
(i) if the Net Working Capital Amount as finally determined exceeds
the Deemed Estimated Foodservice Working Capital Amount or the Net Working
Capital Estimate, as the case may be, Purchaser shall pay the amount of
such excess to Seller, with interest thereon at the Reference Rate from
time to time in effect, plus two percent (2%), calculated from the Initial
Closing Date in the case of the Food Service Business and the Final Closing
Date in the case of the Processing Business until (but not including) the
date of payment, by wire transfer of immediately available funds; and
(ii) if the Net Working Capital Amount as finally determined is less
than the Deemed Estimated Foodservice Working Capital Amount or the Net
Working Capital Estimate, as the case may be, Seller shall pay the amount
of such deficiency to Purchaser, with interest thereon at the Reference
Rate from time to time in effect, plus two percent (2%), calculated from
the Initial Closing Date in the case of the Food Service Business and the
Final Closing Date in the case of the Processing Business until (but not
including) the date of payment, by wire transfer of immediately available
funds.
2.11 Right of Assignment of Purchaser. Prior to the Proper Closing,
Purchaser shall have the right to assign all or any portion of its right to
purchase any of the Purchased Assets, and to delegate its obligation to assume
any of the Assumed Liabilities, to one or more of its subsidiaries. Except as
set forth in Section 11.6, such assignment shall not relieve the Purchaser of
any obligations under this Agreement.
2.12 Excess Inventory Offsets. The amount by which Purchaser is obligated
to reimburse Seller or its Subsidiaries under Section 6.11(d) constitutes the
Excess Inventory Offset and shall be reduced (but not below zero) in the
aggregate by the amount of the Excess Inventory Amount. A final accounting of
the amounts owed under Section 6.11(d), as adjusted by this Section 2.12, shall
be made promptly after finalizing the Net Working Capital Statements.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
The Seller has delivered a disclosure letter relating to this Agreement
(the "Disclosure Letter") to the Purchaser prior to the execution of this
Agreement. As an inducement to Purchaser to enter into this Agreement and to
consummate the Transactions, but without limiting the effect of Sections 8.2 and
11.4, Seller represents and warrants to Purchaser as follows:
3.1 Organization, Active Status, Corporate Power and Qualification. Each
of Seller and any of its Subsidiaries that conduct any portion of the Business
(collectively, the "Seller Business Entities") is
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organized, validly existing and in active status or in good standing under the
laws of its respective jurisdiction of organization and has all corporate or
similar power and authority to own and operate its properties and assets and to
carry on its business as presently conducted. Each of the Seller Business
Entities is qualified to do business and is in good standing as a foreign
corporation (or similar entity) in each jurisdiction where the ownership or
operation of its properties or conduct of its business requires such
qualification, except where the failure to be so qualified, individually or in
the aggregate, has not resulted and is not reasonably likely to result in a
Business Material Adverse Effect. Each of the Seller Business Entities has made
available to Purchaser a complete and correct copy of its articles of
incorporation and by-laws (or comparable governing documents), each as amended
to the date hereof, and each of which is in full force and effect.
3.2 [Intentionally Omitted]
3.3 Corporate Authority; Approval. Each of the Seller Business Entities
has all requisite corporate or similar power and authority and has taken all
corporate or similar action necessary in order to execute and deliver, in the
case of Seller, this Agreement and, with respect to each of the Seller Business
Entities, to execute and deliver each of the Acquisition Documents to which it
is a party and to consummate the Transactions, subject only, in the case of the
consummation of the Final Closing, to approval of the sale of the Final Assets
by the holders of a majority of the outstanding shares of Common Stock (the
"Seller Requisite Vote"). Assuming due execution and delivery of this Agreement
by Purchaser, and due execution and delivery of the Acquisition Documents to
which Purchaser is a party, (a) this Agreement is a valid and binding agreement
of Seller, enforceable against it in accordance with its terms and (b) each of
the Acquisition Documents to which any Seller Business Entity is a party will,
upon the execution by such Seller Business Entity of such Acquisition Document,
be a valid and binding agreement of such Seller Business Entity enforceable
against it in accordance with its terms. The transactions contemplated by the
Acquisition Documents, the BHG Share Purchase and the Merger Agreement are
either exempt from or not subject to Section 607.0901 or Section 607.0902 of the
Florida Statutes.
3.4 Seller Reports; Seller Financial Statements. Seller has made available
to Purchaser each registration statement, report, proxy statement or information
statement filed with the Securities and Exchange Commission (the "SEC") by it
since September 30, 1996, in the form (including exhibits, annexes and any
supplements and amendments thereto) filed with the SEC (collectively, including
any such reports filed subsequent to the date hereof, the "Seller Reports"). As
of their respective dates, the Seller Reports complied, and any Seller Reports
filed with the SEC after the date hereof will comply, in all material respects
with the applicable requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the Securities Act of 1933, as amended (the
"Securities Act"), and, in each case, the rules and regulations promulgated
thereunder, and the Seller Reports did not, and any Seller Reports filed with
the SEC after the date hereof will not, at the time of their filing, contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made therein, in light of
the circumstances in which they were made, not misleading. Except for
adjustments reflected in the statement of net working capital as of August 31,
1999 as set forth in Section 1.1(d) of the Seller's Disclosure Letter, each of
the consolidated balance sheets included in or incorporated by reference into
the Seller Reports (including any related notes and schedules) fairly presents,
or will fairly present, in all material respects, the consolidated financial
position of Seller and its Subsidiaries as of its date and each of the
consolidated statements of income and of changes in financial position included
in or incorporated by reference into the Seller Reports (including any related
notes and schedules) fairly presents, or will fairly present, in all material
respects, the results of operations and cash flows, as the case may be, of
Seller and its Subsidiaries for the periods set forth therein (subject, in the
case of unaudited statements, to normal year-end audit adjustments), in each
case in accordance with GAAP consistently applied during the periods involved,
except as may be noted therein. Seller has heretofore made available or promptly
will make available to Purchaser a complete and correct copy of all amendments
or modifications which are required to be filed with the SEC, but have not yet
been filed with the SEC, to the Seller Reports. Except as set forth in the
Seller Reports filed with the SEC prior to the date hereof (the "Filed Seller
Reports") or as incurred in the ordinary course of business since the date of
the most recent financial statements included in the Filed Seller Reports,
neither Seller nor any of its Subsidiaries
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has any material Liabilities of any nature which would be required under GAAP to
be set forth on a consolidated balance sheet of Seller and its Subsidiaries
taken as a whole.
3.5 Financial Information. (a) The financial data listed in Section 3.5 of
the Seller's Disclosure Schedule do not, as of their respective dates, contain
any material misstatement of fact or omit to state any material fact necessary
to make such statements not misleading.
(b) All of the Books and Records of Seller and its Subsidiaries relating to
the Business have been made available to Purchaser prior to the execution of
this Agreement and contain a true and complete record, in all material respects,
of the business, operations, financial condition, results of operations, assets
and Liabilities relating to the Business. The Seller Business Entities have no
Books and Records recorded, stored, maintained, operated or otherwise wholly or
partly dependent upon or held by any means (including any electronic, mechanical
or photographic process, whether computerized or not) relating to the Business
that are not under the exclusive ownership and control of the Seller Business
Entities, except for such deficiencies in ownership and control which,
individually or in the aggregate, are not reasonably likely to result in a
Business Material Adverse Effect.
3.6 Brokers and Finders. None of the Seller Business Entities or their
respective officers, directors, employees or Affiliates has employed any broker
or finder or incurred any Liability for any brokerage fees, commissions or
finders' fees in connection with this Agreement, the Acquisition Documents or
the Transactions, except that Seller has employed Financial Advisor, the
arrangements with which have been disclosed to Purchaser prior to the date
hereof and whose fees and expenses will be solely Seller's responsibility.
3.7 Governmental Approvals; Noncontravention. (a) No Governmental
Approvals that have not been obtained are required to be obtained or made on
behalf of any of the Seller Business Entities in connection with the execution
and delivery of this Agreement by Seller, and the execution and delivery of the
Acquisition Documents by each of the Seller Business Entities a party thereto,
or the consummation by the Seller Business Entities of the Transactions, other
than (i) assuming Reservoir and its Subsidiaries do not own at least 80% of the
outstanding Common Stock immediately following the consummation or expiration of
the Tender Offer, the filing with the SEC and the New York Stock Exchange of the
Proxy Documents, (ii) unless the condition set forth in Section 7.2(a) is
waived, the filing of articles of merger with the Secretary of State of Florida,
(iii) filings required to be made under the HSR Act (the applicable waiting
periods for which have heretofore expired), (iv) the approvals set forth in
Section 3.7(a) of Seller's Disclosure letter relating to the transfer of the
Business Permits other than the Non-Transferable Business Permits and (v)
Governmental Approvals that, if not obtained or made, are not, individually or
in the aggregate, reasonably likely to result in a Business Material Adverse
Effect.
(b) The execution and delivery of this Agreement by Seller and the
execution and delivery of the Acquisition Documents by each of the Seller
Business Entities a party thereto, and the consummation by the Seller Business
Entities of the Transactions, will not (i) conflict with or result in any
violation of any provision of the articles of incorporation or by-laws (or
comparable governing documents) of any of the Seller Business Entities, (ii)
except as set forth in Section 3.7(b) of Seller's Disclosure Letter, require any
consent that has not been obtained, approval or notice under, or conflict with
or result in a violation or breach of, or constitute (with or without notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation, acceleration or loss of benefit or result in the creation of any
Lien other than a Permitted Lien) under, any of the terms, conditions or
provisions of any Contract to which any of the Seller Business Entities is a
party or by which any of them or any portion of their properties or assets may
be bound that, individually or in the aggregate, is reasonably likely to result
in a Business Material Adverse Effect or (iii) subject to the Governmental
Approvals referred to in Section 3.7(a), violate any Laws applicable to the
Seller Business Entities or any portion of their properties or assets, the
violation of which is reasonably likely to have a Business Material Adverse
Effect.
3.8 Board Recommendation. The Board, based on the unanimous recommendation
of a special committee of the Board consisting of four directors unaffiliated
with Reservoir or the Ben Hill Griffin Entities, has, in light of and subject to
the terms and conditions set forth in this Agreement and in the Merger
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Agreement, (i) determined that this Agreement, the Merger Agreement and the
transactions contemplated hereby and thereby are advisable and in the best
interests of Seller and its unaffiliated stockholders, (ii) determined that the
consideration to be paid for each share of Common Stock pursuant to the Tender
Offer and the Merger is fair to Seller's unaffiliated stockholders, (iii)
determined that the consideration to be paid for the Purchased Assets and the
Assumed Liabilities pursuant to this Agreement is fair to Seller and its
unaffiliated stockholders, (iv) approved this Agreement, the Merger Agreement
and the transactions contemplated hereby and thereby and (v) resolved to
recommend that the holders of the Common Stock adopt this Agreement and the
Merger Agreement and approve the transactions contemplated hereby and thereby
and tender their shares of Common Stock pursuant to the Tender Offer. Section
4.24 of the Merger Agreement is true and correct.
3.9 Material Contracts. (a) Section 3.9(a) of Seller's Disclosure Letter
sets forth a complete list of the following Business Contracts in respect of the
Business to which any Seller Business Entity is a party as of the date hereof
(collectively, the "Business Material Contracts"): (i) each Contract pursuant to
which the dollar volume of sales in respect of the Business to the Seller
Business Entities exceeded $50,000 for the twelve months ended September 30,
1998 or is reasonably expected to exceed such amount for the twelve months ended
September 30, 1999; (ii) each Business Contract that requires a payment in
respect of the Business subsequent to the date of this Agreement by or to the
Seller Business Entities in excess of $50,000; (iii) each Contract primarily
related to the Business relating to, and evidences of, indebtedness for borrowed
money or the deferred purchase price of assets or property in excess of
$150,000; (iv) each partnership, joint venture or other similar Contract
primarily related to the Business or which Purchaser is otherwise specifically
assuming; (v) each license to and from the Seller Business Entities in respect
of Business Intellectual Property; (vi) each distribution agreement primarily
related to the Business or which Purchaser is otherwise specifically assuming;
(vii) each Business Contract that limits the right of the Seller Business
Entities to compete with any Person or to exploit the Business Intellectual
Property; (viii) each Contract primarily related to the Business or which
Purchaser is otherwise specifically assuming to which any Governmental Authority
is a party; (ix) each collective bargaining Contract with labor unions or
associations; (x) each Contract primarily related to the Business or which
Purchaser is otherwise specifically assuming under which the Seller Business
Entities have material indemnity obligations; (xi) each citrus participation
Business Contract; and (xii) each Business Contract for the disposition or
acquisition of (1) any assets or properties other than in the ordinary course of
business or (2) any business.
(b) All Business Material Contracts are valid, binding and in full force
and effect, none of the Seller Business Entities a party thereto is in default
thereunder, nor to the knowledge of Seller is any other party thereto, nor does
any condition exist that with notice or lapse of time or both would constitute a
default by Seller (or to the knowledge of the Seller a default by any other
party) thereunder, except for such defaults that, individually or in the
aggregate, are not reasonably likely to result in a Business Material Adverse
Effect.
3.10 Absence of Certain Changes. Since August 31, 1999, the Seller
Business Entities have conducted the Business in all respects only in, and have
not engaged in any material transaction other than according to, the ordinary
course of business consistent with past practice, and, except as disclosed in
Section 3.10 of Seller's Disclosure Letter or in any Filed Seller Reports, since
August 31, 1999, there has not been any (i) Business Material Adverse Effect;
(ii) material damage, destruction or other casualty loss with respect to any
material asset or property used, or held for use by, the Business, whether or
not covered by insurance; (iii) incurrence, assumption or guarantee in respect
of the Business by the Seller Business Entities of any indebtedness other than
in the ordinary course of business and in amounts and on terms consistent with
past practice; (iv) creation or assumption by the Seller Business Entities of
any Lien on any Purchased Asset except for Permitted Liens; (v) making of any
material loan, advance or capital contributions relating to the Business by the
Seller Business Entities to, or investment in, any Person other than loans or
advances to employees made in the ordinary course of business consistent with
past practice which are not in the aggregate in excess of $100,000, (vi) waiver
by the Seller Business Entities of any right of material value with respect to
the Business or the Purchased Assets; (vii) labor dispute, other than routine
individual grievances, or any activity or proceeding by a labor union or
representative thereof to organize any employees of the Seller Business Entities
relating to the Business, or any lockouts, strikes, slowdowns, work stoppages or
threats
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thereof by or with respect to such employees; (viii) change by the Seller
Business Entities in accounting principles, practices or methods with respect to
the Business, except as required by GAAP or applicable Law; (ix) payment or
commitment to pay by or on behalf of the Seller Business Entities of any
severance or termination pay in respect of the Business to any officer,
employee, consultant, agent or other representative thereof other than under
existing policies that are disclosed in the Disclosure Schedule; (x) grant of
any general increase in the compensation of officers or employees of the
Business (including any such increase pursuant to any bonus, pension,
profit-sharing or other plan or commitment) or any increase in the compensation
payable or to become payable to any such officer or employee, except for annual
increases in the ordinary course of business in accordance with past practice;
(xi) Contract in respect of the Business entered into by any of the Seller
Business Entities (a) that limits the right of the Seller Business Entities to
compete or to exploit the Business Intellectual Property or (b) to acquire or
dispose of by merger, consolidation, sale, lease, license or otherwise any
assets or properties or to assume any Liabilities other than in the ordinary
course of business; (xii) incurrence or commitment to incur any sales, marketing
or promotional allowances in respect of the Business by the Seller Business
Entities outside of the ordinary course of business to distributors or
co-packers; or (xiii) Contract to take any action which, if taken prior to the
date hereof, would have made any representation or warranty in this Section
untrue or incorrect in any material respect.
3.11 Litigation. Section 3.11 of Seller's Disclosure Letter sets forth, as
of the date hereof, all Claims pending and, to the knowledge of Seller,
threatened in which the Business, if an adverse decision is rendered, is
reasonably likely to be subject to damages in excess of $50,000. Except as
disclosed in the Filed Seller Reports, (i) there is no Claim pending or, to the
knowledge of Seller, threatened against any of the Seller Business Entities
that, individually or in the aggregate, has had or is reasonably likely to have
a Business Material Adverse Effect, (ii) there is no judgment, order,
injunction, rule or decree of any Governmental Authority outstanding against any
of the Seller Business Entities, individually or in the aggregate, having or
that is reasonably likely to have any such effect and (iii) there is no Claim by
any Governmental Authority pending or, to the knowledge of Seller, threatened
against any of the Seller Business Entities with respect to any of the
Transactions.
3.12 Real Property. (a) Ownership of the Premises. The Seller Business
Entities have good and marketable title in fee simple to all of the real
property, and all buildings, structures and other improvements located thereon,
set forth in Section 3.12(a)(i) of the Seller's Disclosure Letter (collectively,
the "Owned Business Real Property") and good title to all leasehold interests
set forth in Section 3.12(a)(ii) of the Seller's Disclosure Letter (the "Real
Property Business Leases"), in each case free and clear of all Liens, except for
Permitted Liens. True, correct and complete copies of all leases relating to the
Real Property Business Leases have been delivered to Purchaser and the leasehold
interests thereunder are in good standing, valid and effective in accordance
with their respective terms. All rents and other sums and charges payable by the
Seller Business Entities as a tenant under the Real Property Business Leases are
current and there is not, under any of such leases, any existing default or
condition that with notice or lapse of time or both would constitute a default
by Seller (or to the Knowledge of the Seller, a default by any other party),
except for such defaults that, individually or in the aggregate, are not
reasonably likely to result in a Business Material Adverse Effect. Sections
3.12(a)(i) and 3.12(a)(ii) of Seller's Disclosure Letter set forth a complete
list of the Owned Business Real Property and the Real Property Business Leases,
respectively.
(b) Entire Premises. All of the real property, land, buildings, structures
and other improvements used primarily in the conduct of the Business, other than
in any event the Grove Real Property, are included in the Owned Business Real
Property and the Real Property Business Leases.
(c) Mortgages. Except as set forth in Section 3.12(c) of Seller's
Disclosure Letter, there is no underlying mortgage, deed of trust, lease, grant
of term or other estate in, (i) any of the Owned Business Real Property or (ii)
any Real Property Business Lease unless such estate or interest is expressly
subordinate to the interest of the Seller Business Entities, as tenant under the
applicable Real Property Business Lease. Seller has given to Purchaser true,
correct and complete copies of any and all mortgages in respect of the Business
Real Property.
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(d) Space Leases. None of the Seller Business Entities has granted to any
Person any material right to the possession, use, occupancy or enjoyment of the
Business Real Property or any portion thereof.
(e) Condition and Operation of Improvements. All material components of
all buildings, structures, fixtures and other improvements in, on or within the
Owned Business Real Property (the "Improvements"), including to the roofs and
structural elements thereof and the heating, ventilation, air conditioning,
plumbing, electrical, mechanical, sewer, waste water, storm water, paving and
parking equipment, systems and facilities included therein, taken as a whole,
are in good operating condition and repair, subject to ordinary wear and tear
and continued repair and replacement in accordance with past practice. All
water, gas, electrical, steam, compressed air, telecommunication, sanitary and
storm sewage lines and systems and other similar systems serving the Business
Real Property are, to the knowledge of Seller, installed and operating and are
sufficient to enable the Business Real Property to continue to be used and
operated in the manner currently being used and operated, and any so-called
hookup fees or other associated charges have been fully paid. Each such utility
or other service is provided by a public or private utility or service company
and enters the Business Real Property from an adjacent public street or valid
private easement for the benefit of the supplier of such utility or other
service or the applicable Business Real Property. Each Improvement has direct
access to a public street adjoining the Business Real Property on which such
Improvement is situated over the driveways and accessways currently being used
in connection with the use and operation of such Improvement, and no existing
accessway crosses or encroaches upon any property or property interest not owned
or leased by the Seller Business Entities. No Improvement or portion thereof is
dependent for its access, operation or utility on any land, building or other
improvement not included in the Business Real Property. No portion of the
Business Real Property is located in a special flood hazard area as designated
by Federal Governmental Authorities.
(f) Real Property Laws. All of the Business Real Property and its
continued use, occupancy and operation as currently used, occupied and operated
does not constitute a nonconforming use under any applicable building, zoning,
subdivision or other land use or similar Law (collectively, "Real Property
Laws"). The continued existence, use, occupancy and operation of each
Improvement is not dependent on the granting of any special permit, exception,
approval or variance. Seller Business Entities have no knowledge of any pending
or anticipated change in any Real Property Law which would have a material
adverse effect upon the ownership, use, occupancy or operation of the Business
Real Property or any portion thereof, or upon reconstruction of any Improvement
in the event of a casualty. No material dispute currently exists with any
Governmental Authority having jurisdiction over the Business Real Property with
respect to any Real Property Law or the application thereof to the Business Real
Property.
(g) Condemnation. Seller Business Entities have not received notice of,
and to the knowledge of any of Seller Business Entities, there is not any
pending, threatened or contemplated condemnation proceeding affecting the
Business Real Property or any part thereof, and no sale or other disposition of
the Business Real Property or any part thereof in lieu of condemnation.
(h) Real Property Taxes. Except as set forth in Section 3.12 of Seller's
Disclosure Letter, each of the parcels included in the Owned Business Real
Property is assessed for real estate tax purposes as a wholly independent tax
lot, separate from any adjoining land or improvements not constituting a part of
such parcel. To the knowledge of the Seller Business Entities, there is (i) no
pending or contemplated reassessment of any property included in the Owned
Business Real Property, or (ii) no pending or contemplated reassessment of any
property included in the Real Property Business Leases which would result in a
change in the rent, additional rent or other sums and charges payable by the
Seller Business Entities under the Real Property Business Leases. To the extent
that any of the parcels included in the Owned Business Real Property were
classified as agricultural parcels for the purpose of assessing ad valorem Taxes
during the prior Tax year, Seller has timely made all filings necessary in order
to maintain such classification with respect to such parcels for the current Tax
year.
(i) Survey. To Seller's knowledge, there are no encroachments or other
facts or conditions affecting any parcel of Business Real Property that would be
revealed by an accurate survey or careful physical inspection thereof which
would, individually or in the aggregate, (i) interfere in any material respect
with, or
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materially increase the cost of, the use, occupancy or operation thereof as
currently used, occupied and operated or (ii) materially reduce the fair market
value thereof below the fair market value such parcel would have had but for
such encroachment or other fact or condition. To Seller's knowledge, no portion
of any material Improvement encroaches upon any property not included within the
Business Real Property or upon the area of any easement affecting the Business
Real Property.
(j) Mechanic's and Other Liens. The Seller Business Entities do not owe
any money to any architect, contractor, subcontractor, materialman or any other
professional entitled to claim a construction Lien for labor or materials
performed, rendered or supplied to or in connection with any Business Real
Property within the past six months, except for amounts disputed in good faith
and properly accrued in the Company's Books and Records. There is no work being
done at or materials being supplied to any parcel of Business Real Property at
the date hereof other than routine maintenance projects having an aggregate cost
through completion of not more than $50,000.
3.13 [Intentionally Omitted].
3.14 Assets; Personal Property. (a) All of the Business Equipment is set
forth in Section 3.14 of the Seller's Disclosure Letter. The Seller Business
Entities have good and marketable title (or, with respect to personal property,
good title) to, or a leasehold interest in, all of the tangible Purchased
Assets, free and clear of any Liens other than Permitted Liens, and Purchaser
will acquire good title to, or a leasehold interest in, all of the tangible
Purchased Assets free and clear of any Liens other than Permitted Liens upon the
Proper Closing. The Seller Business Entities own the intangible Purchased
Assets, free and clear of any Liens other than Permitted Liens, and Purchaser
will acquire all title to the intangible Purchased Assets, free and clear of any
Liens other than Permitted Liens, upon the Proper Closing.
(b) The items of personal property included in the Purchased Assets and
presently and actively used in the operation of the Business taken as a whole
are in reasonable operating condition, in light of their respective ages, for
the purposes for which they are currently being used except for such
deficiencies that, individually or in the aggregate, are not reasonably likely
to have a Business Material Adverse Effect.
3.15 Compliance with Laws; Permits. (a) Except as set forth in the Filed
Seller Reports, with respect to the Business, none of the Seller Business
Entities is in conflict with or in default or in violation of any law, rule,
statute, ordinance, regulation, judgment, order, injunction, decree, arbitration
award, license or permit of any Governmental Authority (collectively, "Laws")
applicable to the Seller Business Entities or any portion of their properties or
assets relating to the Business or the conduct thereof, including without
limitation, the provisions of Chapters 500 and 601, Florida Statutes, and the
regulations promulgated thereunder and all Laws promulgated or enforced by the
United States Food and Drug Administration (the "FDA"), except for violations
that, individually or in the aggregate, have not resulted and are not reasonably
likely to result in a Business Material Adverse Effect, and since January 1,
1993, none of the Seller Business Entities has, in respect of the Business,
received any notice of any investigation or notice of violation of any of the
foregoing. Except as set forth in Schedule 3.15(a)(1) of Seller's Disclosure
Letter: (i) there are no material licenses, permits, exemptions, consents,
waivers, authorizations, rights, certificates of occupancy, franchises, orders
or approvals of, or registrations with any Governmental Authority necessary for
or used primarily by the Seller Business Entities to carry on the Business as
now being conducted or to use and occupy the Business Real Property as now being
used (the "Business Permits"), (ii) all such Business Permits are in full force
and effect and no proceeding is pending or, to the knowledge of Seller,
threatened, to revoke or limit any such Business Permit and (iii) each of Seller
and its Subsidiaries is in compliance in all material respects with the terms
and conditions of all such Business Permits except for such non-compliance that,
individually or in the aggregate, is not reasonably likely to result in a
Business Material Adverse Effect. Except for those Business Permits listed on
Schedule 3.15(a)(2) of Seller's Disclosure Letter (the "Non-Transferable
Business Permits"), assuming the receipt of the Governmental Approvals set forth
in Section 3.7(a) of Seller's Disclosure Letter, Purchaser will acquire all
material legal rights of the Seller Business Entities with respect to the
Business Permits upon the Final Closing.
(b) Each of the Seller Business Entities is, with respect to every product
relating to the Business manufactured, produced, sold, marketed, distributed or
under development at any time by or on behalf of any
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of the Sellers Business Entities (each a "Product" and collectively the
"Products"), in compliance ("Product Compliance") with the applicable provisions
of the Federal Food, Drug and Cosmetics Act, as amended, the applicable
regulations and requirements adopted by the FDA pursuant to that Act, the
applicable regulations and requirements adopted by the United States Department
of Agriculture the ("UDSA") and any applicable requirements established by state
and local Governmental Authorities responsible for regulating food products and
establishments (collectively, "State Food Authorities"), as well as with all
terms and conditions imposed in any Business Permits granted to the Sellers or
their Affiliates by the FDA, USDA or State Food Authorities, including any
applicable "Good Manufacturing Practices," requirements for use of food or color
additives, labeling requirements, testing requirements and protocols, shipping
requirements, record keeping and reporting requirements, monitoring
requirements, packaging or repackaging requirements, laboratory controls,
storage and warehousing procedures and shipping requirements, except where the
failure to be in Product Compliance would not be reasonably likely to result in
a Business Material Adverse Effect. Except as set forth on Schedule 3.15(b) of
Seller's Disclosure Letter, since January 1, 1993, none of the Seller Business
Entities have received written notice of any failure to be in Product Compliance
or that the FDA, USDA or any State Food Authority is alleging any failure to be
in Product Compliance.
(c) Except as set forth on Schedule 3.15(c) of Seller's Disclosure Letter,
none of the Seller Business Entities, the Products, or, to the knowledge of the
Seller Business Entities, the co-packers manufacturing the Products or the
co-packers' facilities, is now subject (and none has been subject during the
previous four years) to any materially adverse inspection, finding, recall,
investigation, penalty assessment, audit or other compliance or enforcement
action by the FDA, USDA, any State Food Authority or any other authority having
responsibility for the regulation of food or beverage products.
(d) The Seller Business Entities have obtained all required Governmental
Approvals from the FDA, USDA, State Food Authorities and any other Governmental
Authority having responsibility for the regulation of food or beverage products,
for their current and past business activities relating to the Products,
including any approvals required for the marketing and sale of those Products,
the manufacture and distribution of the Products, the food and color additives
appearing in or otherwise used in manufacturing the Products, the labeling of
the Products and the claims made regarding the content, benefits or quality of
the Products, except for those approvals, authorizations, applications and other
submissions of which the failure to obtain would not be reasonably expected to
result in a Business Material Adverse Effect. None of the Seller Business
Entities have received any written notice that any such Governmental Approvals
have not been obtained or have been revoked or that there is any challenge to
any such Governmental Approvals.
(e) With respect to the Business, none of the Seller Business Entities or,
to the knowledge of the Seller Business Entities, any third party retained by
the Seller Business Entities has made on behalf of the Sellers Business Entities
any material false statements or material omissions in applications or other
submissions to the FDA, USDA, State Food Authorities or any other Governmental
Authority having responsibility for the regulation of food or beverage products,
and none of the Seller Business Entities or, to the knowledge of the Seller
Business Entities, third parties retained by the Seller Business Entities has
made or offered on behalf of the Seller Business Entities any payments,
gratuities or other things of value that are prohibited by any law or regulation
to personnel of the FDA, USDA, State Food Authority or other authority having
responsibility for the regulation of food or beverage products.
(f) With respect to the Business, none of the Seller Business Entities have
received any information or report from the FDA, FDA personnel or other
authority indicating that any of the Products are unsafe for their intended use,
and to the knowledge of the Seller Business Entities there are no facts that
would indicate that the FDA, USDA or any State Food Authority has or will
prohibit or materially restrict the manufacturing, marketing, sale, license, or
use in the United States of any Product currently produced, marketed or under
development by the Seller Business Entities, or the operation or use of any
facility currently used by the Sellers Business Entities or, to the knowledge of
the Seller Business Entities, their co-packers to make or distribute any
Product.
3.16 Environmental Matters. Except for matters disclosed on Schedule 3.16
or in the Seller Reports, (a) there have been no releases of Hazardous Material
in, on, under or affecting any of the Business Real
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Property or, to the knowledge of the Seller Business Entities, any properties
previously owned, leased or operated in respect of the Business by the Seller
Business Entities or any surrounding site, which, in either case, would require
the Purchaser to conduct or otherwise be responsible for any material
investigation or remediation pursuant to Environmental Laws or result in a
material Liability to the Purchaser pursuant to Environmental Laws or principles
of common law relating to pollution or protection of health, safety or the
environment, (b) none of the Seller Business Entities has disposed of any
Hazardous Material in respect of the Business in a manner that has led, or could
reasonably be anticipated to lead, to a release of any Hazardous Material,
which, in either case, would require the Purchaser to conduct or otherwise be
responsible for any material investigation or remediation pursuant to
Environmental Laws or result in a material Liability to the Purchaser pursuant
to Environmental Laws or principles of common law relating to pollution or
protection of health, safety or the environment, (c) none of the Seller Business
Entities has received any written notice of, or entered into any order,
settlement or decree in respect of the Business relating to: (A) any violation
of any Environmental Laws or the institution or pendency of any Claim by any
Person in connection with any alleged violation of Environmental Laws or any
other alleged Liability pursuant to Environmental Laws or principles of common
law as relating to pollution or protection of health, safety or the environment
or (B) the response to or remediation of Hazardous Material at or arising from
any of the Business Real Property or any properties previously owned, leased or
operated in respect of the Business by the Seller Business Entities or any
surrounding site, which, in either case, would result in a material Liability
for the Purchaser and (d) there have been and there are no material violations
of any Environmental Laws in respect of the Business by the Seller Business
Entities.
3.17 Intellectual Property. (a) Ownership. Seller and its Subsidiaries
own, free and clear of all Liens, or otherwise have the right to use, sell and
license all Business Intellectual Property, except for Permitted Liens.
(b) Intellectual Property Schedules. Section 3.17(b)(i) of Seller's
Disclosure Letter sets forth all material Copyrights, Patents, Software (other
than "off the shelf" software) and Marks used primarily in the Food Service
Business. Section 3.17(b)(ii) of Seller's Disclosure Letter sets forth all
material Copyrights, Patents, Software (other than "off the shelf" software) and
Marks used primarily in the Processing Business of the Seller. Section
3.17(b)(iii) of Seller's Disclosure Letter sets forth all material licenses,
sublicenses, and other Contracts or permissions ("IP Licenses") under which
Seller and its Subsidiaries are a licensor or licensee or are otherwise
authorized to practice Business Intellectual Property and specifies those
licenses, sublicenses, and other Contracts or permissions ("Food Service IP
Licenses") under which Seller and its Subsidiaries are a licensor or licensee or
are otherwise authorized to practice Food Service Intellectual Property and
those material licenses, sublicenses, and other Contracts or permissions
("Processing IP Licenses") under which Seller and its Subsidiaries are a
licensor or licensee or are otherwise authorized to practice Processing
Intellectual Property.
(c) Claims. None of the Seller Business Entities have materially infringed
upon or otherwise materially violated the intellectual property rights of any
third party nor have they received any Claim alleging any such infringement or
other violation. None of the Seller Business Entities is, nor has any of the
Seller Business Entities been during the three years preceding the date hereof,
a party to any Claim, nor, to the Knowledge of Seller, is any Claim threatened,
that challenges the validity, enforceability, ownership, or right to use, sell,
or license any Business Intellectual Property, except for Claims which,
individually or in the aggregate, have not resulted and are not reasonably
likely to result in a Business Material Adverse Effect. To the knowledge of
Seller, no third party is infringing upon any Business Intellectual Property
except for infringements which, individually or in the aggregate, have not
resulted and are not reasonably likely to result in a Business Material Adverse
Effect.
(d) Filing Requirements. The Seller Business Entities are currently in
compliance with all legal requirements (including the timely payment of filing
and other fees and the timely filing of documents and other information)
relating to the Business Intellectual Property, except for failures to so comply
which, individually or in the aggregate, have not resulted and are not
reasonably likely to result in a Business Material Adverse Effect.
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(e) Protection of Trade Secrets and Technology. The Seller Business
Entities have taken all reasonable precautions to protect the secrecy,
confidentiality, and value of the Trade Secrets, except for failures to take
such precautions which, individually or in the aggregate, have not resulted and
are not reasonably likely to result in a Business Material Adverse Effect.
(f) Software. Except as set forth in Section 3.17(f) of Seller's
Disclosure Letter, to Seller's Knowledge, all material Software used, sold or
licensed by the Seller Business Entities in the conduct of the Business is held
by the Seller Business Entities legitimately, is fully and freely transferable
to the Purchaser without any Consents and is free from any significant software
defect.
(g) Effect of Transaction. After the completion of the transactions
contemplated hereby, Purchaser will own all right, title, and interest in and to
or have a license to use all Business Intellectual Property that is material to
the Business. All Business Intellectual Property will be owned or available for
use by Purchaser on identical terms and conditions immediately subsequent to the
Proper Closing Date as existed prior thereto, except for such failures to own or
to have available for use which, individually or in the aggregate, have not
resulted and are not reasonably likely to result in a Business Material Adverse
Effect.
3.18 Year 2000 Compliance. All Software, hardware, databases, and embedded
control systems used, sold, or licensed by the Seller Business Entities in
respect of the Business (collectively, the "Business Systems") are Year 2000
Compliant, except for Business Systems for which the failure to be Year 2000
Compliant, individually or in the aggregate, would not be reasonably likely to
have a Business Material Adverse Effect. As used herein, the term "Year 2000
Compliant" means that the Systems (i) accurately process date and time data
(including, without limitation, calculating, comparing, and sequencing) from,
into, and between the twentieth and twenty-first centuries, the years 1999 and
2000, and leap year calculations and (ii) operate accurately with other software
and hardware that use standard date format (4 digits) for representation of the
year. Seller has no Knowledge that the failure of any supplier, manufacturer,
distributor, or other third party to be Year 2000 Compliant is reasonably likely
to result in a Business Material Adverse Effect.
3.19 Taxes. Except as set forth in Section 3.19 of Seller's Disclosure
Letter, each of the Seller Business Entities has timely filed or will timely
file all Tax Returns required to be filed with respect to it and has paid or
provided for all deficiencies or other assessments of Tax owed by it for all tax
periods ending on or prior to the Final Closing Date which if unpaid would
result in a Lien (other than a Permitted Lien) upon or in respect of any of the
Purchased Assets. As of the date hereof, except as set forth in Section 3.19 of
Seller's Disclosure Letter, there is no pending or, to the knowledge of Seller,
threatened Tax audit of any Tax Return filed by or on behalf of the Seller
Business Entities or with respect to any of the Seller Business Entities'
income, assets and operations, including the Purchased Assets.
3.20 Employee Benefits. (a) Except as set forth on Schedule 3.20(a) of
Seller's Disclosure Letter, none of the Seller Business Entities or any other
trade or business, whether or not incorporated, that would be aggregated with
any of the foregoing under Section 414(b), (c), (m) or (o) of the Code (an
"ERISA Affiliate") maintains or contributes to or has any obligation to
contribute to, or has any direct or indirect Liability with respect to any plan,
program, arrangement or Contract which is an employment, consulting or deferred
compensation agreement, or an executive compensation, incentive bonus or other
bonus, service award, employee pension, profit-sharing, savings, retirement,
stock option, stock purchase, severance pay, life, health, disability or
accident insurance plan, or vacation, or other employee benefit plan, program,
arrangement, agreement or commitment, including, without limitation, any
"employee benefit plan" as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") (individually, a "Seller Plan"
and collectively, the "Seller Plans").
(b) None of the Seller Business Entities or any ERISA Affiliate maintains
or contributes to, or has within the preceding six years maintained or
contributed to, or has had during such period the obligation to maintain or
contribute to, or may have any Liability with respect to, any Seller Plan
intended to be qualified under Section 401(a) of the Code (a "Qualified Plan")
subject to Title IV of ERISA or Section 412 of the Code or any "multiple
employer plan" within the meaning of the Code or ERISA.
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(c) Since September 30, 1993, no event has occurred in connection with
which the Seller Business Entities or any ERISA Affiliates or any Seller Plan,
directly or indirectly, could be subject to any material Liability under ERISA,
the Code or any other law, regulation or governmental order applicable to any
Seller Plan, including, without limitation, Section 406, 409, 502(i), 502(l) or
4069 of ERISA, or Section 4971, 4975 or 4976 of the Code.
(d) With respect to each Seller Plan (A) all payments due from any of the
Seller Business Entities or any ERISA Affiliate to date have been made when due
and all amounts properly accrued to date or as of the Final Closing Date as
liabilities of the respective Seller Business Entity or ERISA Affiliate which
have not been paid have been properly recorded on the books of such respective
Seller Business Entity or ERISA Affiliate; (B) each such Seller Plan which is an
"employee pension benefit plan" (as defined in Section 3(2) of ERISA) and
intended to qualify under Section 401 of the Code has received a favorable
determination letter from the IRS with respect to such qualification, its
related trust has been determined to be exempt from taxation under Section
501(a) of the Code, and nothing has occurred since the date of such letter that
has or is likely to adversely affect such qualification or exemption; and (c)
there are no actions, suits or Claims pending (other than routine claims for
benefits) or threatened with respect to such Seller Plan or against the assets
of such Seller Plan.
(e) With respect to each Qualified Plan and each Seller Plan which is an
"employee welfare benefit plan" within the meaning of Section 3 of ERISA, the
Seller Business Entities and each ERISA Affiliate have complied with, and each
such Seller Plan conforms in form and operation to, all applicable laws and
regulations, including, but not limited to, ERISA and the Code, in all material
respects.
(f) Other than with respect to benefits accrued under a Qualified Plan, the
consummation of the Transactions will not (A) accelerate the time of the payment
or vesting of, or increase the amount of, compensation due to any employee or
former employee, or (B) entitle any employee or former employee to severance
pay, unemployment compensation or similar payment.
(g) None of the Seller Business Entities has any obligation to provide or
any direct or indirect Liability with respect to the provision of health or
death benefits to or in respect of former employees, except as may be required
pursuant to Section 4980B of the Code and the costs of which are fully paid by
such former employees.
(h) With respect to each Seller Plan, the Seller has delivered or made
available to Purchaser a current, accurate and complete copy (or, to the extent
no such copy exists, an accurate description) thereof and, to the extent
applicable: (A) any related trust agreement or other funding instrument; (B) the
most recent IRS determination letter, if applicable; (c) any summary plan
description and other written communication (or a description of any oral
communications) by the Seller Business Entities to its employees concerning the
benefits provided under the Seller Plan; and for the three most recent years (w)
the Form 5500 and attached schedules, (x) audited financial statement, (y)
actuarial valuation reports and (z) attorney's response to an auditor's request
for information.
3.21 Labor Matters. (a) None of the Seller Business Entities has violated
in any material respect any provision of federal or state law or any
governmental rule or regulation, or any order, decree, judgment arbitration
award of any court, arbitrator or any government agency regarding the terms and
conditions of employment of employees, former employees or prospective employees
or other labor related matters, including, without limitation, laws, rules,
regulations, orders, rulings, decrees, judgments and awards relating to
discrimination, fair labor standards and occupational health and safety,
wrongful or retaliatory discharge or violation of the personal rights of
employees, former employees or prospective employees or relating to the payment
of social security or other Taxes.
(b) Except as set forth on Schedule 3.21(b) of Seller's Disclosure Letter,
none of the Seller Business Entities or any ERISA Affiliate is a party to or
otherwise bound by any collective bargaining Contract with a labor union or
labor organization, nor is any of the Seller Business Entities the subject of
any claim asserting that it has committed an unfair labor practice or seeking to
compel it to bargain with any labor union or labor organization, nor is there
pending or, to the Knowledge of Seller, threatened, nor has there been for the
past
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five years, any labor strike, dispute, walkout, work stoppage, slow-down or
lockout relating to the Business involving the Seller Business Entities that has
resulted or is reasonably likely to result in a Business Material Adverse
Effect.
3.22 Insurance. With respect to the Business, the Seller Business Entities
maintain insurance policies against all risks, including fire and other risks
insured against by extended coverage, of a character and in such amounts as are
set forth on Schedule 3.22 of Seller's Disclosure Letter (the "Insurance
Policies"). Each Insurance Policy that is material to the Business is in full
force and effect and is valid, outstanding and enforceable, and all premiums due
thereon have been paid in full. Each of the Seller Business Entities has
complied in all material respects with the provisions of each Insurance Policy
under which it is the insured party. No insurer under any Insurance Policy has
canceled any such policy or, to Seller's knowledge, indicated any intent to do
so or not to renew any such policy.
3.23 Product Warranties. Section 3.23 of Seller's Disclosure Letter sets
forth complete and accurate copies of the written, and descriptions of all oral,
warranties and guaranties by any of the Seller Business Entities currently in
effect with respect to the goods and services produced or provided by them in
respect of the Business. The goods and services produced or provided by the
Seller Business Entities in respect of the Business comply in all material
respects to the warranties and guarantees currently in effect with respect to
such goods and services, except for such non-compliance which, individually or
in the aggregate, are not reasonably likely to have a Business Material Adverse
Effect.
3.24 Suppliers and Customers. Section 3.24 of Seller's Disclosure Letter
sets forth for the nine months ended June 30, 1999 the ten largest suppliers and
the ten largest customers in respect of the Business by dollar volume paid by or
to the Seller Business Entities. To the knowledge of Seller, the relationships
of the Seller Business Entities with such suppliers and customers in respect of
the Business are good commercial working relationships and, except as set forth
in Section 3.24 of Seller's Disclosure Letter, to the knowledge of Seller, (a)
no Person listed in Section 3.24 of Seller's Disclosure Letter has threatened to
cancel or otherwise terminate, or intends to cancel or otherwise terminate, the
relationship of such Person with the Business, (b) no such Person has during the
twelve months ended June 30, 1999 decreased materially or threatened to decrease
or limit materially, or intends to modify materially its relationship with
respect to the Business or intends to decrease or limit materially its services
or supplies to the Business or its usage or purchase of the services or products
of the Business and (c) the consummation of the Transactions will not materially
adversely affect the relationship between such Persons and the Business.
3.25 Accounts Receivable. All Business Accounts Receivable reflected on
the Net Working Capital Schedules will have arisen in the ordinary course of the
Business and to the Knowledge of the Company are collectible in the ordinary
course subject to reserves for bad debts and customer credit as reflected in the
Company's Books and Records.
3.26 Inventory. The Inventory reflected on the Current Business Balance
Sheet was, and the Inventory currently held by the Seller Business Entities is,
in merchantable condition, is in compliance with all applicable Laws and
regulations in all material respects and is suitable, usable and salable in the
ordinary course of business for the purposes for which intended, subject only to
a lower of cost or market reserve and a reserve for excess and obsolete
inventory as reflected in the Company's Books and Records.
3.27 Seller's Representations in Merger Agreement. The representations and
warranties made by the Seller in the Merger Agreement are true and correct in
all material respects.
ARTICLE IV
[INTENTIONALLY OMITTED]
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to Seller to enter into this Agreement and to consummate
the Transactions, Purchaser hereby represents and warrants to Seller as follows:
5.1 Organization and Good Standing. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own and operate
its properties and assets and to carry on its business as presently conducted.
5.2 Corporate Authority; Approval. Purchaser has all requisite corporate
power and authority and has taken all corporate action necessary in order to
execute and deliver this Agreement and the Acquisition Documents to which it is
a party and to consummate the Transactions. Assuming due execution and delivery
of this Agreement by Seller and due execution and delivery of the Acquisition
Documents by each Seller Business Entity a party thereto, this Agreement is, and
the Acquisition Documents to which Purchaser is a party will, upon the execution
by Purchaser thereof, be, a valid and binding agreement of Purchaser enforceable
against it in accordance with its terms.
5.3 Government Approvals; Noncontravention. (a) No Governmental Approvals
are required to be obtained or made on behalf of Purchaser in connection with
the execution and delivery by it of this Agreement and the Acquisition Documents
to which it is a party or the consummation by it of the Transactions, other than
(i) filings required to be made under the HSR Act (the applicable waiting
periods for which have heretofore expired) and (ii) Governmental Approvals that,
if not obtained or made, are not, individually or in the aggregate, reasonably
likely to result in any Purchaser Material Adverse Effect.
(b) The execution and delivery by Purchaser of this Agreement and the
Acquisition Documents to which it is a party and the consummation by Purchaser
of the Transactions will not (i) conflict with or result in any violation of any
provision of its certificate of incorporation or by-laws, (ii) require any
consent, approval or notice under, or conflict with or result in a violation or
breach of, or constitute (with or without notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation, acceleration or
loss of benefit or result in the creation of any Lien) under, any of the terms,
conditions or provisions of any Contract to which Purchaser is a party or by
which it or any portion of its properties or assets may be bound that,
individually or in the aggregate, is reasonably likely to result in a Purchaser
Material Adverse Effect or (iii) subject to the Governmental Approvals referred
to in Section 5.3(a), violate any Laws applicable to Purchaser or any portion of
its properties or assets.
5.4 Brokers and Finders. Neither Purchaser nor its officers, directors,
employees or Affiliates has employed any broker or finder or incurred any
Liability for any brokerage fees, commissions or finders' fees in connection
with this Agreement, the Acquisition Documents or the Transactions.
5.5 Financing. On the Initial Closing Date and the Final Closing Date,
Purchaser will have available all funds necessary to pay the Initial Payment and
the Final Payment, respectively, as provided in this Agreement.
ARTICLE VI
COVENANTS
6.1 Conduct of Business. (a) Following the Initial Closing, until the
Final Closing or the earlier termination of this Agreement and except as
expressly contemplated or permitted by this Agreement, (i) Purchaser shall not
be required to remove any Purchased Assets that are purchased at the Initial
Closing but are located at the premises of Seller or its Subsidiaries and Seller
shall permit Purchaser's employees reasonable access during business hours to
such Purchased Assets for the purpose of operating, maintaining or removing such
Purchased Assets; provided there shall be no substantive interference with
Seller's operations and Purchaser maintains such assets in no worse repair than
on the Initial Closing Date and in compliance with all material legal
requirements, (ii) Seller and its Subsidiaries will continue to supply the Food
Service
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Business with juice and beverage products that are included in the Business
Inventory at the unit value used by Tedder, James in the preparation of the
statements of net working capital as of August 31, 1999, and (iii) Seller and
its Subsidiaries shall continue to operate the Processing Business only in the
ordinary course of business; provided that this shall not be understood to
require Seller or its Subsidiaries to process citrus at its processing plant.
Without limiting the generality of the foregoing, (i) Seller and its
Subsidiaries shall use all commercially reasonable efforts (subject to the
proviso in the immediately preceding sentence) to preserve the Processing
Business intact in all material respects to keep available, subject to
terminations in the ordinary course, the services of the Scheduled Employees who
are listed in Section 6.1 of the Seller's Disclosure Letter ("Offered
Employees"), to maintain the assets and properties of the Processing Business in
the same order as on the date of this Agreement, to maintain insurance
respecting the Processing Business and the tangible assets included therein) in
such amounts and against such risks and losses as are currently in effect, to
preserve the relationships with key customers and suppliers of the Processing
Business and others having significant business dealings with it and to comply
in all material respects with all Laws and orders of all Governmental
Authorities applicable to it, and (ii) Seller shall not, nor shall it permit any
of its Subsidiaries to, except as otherwise expressly provided for in this
Agreement:
(A) acquire as part of the Processing Business (by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner) any business
or any corporation, partnership, association or other business organization
or division thereof or otherwise acquire or agree to acquire as part of the
Processing Business any material assets other than inventory and other
assets to be sold or used in the ordinary course of business;
(B) other than dispositions in the ordinary course of its business of
assets included in the Processing Business or which are not, individually
or in the aggregate, material to the Processing Business taken as a whole,
sell, lease, grant any security interest in or otherwise dispose of or
encumber any of its properties (other than Permitted Liens);
(C) except to the extent required by applicable law, with respect to
the Processing Business, permit any material change in (A) any marketing,
purchasing, investment, accounting, financial reporting, inventory, credit,
allowance or tax practice or policy or (B) any method of calculating any
bad debt, contingency or other reserve for accounting, financial reporting
or tax purposes, except in all events with the consent of Purchaser which
shall not be unreasonably withheld;
(D) enter into, adopt, amend in any material respect (except as may be
required by applicable law) or terminate any Seller Plans, or other
agreement, arrangement, plan or policy between Seller or one of its
Subsidiaries and one or more of its directors, officers or employees, or
increase (other than increases in the ordinary course of business
consistent with past practice) in any manner the compensation or fringe
benefits of any director, officer or employee or pay any benefit not
required by any plan or arrangement in effect as of the date hereof, except
for matters that will not affect Purchaser after giving effect to Section
6.11(a);
(E) make any capital expenditures or commitments for additions to
plant, property or equipment constituting capital assets to be transferred
at the Final Closing in an aggregate amount exceeding $100,000 for periods
on or prior to January 1, 2000, or exceeding $100,000 for each calendar
quarter thereafter, without the prior consent of Purchaser not to be
unreasonably withheld;
(F) make any material change in the lines of business in which the
Processing Business participates or is engaged; or
(G) enter into any contract, binding commitment or arrangement to do
or engage in any of the foregoing.
(b) Seller shall confer on a regular and frequent basis with
Purchaser with respect to the business and operations and other matters
relevant to the Processing Business or this Agreement and shall promptly
advise Purchaser, orally and in writing, of any change or event,
including, without limitation, any complaint, investigation or hearing
by any Governmental Authority (or communication indicating the same may
be contemplated) or the institution or threat of litigation, having, or
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which, insofar as can be reasonably foreseen, could have, a material
adverse effect on the Processing Business taken as a whole or on the
ability of Seller to complete the Final Closing; provided that the
Company shall not be required to make any disclosure to the extent such
disclosure would constitute a violation of any applicable law.
6.2 Publicity; Confidentiality. (a) All press releases with respect to
this Agreement and the Acquisition Documents shall be in the form agreed to by
Seller and Purchaser. For as long as this Agreement is in effect, each of
Purchaser and Seller shall not, and shall cause its Affiliates not to, issue or
cause the publication of any press release, any other public announcement or any
general announcement to the employees, customers, suppliers or other Persons to
whom the Seller sells goods or provides services or with whom Seller otherwise
has significant business relationships with respect to the transactions
contemplated under this Agreement and the Acquisition Documents without the
consent of the other party to this Agreement (which consent shall not be
unreasonably withheld or delayed), except where such release or announcement is
required by applicable Law or pursuant to any listing agreement with, or the
rules or regulations of, any securities exchange or any other regulatory
requirement (and then, to the extent feasible, with prior notice to and
consultation with the other party to this Agreement, including, without
limitation, an advance copy of any such release or announcement and an
opportunity by such parties to comment thereon). Purchaser acknowledges and
accepts that, promptly after the execution and delivery of this Agreement,
Seller will file with the SEC a Current Report on Form 8-K, reporting such event
and including a copy of this Agreement as an exhibit thereto.
(b) After the Final Closing and for a period of five years following the
Final Closing Date, Seller agrees that it and its Subsidiaries will keep and
will use its best efforts to cause its other Affiliates to keep confidential all
Confidential Information in their respective possession, regardless of whether
such information is conveyed to Purchaser as part of the Purchased Assets. If
Seller or any of its Affiliates is requested or required by Law to disclose any
such Confidential Information, Seller will promptly notify Purchaser of such
request or requirement and will cooperate with Purchaser at Purchaser's expense
such that Purchaser may obtain an appropriate protective order or other
appropriate remedy or reliable assurance that confidential treatment will be
accorded to such Confidential Information. If, in the absence of a protective
order or the receipt of a waiver hereunder, Seller or any of its Affiliates is
required by applicable Law to disclose any Confidential Information, Seller and
its Subsidiaries shall, or shall use its best efforts to cause its Affiliate to,
disclose only so much of such Confidential Information as is so required. Seller
shall not be obligated to comply with this Section 6.2(b) in pursuing any remedy
against Purchaser but shall use reasonable efforts to avoid any unnecessary
disclosure.
6.3 No Solicitation. From the date hereof until the earlier of the Final
Closing Date or the termination of this Agreement in accordance with its terms,
Seller shall not, and shall cause its Affiliates not to, through any officer,
director, employee or agent or otherwise, solicit, initiate, participate in any
negotiation or discussion or enter into any agreement in respect of, any
Acquisition Proposal (as hereinafter defined), or facilitate any such by
proposal by furnishing any non-public information concerning, or affording
access to, the Business or otherwise. The term "Acquisition Proposal" means any
proposal (other than a proposal by Purchaser or a proposal that explicitly
assumes the obligations of Seller under this Agreement) for the acquisition of
all or the acquisition out of the ordinary course of any portion of the assets
comprising the Business or for a merger (other than the Merger), stock
acquisition, consolidation or other business combination pursuant to which any
other Person (other than Reservoir or an Affiliate thereof) would acquire the
Business or any substantial interest therein or the Purchased Assets or any
material portion thereof.
6.4 Access. (a) Between the date of this Agreement and the Final Closing,
Seller shall (and shall cause its Subsidiaries to) (i) afford the Purchaser's
officers, employees, counsel, accountants and other authorized representatives
access to the Books and Records of Seller and its Subsidiaries in respect of the
Business and the assets, properties and personnel relating thereto, in each
case, during normal business hours, upon reasonable prior notice and in such a
manner as not to interfere with the normal operations of Seller, and (ii)
furnish, except to the extent doing so would violate any Law or Contract,
promptly to Purchaser all information concerning the Business and the assets,
properties and personnel of the Business as may reasonably be requested by
Purchaser; provided, however, that no investigation pursuant to this Section
shall
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affect or be deemed to modify any representation or warranty made by Seller
hereunder or under the Acquisition Documents. All information so provided shall
be held by the Purchaser under its existing confidentiality agreement entered
into in connection with the transactions contemplated by this Agreement which
shall continue following the execution or termination of this Agreement, with
Seller being treated as if it were the party thereto entitled to the benefits
thereunder.
(b) After the Final Closing and for a period of five years following the
Final Closing Date, (i) Purchaser shall afford Seller's officers, employees,
counsel, accountants and other authorized representatives reasonable access to
the Books and Records obtained from Seller and its Subsidiaries relating to the
Business and (ii) Seller and its Subsidiaries shall afford Purchaser's officers,
employees, counsel, accountants and other authorized representatives access to
the Books and Records retained by Seller and its Subsidiaries relating to the
Business, in each case, during normal business hours in such a manner as not to
interfere with the normal operations of the Person providing access, as
reasonably required in connection with preparing Tax Returns or financial
statements, determining or enforcing rights or duties under this Agreement or
the Acquisition Documents or complying with Law or requests of any Governmental
Authority. Seller hereby agrees that it shall keep confidential pursuant to
Section 6.2(b) (for a period of five years from the date it obtains such
information) any Confidential Information which it obtains pursuant to this
Section. Purchaser hereby agrees that if it obtains any confidential information
related to the Grove Business pursuant to this Section, it shall agree to take
such actions with respect to such information as are required to be taken by
Seller under Section 6.2(b) hereof with respect to Confidential Information (for
a period of five years from the date Purchaser obtains such information).
6.5 Certain Filings. The parties hereto shall cooperate with one another
in determining whether any Governmental Approval is required or reasonably
appropriate, or any other Consent is required or reasonably appropriate, in
connection with the consummation of the Transactions. Without limiting the
generality of the foregoing, each of the parties hereto shall, as promptly as
practicable following the execution and delivery of this Agreement, make such
filings with Governmental Authorities as are determined to be necessary or
reasonably appropriate in connection with the Transactions. Each of the parties
hereto shall furnish to the other such necessary information and reasonable
assistance as it may request in connection with its preparation of any filing or
submission to any Governmental Authority. The parties hereto shall keep each
other apprised of the status of any communications with, and any inquiries or
requests for additional information from, any such Governmental Authority, and
shall comply promptly with any such inquiry or request.
6.6 All Necessary Action. Subject to the terms and conditions hereof, each
of Purchaser and Seller agrees to use its best efforts to, and to use its best
efforts to cause its officers, directors, employees or agents to, take or cause
to be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable to consummate and make effective the Transactions (including
without limitation the actions required to consummate the Final Closing under
Section 607.1202 of the Florida Business Corporation Act) and to cause the
conditions to each party's obligation to consummate the Final Closing to be
satisfied as promptly as practicable, including, in the case of Seller, waiving,
and causing to be waived, the condition set forth in Section 7.2(a) if all of
the other conditions set forth in Sections 7.1, 7.2 and 7.3 have been satisfied
(or waived by the parties entitled to the benefits thereof). Without limiting
the generality of the foregoing, the parties hereto agree that if the Tender
Offer is not consummated by November 15, 1999, Seller shall take, in accordance
with applicable Law and its certificate of incorporation and by-laws, all action
necessary to convene a meeting of holders of Common Stock or take action by
written consent (the "Stockholders Meeting") to consider and vote upon the
adoption of this Agreement and the approval of the Transactions to be
consummated at the Final Closing as promptly as practicable. In connection
therewith, Seller shall prepare and file with the SEC and the New York Stock
Exchange no later than November 30, 1999, a proxy or information statement for
the solicitation of the vote of the holders of Common Stock at the Stockholders
Meeting (together with all amendments and supplements thereto, the "Proxy
Statement"), together with any other Proxy Documents, if any; provided, however,
that Purchaser shall furnish to Seller such necessary information and reasonable
assistance as Seller may request in connection with its preparation of the Proxy
Documents; provided, further, that Purchaser shall have the right to review the
Proxy Documents prior to
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filing, and Seller shall consult with Purchaser in good faith regarding the
content of the Proxy Documents to be filed. The Proxy Documents shall include
the recommendation of the Board of Directors of Seller that the holders of
Common Stock vote in favor of the approval of this Agreement and the
Transactions. Seller shall use all reasonable best efforts to have the Proxy
Documents cleared by the SEC as promptly as practicable after such filing, and
Seller shall promptly thereafter mail the Proxy Statement to the stockholders of
Seller. The Proxy Documents may include a solicitation of approval for the
transactions contemplated by the Merger Agreement, and the Seller may include
such other matters as it shall determine to be advisable, so long as such other
matters are not inconsistent with consummation of the Final Closing.
6.7 Information Supplied. Each of Purchaser and Seller agrees, solely as
to information it provides, that none of the information included or
incorporated by reference in the Tender Offer Documents and the Proxy Documents
will, as of the dates such documents are filed with the SEC or the New York
Stock Exchange, as of the date of the consummation or expiration of the Tender
Offer (in the case of the Tender Offer Documents) and at the time of the
Stockholders Meeting (in the case of the Proxy Documents), contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of Purchaser and
Seller agrees to promptly correct any information provided by it for use in the
Tender Offer Documents or the Proxy Documents, if and to the extent that such
information shall have become false or misleading in any material respect, and
Peller further agrees to take all steps necessary to amend or supplement the
Tender Offer Documents it has filed or the Proxy Documents, as the case may be,
and to cause such documents as so amended or supplemented to be filed with the
SEC and the New York Stock Exchange and to be disseminated to the holders of
Common Stock, in each case as and to the extent required by applicable Law.
Seller shall provide Purchaser and its counsel with any comments or other
communications, whether written or oral, that Seller may receive from time to
time from the SEC or its staff with respect to the Tender Offer Documents or the
Proxy Documents promptly after the receipt of such comments or other
communications.
6.8 Other Actions. Each of Purchaser and Seller agrees that it shall not
knowingly or intentionally take any action or omit to take any action, if such
action or omission would or is reasonably likely to result, individually or in
the aggregate, in any of the other party's conditions to the Final Closing set
forth in this Agreement not being satisfied.
6.9 Tax Matters. (a) Cooperation. Each of Seller and Purchaser agrees to
furnish or cause to be furnished to one another, upon request, as promptly as
practicable, such information and assistance relating to the Purchased Assets,
the Assumed Liabilities and the Business as is reasonably requested by the other
for the filing of all Tax Returns of or with respect to the Business, and making
of any election related to Taxes of or with respect to the Business, the
preparation for any audit by any taxing authority, and the prosecution or
defense of any claim, suit or proceeding relating to any Tax Return of or with
respect to the Business. Each of Seller and Purchaser shall cooperate with each
other in the conduct of any audit or other proceeding related to Taxes of or
with respect to the Business and each shall execute and deliver such powers of
attorney and other documents as are necessary to carry out the intent of this
Section 6.9(a).
(b) Transfer Taxes. Seller and Purchaser shall each pay one half of all
sales, use, documentary, filing, transfer, recording and similar Taxes and fees
(and any interest or penalties thereon) arising from the sale and transfer of
the Purchased Assets to Purchaser under this Agreement. The parties will
reasonably cooperate with each other as reasonably requested in order to procure
the benefit of an exemption from, or otherwise reduce, any such Taxes and fees.
6.10 Tax Allocation of Purchase Price. (a) Within a reasonable period
following the Final Closing, Purchaser shall prepare and deliver to Seller a
statement (an "Allocation Statement") reasonably allocating the amount of the
Purchase Price among the Purchased Assets, in amounts consistent with Section
1060 of the Code, and the regulations thereunder ("Section 1060").
(b) Seller shall have a period of 30 Business Days after the delivery of
the Allocation Statement to present in writing to Purchaser notice of any
objections Seller may have to the allocations set forth therein (an
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"Allocation Objection Notice"). Unless Seller timely objects, such Allocation
Statement shall be binding on the parties without further adjustment, absent
manifest error.
(c) If Seller shall deliver an Allocation Objection Notice within the
thirty-Business Day period referred to above, Purchaser and Seller shall
negotiate in good faith and use their reasonable best efforts to resolve such
dispute. If the parties fail to agree within fifteen days after the delivery of
the Allocation Objection Notice, then the disputed items shall be resolved by
such independent and nationally recognized accounting firm chosen by Purchaser
and acceptable to Seller (the "Tax Accountant"), whose determination shall be
final and binding on the parties. The Tax Accountant shall resolve the dispute
within thirty days after such dispute has been referred to it. The costs, fees
and expenses of the Tax Accountant shall be borne by the party whose position is
not upheld or, if the Tax Accountant makes an independent determination, equally
by Seller, on the one hand, and Purchaser, on the other hand.
6.11 Liabilities with Respect to Employees. (a) The Purchaser may offer to
employ the employees who are listed in Section 6.11 of the Seller's Disclosure
Letter (including any employees hired for the Businesses following the date
hereof whose employment was approved by Purchaser, "Scheduled Employees").
Effective as of the Initial Closing Date for Scheduled Employees employed in the
Food Service Business (the "Food Service Employees") and the Final Closing Date
for the remainder of the Scheduled Employees (the "Other Employees"), Scheduled
Employees who accept employment with Purchaser shall be referred to herein as
"Transferred Employees." Purchaser shall, as of the Initial Closing Date for
Food Service Employees, and as of the Final Closing Date for Other Employees,
assume and be responsible for any and all Liabilities relating to the Scheduled
Employees, including, but not limited to, Liabilities in respect of wages,
vacation, sick days, severance, COBRA, WARN and the Seller Plans; provided,
however, that all Liability for (i) management bonuses, (ii) benefits accrued
under any Qualified Plan or the Orange-co of Florida Inc. Deferred Compensation
Plan, (iii) salary and benefits, after the Transition Period (as defined below),
of Scheduled Employees who are not Offered Employees, and (iv) severance in
respect of Scheduled Employees who are not Offered Employees and whose
employment is not terminated by Seller prior to the last day of the Transition
Period shall be retained and paid by Seller. For purposes of this Section
6.11(a), "Transition Period" shall mean the one week period following the
Initial Closing Date. In addition, Purchaser shall also assume, on the Initial
Closing Date, a Percentage (as defined below) of any Liabilities generally in
respect of employees which are not directly allocable to individual employees of
the Seller (e.g., administrative costs, filing costs, and other similar costs,
including any Liabilities arising pursuant to the Code or ERISA, which have been
or may be incurred as result of any plans or programs in which employees of the
Seller participate). For purposes of this Section, the Percentage shall be
sixty-four percent (64%). At Purchaser's direction, Seller shall promptly
provide notices under the Worker Adjustment and Retraining Notification Act (the
"WARN Act") and under similar applicable state laws to the Scheduled Employees
specified by Purchaser. On the Initial Closing Date, Seller shall provide WARN
Act notices to the seasonal employees of the Processing Business (the "Seasonal
Employees"). If any WARN Act notice required under this Section 6.11(a) notice
is duly and promptly given, Purchaser shall be responsible for any severance
payments due to the Seasonal Employees under any Seller Plan set forth in
Section 3.20(a) of the Seller's Disclosure Letter or under applicable law. In
the event such notice is not duly and promptly given, Seller shall be
responsible for any severance liability arising as a result of a failure to give
such notice duly and promptly.
(b) Purchaser has established or adopted employee benefit plans that,
subject to the eligibility requirements thereof, cover Transferred Employees
(the "Purchaser Plans"). Purchaser shall recognize service of Transferred
Employees with Seller under Purchaser Plans for purposes of eligibility and
vesting, but not for purposes of benefit accrual, and Transferred Employees
shall be credited with any deductibles and other out of pocket expenses paid in
calendar year 1999 under Seller's health plans for purposes of Purchaser's
health plan.
(c) It is understood and agreed that Purchaser shall have the right at any
time to unilaterally amend or terminate any Purchaser Plan that it has already
established or that it adopts subsequent hereto.
(d) To the extent Seller has paid salary and benefits to Offered Employees
during the period commencing on the Initial Closing Date and ending on the Final
Closing Date, Purchaser shall reimburse
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Seller upon request for the cost of such salary and benefits and Purchaser's
liability under this Section 6.11(d) shall constitute an Excess Inventory Offset
and shall be subject to Section 2.12; provided, however, that Purchaser may
notify Seller in writing that it no longer requires the services of any Offered
Employee or that an Offered Employee has declined Purchaser's offer of
employment prior to the Final Closing Date; in which case Purchaser's
reimbursement obligation under this Section 6.11(d) with respect to any such
Employee shall cease one week following the delivery of such written notice;
provided, further, that, for purposes of clause (iv) of Section 6.11(a) only,
any such employees shall be deemed to be "Scheduled Employees who are not
Offered Employees" and the aforementioned one-week period shall be deemed to be
the "Transition Period."
(e) Notwithstanding anything to the contrary in Section 6.11(a), Purchaser
is assuming Liability for worker's compensation and health benefit claims for
all of Seller's employees but only up to the amounts accrued therefor on the Net
Working Capital Statement. If payments are made by Purchaser respecting worker's
compensation or health benefit claims respecting a person who is not or was not
(i) an employee of the Food Distribution Business or the Processing Business or
(ii) a Transferred Employee in excess of the total amounts accrued on an
aggregate basis for such employees, then the liability therefor shall not be
assumed by Purchaser and shall otherwise be retained by Seller.
6.12 Notification of Certain Matters. Seller shall give prompt notice
after discovery thereof to Purchaser, and Purchaser shall give prompt notice
after discovery thereof to Seller, of (i) any material failure of on its part to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder or under any Acquisition Document or the Merger
Agreement, (ii) any notice or other written communication received by it from
any Person alleging that the consent of such Person is or may be required in
connection with the Transactions or with the transactions contemplated under the
Merger Agreement or (iii) any Business Material Adverse Effect (in the case of
Seller) or Purchaser Material Adverse Effect (in the case of Purchaser) in each
case occurring after the date hereof; provided, however, that the delivery of
any notice pursuant to this Section 6.12 shall not cure such breach or
non-compliance or limit or otherwise affect the remedies available hereunder to
the parties receiving such notice.
6.13 Insurance. Following the Proper Closing Date, Seller shall not be
required to maintain any Insurance Policies with respect to the Purchased Assets
or Assumed Liabilities. Notwithstanding the foregoing, Seller hereby agrees that
it shall, and shall cause its Subsidiaries to (a) promptly transfer or deliver
to Purchaser any insurance proceeds it receives pursuant to the Insurance
Policies in respect of any casualty or loss primarily relating to the Purchased
Assets or the Assumed Liabilities or primarily relating to the Business (Seller
agreeing that until delivered to Purchaser, any such proceeds shall be held by
Seller and its Subsidiaries in trust for Purchaser) and (b) cooperate at
Purchaser's expense with any reasonable efforts by Purchaser to obtain insurance
proceeds pursuant to the Insurance Policies in respect of any casualty or loss
in respect of the Business, including without limitation the filing of any
claims in accordance with the terms of the Insurance Policies. The foregoing
sentence shall not apply to Insurance Policies listed in Section 6.13 of the
Disclosure Schedule.
6.14 Notices Regarding the Merger Agreement. Seller agrees that at any
time it delivers or receives a notice under the Merger Agreement to or from any
party thereto, it shall deliver a copy of such notice to Purchaser as promptly
as practicable.
6.15 Transfer of Certain Materials. (a) Seller shall, and shall cause its
Subsidiaries to, maintain in accordance with their normal record retention
policy, but in no event for less than seven years from the Final Closing Date,
or, if there shall not be a Final Closing, the Initial Closing Date, all Books
and Records pertaining to the Business and not otherwise included in the
Purchased Assets. At such time, if any, as Seller and its Subsidiaries are no
longer required to retain such Books and Records, Seller shall offer to transfer
such Books and Records to Purchaser at Purchaser's expense (but with no charge
payable to Seller other than the reasonable out-of-pocket costs of Seller) prior
to destroying such Books and Records.
(b) Purchaser shall maintain in accordance with its normal record retention
policy, but in no event for less than seven years from the Final Closing Date,
all Books and Records included in the Purchased Assets pertaining to the Grove
Business. At such time, if any, as Purchaser is no longer required to retain
such Books
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and Records, Purchaser shall offer to transfer such Books and Records to Seller
at Seller's expense (but with no charge payable to Purchaser other than the
reasonable out-of-pocket costs of Purchaser) prior to destroying such Books and
Records.
6.16 Collection of Accounts. (a) Seller agrees that, after the Proper
Closing, it will promptly transfer to or deliver to Purchaser any cash or other
property received by Seller and its Subsidiaries in respect of any Business
Accounts Receivable theretofore sold hereunder, including any amounts receivable
as interest. Until delivered to Purchaser, any such amounts received by Seller
and its Subsidiaries shall be held by it in trust for Purchaser.
(b) Purchaser agrees that, after the Initial Closing, it will promptly
transfer to or deliver to Seller any cash or other property received directly or
indirectly by Purchaser in respect of any Grove Accounts Receivable or other
accounts receivable not included in the Purchased Assets, including any amounts
receivable as interest thereon. Until delivered to Seller, any such amounts
received by Purchaser shall be held by it in trust for Seller.
6.17 Noncompetition. Each of Seller and its Subsidiaries hereby agrees
that it shall not, anywhere in the United States or Canada, for a period ending
on the earlier of the Final Closing Date or the second anniversary of the
Initial Closing Date, in any capacity (including, but not limited to, as an
owner, partner, shareholder, member, manager, consultant or agent), directly or
indirectly, for its own account or for the benefit of any person, establish, or
engage in any manufacturing, bottling, distribution or sale of juice, juice
products or other beverages or food products or dispensing equipment for the
same, for institutional or food service use. The foregoing shall not apply with
respect to the activities of Consolidated Citrus, L.P. or its successors if
Seller merges, consolidates with, transfers substantially all of its assets to
or otherwise completes a business combination with, or makes an investment in,
Consolidated Citrus, L.P. This Section 6.17 is binding upon and shall inure to
the benefit of the parties hereto and their respective successors and permitted
assigns, as set forth in Section 11.6, and shall be expressly enforceable by
such assignees and successors.
6.18 Bulk Transfer Laws. Purchaser hereby waives compliance by Seller and
its Subsidiaries with the provisions of any bulk transfer laws applicable to the
Transactions.
6.19 Further Assurances. After the Proper Closing, each party hereto
agrees, at the other's request, to execute and deliver, or cause to be executed
and delivered, such other documents, certificates, instruments and agreements,
and to take such other actions, as may be reasonably necessary or desirable in
order to properly effect the transfer of the Purchased Assets to, or the
assumption of the Assumed Liabilities by, Purchaser.
6.20 Certain Fruit Purchases. Commencing upon the Final Closing, Seller
and its Subsidiaries shall sell to Purchaser or its designated subsidiary all
citrus grown upon groves managed for third parties located in the Joshua and
Bermont groves for the 1999-2000 growing season on the terms and conditions set
forth in the standard agreements pursuant to which the Seller or its
Subsidiaries have procured such citrus in the past except that the price to be
paid by Purchaser to Seller therefore shall be based on the pricing mechanism
used in determining the price of fruit purchased from Ben Hill Griffin Inc.
under the Delivered Fruit Purchase Agreement between Purchaser's subsidiary and
Ben Hill Griffin Inc., as in effect on the date hereof, but subject to a floor
price of $0.85 per pound solid for Early/Midseason oranges and $1.00 for
Valencia oranges. Seller has no obligation after the 1999-2000 growing season to
deliver any fruit to Purchaser other than to the extent that either Sun Ridge or
Fawn Grove constitute a Delayed Asset. This Section 6.20 shall not be of any
force or effect if the Final Closing has not occurred on or before December 1,
1999, except this Section 6.20 shall remain in effect if such failure is not as
a result of Purchaser's breach of its obligations hereunder or Purchaser's
failure to close by reason of the conditions set forth in Section 7.3(a).
6.21 Frank Carroll Oil Environmental Liabilities. (a) Seller shall defend
all matters associated with the Frank Carroll Oil Environmental Liabilities,
subject to the provisions of this Agreement.
(b) If either Purchaser or Seller receives notice of potential Frank
Carroll Oil Environmental Liabilities, it shall provide prompt notice thereof to
the other party.
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(c) With respect to the Frank Carroll Oil Environmental Liabilities, Seller
shall (i) afford Purchaser the opportunity to participate in all conferences
with counsel or any Person advancing a claim or otherwise seeking to compel
action with respect to Frank Carroll Oil Environmental Liabilities, (ii) provide
to Purchaser draft versions of all environmental reports and submissions in any
legal or administrative proceeding, (iii) provide to Purchaser copies of all
reports, sampling data, pleadings and other correspondence, and (iv) consult
with Purchaser in advance of finalizing any environmental reports or submissions
in any legal or administrative proceeding and use reasonable efforts to
incorporate such comments in the final document.
(d) Seller shall not settle any claim or demand with respect to Frank
Carroll Oil Environmental Liabilities without the approval of Purchaser, which
shall not be unreasonably withheld.
ARTICLE VII
CONDITIONS TO FINAL CLOSING
7.1 Conditions to Seller's and Purchaser's Obligations to Effect the Final
Closing. The respective obligations of Seller and Purchaser to effect the Final
Closing is subject to the satisfaction on or prior to the Final Closing Date of
each of the following conditions:
(a) Stockholder Approval. The Seller Requisite Vote shall have been
obtained.
(b) No Injunction. There shall be no order or injunction of a court
of competent jurisdiction in effect prohibiting, nor any statute, rule or
regulation enacted that would make illegal, the consummation of the Final
Closing.
7.2 Conditions to Seller's Obligation to Effect the Final Closing. The
obligation of Seller to effect the Final Closing is also subject to the
satisfaction (or waiver by Seller with the consent of Reservoir) on or prior to
the Final Closing Date of each of the following additional conditions:
(a) The Merger. The Merger shall have been consummated.
(b) Compliance with Covenants. Purchaser shall have performed in all
material respects all obligations and agreements, and complied in all
material respects with all covenants contained in Article II and Sections
6.1, 6.4, 6.5, 6.6 and 6.9 of this Agreement to be performed or complied
with by it prior to or as of the Final Closing Date.
(c) Acquisition Documents. Purchaser shall have executed and
delivered to Seller all Acquisition Documents to which it is a party.
7.3 Conditions to Purchaser's Obligation to Effect the Final Closing. The
obligation of Purchaser to effect the Final Closing is also subject to the
satisfaction (or waiver by Purchaser) at or prior to the Final Closing Date of
each of the following additional conditions:
(a) No Material Adverse Change. Since the Initial Closing there shall
have been no adverse change in the business, assets, properties, financial
condition or results of operation of the Processing Business which is or is
reasonably expected to be material to the Business taken as a whole,
including any portion purchased in the Initial Closing; provided, however,
that any change occurring as a result of general economic or financial
conditions or conditions in the citrus processing and packaging industry,
including fluctuations in the market price of citrus or citrus products,
shall not constitute grounds for failure of the condition set forth in this
Section 7.3(a) to be satisfied.
(b) Compliance with Covenants. Seller shall have performed in all
material respects the obligations and agreements, and complied in all
material respects with the covenants, contained in Article II and Sections
6.1, 6.2, 6.4, 6.5, 6.6 and 6.9 of this Agreement to be performed or
complied with by it prior to or as of the Final Closing Date.
(c) Acquisition Documents. Each of Seller and its Subsidiaries shall
have executed and delivered to Purchaser all Acquisition Documents to which
it is a party.
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ARTICLE VIII
TERMINATION
8.1 Grounds for Termination. This Agreement may only be terminated prior
to the Final Closing:
(a) by mutual written agreement of Seller and Purchaser, with the
written consent of Reservoir;
(b) by Seller (with the written consent of Reservoir) or Purchaser, if
the Final Closing shall not have occurred on or before September 30, 2000,
unless such failure is the result of a breach of this Agreement by the
party seeking to terminate this Agreement;
(c) by Seller (with the written consent of Reservoir) or Purchaser, if
a court of competent jurisdiction or other Governmental Authority shall
have issued an order or taken any other action permanently restraining,
enjoining or otherwise prohibiting the consummation of the Final Closing
and such order or other action shall have become final and nonappealable.
Any party desiring to terminate this Agreement pursuant to this Section 8.1
shall give written notice of such termination and the basis therefor to the
other party hereto.
8.2 Effect of Termination. In the event of termination of this Agreement
as provided in Section 8.1, the provisions of this Agreement (other than
Sections 2.10, 6.9, 6.10, 6.11, 6.13, 6.15, 6.16, 6.17 and 6.18 and Articles IX
and XI in each case with respect to the Food Service Business) shall forthwith
become void and be of no further legal effect, without any liability or
obligation on the part of any party hereto, except that nothing therein shall
relieve any party from liability for any material breach by a party of any of
its covenants or agreements set forth in this Agreement.
ARTICLE IX
INDEMNIFICATION
9.1 Agreement to Indemnify. (a) Indemnification by Seller. Purchaser, its
Affiliates, and their respective officers, directors, shareholders, employers,
representatives and agents (collectively, the "Seller Indemnitees"), shall each
be indemnified and held harmless to the extent set forth in this Article IX by
Seller with respect to any and all Damages incurred by any Seller Indemnitee as
a result of, relating to or arising in connection with the Excluded Liabilities
or any Liabilities (other than Assumed Liabilities) relating to the operations
of the Seller or its Subsidiaries from and after the date hereof.
(b) Indemnification by Purchaser. Seller, its Affiliates and their
respective officers, directors, shareholders, employers, representatives and
agents (collectively, the "Purchaser Indemnitees"), shall each be indemnified
and held harmless to the extent set forth in this Article IX by Purchaser, in
respect of any and all Damages incurred by any Purchaser Indemnitee as a result
of, relating to or arising in connection with any Assumed Liability or any
Liabilities (other than Excluded Liabilities) relating to the operation of the
Food Service Business from and after the date hereof or the operation of the
Processing Business from and after the Final Closing Date.
9.2 Defense of Claims. Whenever any claim shall arise for indemnification
hereunder, the party entitled to indemnification (the "Indemnified Party") shall
promptly notify the other party (the "Indemnifying Party") of the claim and,
when known, the facts constituting the basis for such claim. The Indemnifying
Party will not be obligated to indemnify the Indemnified Party with respect to
such portion of the claim as to which (and only to the extent to which) the
Indemnifying Party's ability to defend has been prejudiced by the Indemnified
Party's failure to provide prompt notice of a claim. The Indemnifying Party may,
upon written notice to the Indemnified Party within 30 calendar days of receipt
of the notice specified in the first sentence of this paragraph, assume the
defense of any such claim, or any discrete portion of a claim if the
Indemnifying Party acknowledges to the Indemnified Party the Indemnified Party's
right to indemnity pursuant hereto in respect of the entirety of such claim, or
the relevant portion; provided, however, that the Indemnified Party may, at the
sole cost and expense of the Indemnified Party, at any time prior to the
Indemnifying Party's delivery of the notice referred to in this sentence, file
any motion, answer or other pleadings or take any other
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action that the Indemnified Party reasonably believes to be necessary or
appropriate to protect its interests and not unreasonably prejudicial to the
Indemnifying Party (it being understood and agreed that, if an Indemnified Party
takes any such action that is unreasonably prejudicial and causes a final
adjudication that is adverse to the Indemnifying Party, the Indemnifying Party
will be relieved of its obligations hereunder to the extent it is prejudiced by
the Indemnified Party's action). If the Indemnifying Party assumes the defense
of any such claim, the Indemnifying Party shall select nationally recognized
counsel or counsel reasonably acceptable to the Indemnified Party to conduct the
defense of such claim, and shall take reasonable steps in the defense or
settlement thereof. If the Indemnifying Party shall have assumed the defense of
any claim in accordance with this Section 9.2, the Indemnifying Party shall be
authorized to consent to a settlement of, or the entry of any judgment arising
from, any such claim, without the prior written consent of the Indemnified Party
(but only with the written consent of the Indemnified Party, which consent will
not be unreasonably withheld, in the case of any settlement that provides for
any relief other than the payment of monetary damages as to which the
Indemnified Party will be indemnified in full or that does not provide for the
release of the Indemnified Party from all liability); provided, however, that
the Indemnifying Party shall pay or cause to be paid all amounts arising out of
such settlement or judgment concurrently with the effectiveness thereof;
provided, further, that the Indemnifying Party shall not be authorized to
encumber any of the assets of the Indemnified Party or to agree to any
restriction that would apply to the Indemnified Party or to its conduct of
business; provided, further, that if such settlement does not contain a complete
release of the Indemnified Party with respect to such claim, the Indemnifying
Party shall continue to be obligated to indemnify the Indemnified Party with
respect to such claim. The Indemnified Party shall be entitled to participate in
(but not control) the defense of any such action, with its own counsel and at
its own expense, except that the Indemnifying Party will pay the costs and
expenses of such separate counsel if a conflict or potential conflict exists
between the Indemnifying Party and Indemnified Party which makes representation
of both parties inappropriate under applicable standards of professional
conduct. The Indemnified Party shall, and shall cause each of its Affiliates,
officers, employees, consultants and agents, to cooperate fully with the
Indemnifying Party at the Indemnifying Party's expense in the defense of any
claim pursuant to this Section 9.2. If the Indemnifying Party does not assume
and timely pursue the defense of any claim resulting therefrom in accordance
with the terms of this Section 9.2, the Indemnified Party following notice to
the Indemnifying Party may defend against such claim in such manner as it may
reasonably deem appropriate, including settling such claim after giving notice
of the same to the Indemnifying Party, on such terms as the Indemnified Party
may reasonably deem appropriate at the expense of the Indemnifying Party.
Notwithstanding the foregoing, the Indemnified Party may retain or take over the
control of the defense or settlement of any claim against the Indemnified Party
the defense of which the Indemnified Party has elected to control if the
Indemnified Party irrevocably waives its right to indemnity under Section 9.1
with respect to such claim. In the case of claims or matters where both parties
are potentially liable in accordance with Section 6.11, the parties shall
reasonably cooperate with the defense and settlement of such matters and in the
case of any material disagreement will submit their disagreement for final
resolution to an appropriate independent consultant.
9.3 Exclusive Remedy. After the Proper Closing, to the extent permitted by
Law, the indemnities set forth in this Article IX shall be the exclusive
remedies of Purchaser and Seller and their respective officers, directors,
employees, agents and Affiliates for any misrepresentation, breach of warranty
or nonfulfillment or failure to be performed of any covenant or agreement
contained in this Agreement, and the parties shall not be entitled to a
rescission of this Agreement or to any further indemnification rights or claims
of any nature whatsoever in respect thereof, all of which the parties hereto
hereby waive.
9.4 Equitable Relief. Nothing set forth in this Article IX shall be deemed
to prohibit or limit the right of any party hereto, at any time before, on or
after the Final Closing Date, to seek injunctive or other equitable relief for
the failure of any other party hereto to perform or comply with any covenant or
agreement contained herein.
ARTICLE X
[INTENTIONALLY OMITTED]
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ARTICLE XI
MISCELLANEOUS
11.1 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given when delivered in person or
by telecopier (with a confirmed receipt thereof), and on the next business day
when sent by overnight courier service, to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
if to Purchaser, to:
Pasco Acquisition, Inc.
Post Office Box 1690
400 North Tampa Street (33602)
Tampa, Florida 33601
Attention: Robert A. Peiser, CEO
Telephone: (813) 223-3981
Telecopy: (813) 273-5420
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Carl L. Reisner, Esq.
Telephone: (212) 373-3017
Telecopy: (212) 757-3990
if to Seller, to:
Orange-co, Inc.
2020 U.S. Highway 17 South
P.O. Box 2158
Bartow, Florida 33831-2158
Attention:
Telephone:
Telecopy:
with copies to:
Bush Ross Gardner Warren & Rudy, P.A.
220 South Franklin Street
Tampa, Florida 33602
Attention: Jere Ross, Esq.
Telephone: (813) 224-9255
Telecopy: (813) 223-9620
and
Reservoir Capital Group, LLC
650 Madison Avenue, 20th Floor
New York, New York 10022
Attention:
Telephone:
Telecopy:
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and
Milbank, Tweed, Hadley & McCloy LLP
One Chase Manhattan Plaza
New York, New York 10005-1413
Attention: Mark L. Weissler, Esq.
Telephone: (212) 530-5000
Telecopy: (212) 530-5219
11.2 Amendment and Modification. Subject to applicable Law, this Agreement
may be amended, modified or supplemented only by a written agreement signed by
each of the parties hereto with the written consent of Reservoir; provided,
however, that following the satisfaction of the Seller Requisite Vote, no such
amendment shall be made which requires the approval of holders of Common Stock
under applicable Law unless such approval is obtained.
11.3 Waiver of Compliance; Consents. Any failure of any party hereto to
comply with any obligation, covenant, agreement or condition herein may, subject
to Section 11.2, be waived by the other party hereto entitled to the benefit
thereof only by a written instrument signed by the party granting such waiver,
but such waiver or failure to insist upon strict compliance with such
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 11.3 and in Section
11.2. No consent or waiver on the part of Seller shall be effective unless
consented thereto in writing by Reservoir.
11.4 Survival. The representations and warranties contained in this
Agreement (including the Disclosure Letter) and the covenants and agreements not
specifically addressed below shall not survive the Proper Closing, and there
shall be no liability in respect thereof, whether such liability has accrued
prior to the Proper Closing Date or after the Proper Closing Date, on the part
of either party or its officers, directors, employees, agents or Affiliates. The
covenants or agreements of the parties hereto set forth in Sections 2.8, 2.9,
2.11, 2.12, 6.3, 6.6, 6.11, 6.12 and 6.14 which by their terms contemplate
performance on or prior to the Final Closing Date shall expire and be of no
further legal effect on the date which is 30 days following the final
determination of the Net Working Capital Amount pursuant to Section 2.10(c) or
(d) and if any amounts are owed as a result of an adjustment under Section 2.10,
the final irrevocable payment of all amounts owed thereunder pursuant to Section
2.10(f). This Section shall not limit in any way the survival and enforceability
of any covenant or agreement of the parties hereto which by its terms
contemplates performance after the Final Closing Date, which shall survive for
the respective periods set forth herein.
11.5 Expenses. All costs and expenses incurred in connection with this
Agreement and the Acquisition Documents shall be paid by the party incurring
such cost or expense, except as expressly provided otherwise in this Agreement
or in the other Acquisition Documents.
11.6 Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties (and of
Reservoir in the case of a consent given by Seller); provided, however, that
Purchaser may assign its rights, in whole or in part, but not its obligations
under this Agreement as contemplated by Section 2.11; provided, further, that
Purchaser may assign (i) any or all of its rights but not its obligations under
this Agreement to one or more of its financing sources and (ii) all of its
rights but not its obligations under this Agreement to any Person in connection
with the sale of all or substantially all of its assets to such Person.
Notwithstanding anything to the contrary set forth in this Agreement, the
Purchaser may assign its rights hereunder at anytime prior to the Final Closing
to PAI Holdings LLC, a wholly-owned subsidiary of the Purchaser, whereupon the
Purchaser's obligations to purchase the Final Assets, to assume the Final
Liabilities and to pay the balance of the Purchase Price on the Final Closing
Date under Sections 2.1, 2.3 and 2.8 shall cease and be assumed by PAI but
Purchaser's other
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obligations under this Agreement, including under Article IX, will continue in
accordance with the terms hereof.
11.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE CHOICE OF
LAW PRINCIPLES THEREOF.
11.8 Jurisdiction. The parties hereto agree that (a) any action arising
out of or relating to this Agreement or any of the Transactions may be brought
in the state or federal courts in the County of New York, State of New York and
(b) each party consents to and submits itself to the personal jurisdiction in
the state or federal courts in the County of New York, State of New York for any
action arising out of or relating to this Agreement or any of the Transactions.
11.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.10 Interpretation. The parties hereto acknowledge and agree that: (i)
each party hereto and its counsel reviewed and negotiated the terms and
provisions of this Agreement and have contributed to its revision and (ii) the
rule of construction to the effect that any ambiguities are resolved against the
drafting party shall not be employed in the interpretation of this Agreement.
Unless otherwise expressly provided herein, the words "include," "includes" and
"including" do not limit the preceding words or terms and shall be deemed to be
followed by the words "without limitation." All pronouns and any variations
thereof refer to the masculine, feminine or neuter, singular or plural, as the
context may require. All terms defined in this Agreement in their singular or
plural forms, have correlative meanings when used herein in their plural or
singular forms, respectively. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement.
11.11 Entire Agreement. This Agreement (including the schedules, exhibits,
documents or instruments referred to herein) and the Acquisition Documents
embody the entire agreement and understanding of the parties hereto in respect
of the subject matter hereof and thereof and supersede all prior agreements and
understandings, both written and oral, among the parties, or between any of
them, with respect to the subject matter hereof and thereof.
11.12 No Third Party Beneficiaries. Except as expressly provided in this
Agreement, this Agreement is not intended to, and does not, create any rights or
benefits of any party other than the parties hereto.
11.13 Severability. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement or any other such instrument.
11.14 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE ACQUISITION
DOCUMENTS OR ANY OF THE TRANSACTIONS.
11.15 Specific Performance. The parties hereto acknowledge that
irreparable damage would result if this Agreement were not specifically
enforced, and they therefore consent that the rights and obligations of the
parties under this Agreement may be enforced by a decree of specific performance
issued by any court of competent jurisdiction. Such remedy shall, however, not
be exclusive and shall be in addition to any other remedies which any party may
have under this Agreement or otherwise, all remedies being cumulative.
11.16 No Other Representations. Notwithstanding anything to the contrary
contained in this Agreement, it is the explicit intent of each party hereto that
Seller is making no representation or warranty whatsoever, express or implied,
including but not limited to any implied representation or warranty as to
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condition, merchantability or suitability as to any of the Purchased Assets or
other properties of the Business, except those representations and warranties
contained in Article III.
IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase
Agreement to be signed by their respective duly authorized officers as of the
date first above written.
ORANGE-CO, INC.
By:
------------------------------------
Name: Gene Mooney
Title: President and Chief Operating
Officer
PASCO ACQUISITION, INC.
By:
------------------------------------
Name: Steven Lefkowitz
Title: Vice President
41
