SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 1, 1994
INTERNATIONAL MULTIFOODS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-6699 41-0871880
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
33 South Sixth Street, Minneapolis, Minnesota 55402
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 340-3300
Not applicable
(Former name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets.
On June 1, 1994, pursuant to a Stock Purchase Agreement dated as of
March 17, 1994, International Multifoods Corporation (the "Company")
sold all of the issued and outstanding shares of International
Multifoods Foodservice Corp., a Delaware corporation and wholly-owned
subsidiary of the Company, to Doskocil Companies Incorporated for an
aggregate cash purchase price of $135,944,000, which includes $172,000
of debt assumed by Doskocil Companies Incorporated. The purchase price
of the shares was arrived at by negotiation between the Company and
Doskocil Companies Incorporated. The business sold by the Company
pursuant to the Stock Purchase Agreement consisted of the Company's
Frozen Specialty Foods business and included six processing facilities
and one distribution facility.
Item 7. Financial Statements and Exhibits.
(a) Not applicable.
(b) Pro forma financial information reflecting the disposition
of the Company's Frozen Specialty Foods business, as
described above in Item 2.
(c) Exhibits.
2.1 Stock Purchase Agreement between International
Multifoods Corporation (Seller) and Doskocil Companies
Incorporated (Buyer) dated as of March 17, 1994.
INTERNATIONAL MULTIFOODS CORPORATION
Introduction to Pro Forma Consolidated
Condensed Financial Information (Unaudited)
As described in Item 2, on June 1, 1994, the Company
completed the sale of its Frozen Specialty Foods business.
As discussed in Note 20 of the Company's Annual Report on
Form 10-K for the year ended February 28, 1994, the Company signed
an agreement in March 1994 to sell its Meats business. The
Company recognized a charge of $22.5 million in the fourth quarter
of fiscal year 1994 on the write-down of the Meats business net
assets to expected realizable value. The sale of the Meats
business was completed on May 2, 1994.
The following unaudited pro forma financial statements
reflect the impact of the transactions described above, in the
manner described in the accompanying notes, to the historical
statement of operations for the year ended February 28, 1994 and
the balance sheet as of February 28, 1994. For purposes of
reporting pro forma results of operations, it is assumed these
businesses were sold on March 1, 1993. For purposes of reporting
the pro forma balance sheet, it is assumed these businesses were
sold on February 28, 1994.
The sale of the Frozen Specialty Foods business will result
in a net gain which will be reflected in the Company's results of
operations in the quarter ended August 31, 1994.
The pro forma financial information is not intended to
reflect the results of operations or financial position of the
Company which actually would have resulted had these transactions
occurred on the assumed dates.
The pro forma financial information should be read in
conjunction with the accompanying notes which follow and the
historical financial statements of the Company included in its
Annual Report on Form 10-K for the year ended February 28, 1994.
International Multifoods Corporation and Subsidiaries
Pro Forma Consolidated Condensed Balance Sheet
February 28, 1994
(Unaudited)
(in thousands)
Pro Forma
-------------------------
Adjust-
Historical(a) ments(b)(c) Results
Assets
Current assets:
Cash and equivalents $ 10,507 $ (5) $ 10,502
Trade accounts receivable,
net of allowance 146,455 (14,516) 131,939
Inventories 219,630 (36,177) 183,453
Other current assets 62,698 (5,893) 56,805
Total current assets 439,290 (56,591) 382,699
Property, plant and
equipment, net 245,891 (55,709) 190,182
Goodwill 72,672 (11,062) 61,610
Other assets 56,922 (19,456) 37,466
Total assets $814,775 $(142,818) $671,957
Liabilities and Shareholders' Equity
Current liabilities:
Notes payable $ 58,651 $ (45,782) $ 12,869
Current portion of
long-term debt 3,953 (405) 3,548
Accounts payable 150,221 (9,390) 140,831
Other current liabilities 88,909 14,977 103,886
Total current liabilities 301,734 (40,600) 261,134
Long-term debt, net
of current portion 195,125 (115,018) 80,107
Other liabilities 64,277 (14,200) 50,077
Total liabilities 561,136 (169,818) 391,318
Redeemable preferred stock 3,635 0 3,635
Shareholders' equity 250,004 27,000 277,004
Total liabilities and
shareholders' equity $814,775 $(142,818) $671,957
(a) The historical balance sheet reflects the $22.5 million pre-tax
($12.6 million after-tax) charge on the write-down of the Meats business
net assets to expected realizable value.
(b) The pro forma adjustments assume that the divestitures took place on
February 28, 1994. The adjustments reflect the application of proceeds,
the elimination of assets transferred to and liabilities assumed by the
buyers and accruals for estimated additional costs directly attributable
to the divestitures. Proceeds are assumed to pay down debt obligations.
However, it is anticipated that the proceeds will be reinvested for a
variety of corporate purposes, including acquisitions and common stock
repurchases.
(c) The pro forma adjustments reflect an assumed aggregate purchase
price for the two businesses of $161.2 million, including assumption of
debt by the buyers. As a result of lower aggregate net assets of the two
businesses at their respective closing dates, the actual aggregate
purchase price was $157.7 million.
International Multifoods Corporation and Subsidiaries
Pro Forma Consolidated Condensed Statement of Operations
February 28, 1994
(Unaudited)
(in thousands, except per share data)
Pro Forma
-------------------------
Adjust-
Historical ments(a) Results
Net sales $ 2,224,710 $(259,628) $ 1,965,082
Cost of sales (1,952,086) 203,527 (1,748,559)
Selling, general
and administrative (203,797) 46,285 (157,512)
Unusual items (70,007) (70,007)
Interest, net (10,685) 4,290(b) (6,395)
Corporate (852) (852)
Losses from unconsolidated
affiliates (12,187) (12,187)
Loss before income taxes (24,904) (5,526) (30,430)
Income taxes 11,466 2,376 13,842
Net loss $ (13,438) $ (3,150) $ (16,588)
Net loss per share
of common stock $ (0.72) $ (0.17) $ (0.89)
Average shares of common
stock outstanding 18,911 18,911
(a) The pro forma statement of operations for the year ended February
28, 1994 assumes that both divestitures took place on March 1, 1993.
Adjustments include the elimination of net sales and expenses of the
businesses. The net gain on the divestiture of the Frozen Specialty
Foods business has not been included. The impact on the net loss per
share from the write-down of the Meats business net assets was $.67
which is included in the historical statement of operations and has not
been eliminated in the pro forma results.
(b) Represents the reduction in interest expense assuming the
divestitures had been consummated March 1, 1993 and the net proceeds
were used to reduce U.S. debt. Proceeds were reduced by additional costs
directly attributable to the transactions, including taxes.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
INTERNATIONAL MULTIFOODS CORPORATION
Date: June 8, 1994 By /s/ Duncan H. Cocroft
Duncan H. Cocroft
Vice President - Finance and
Chief Financial Officer
EXHIBIT INDEX
2.1 Stock Purchase Agreement between International Multifoods
Corporation (Seller) and Doskocil Companies Incorporated (Buyer)
dated as of March 17, 1994.
EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
between
INTERNATIONAL MULTIFOODS CORPORATION
(Seller)
and
DOSKOCIL COMPANIES INCORPORATED
(Buyer)
____________________________
Dated as of March 17, 1994
____________________________
SALE OF FROZEN SPECIALTY FOODS BUSINESS
TABLE OF CONTENTS
SECTION Page
1. Purchase and Sale of the Shares . . . . . . . . . . . . . 1
2. Closing; Determination of Closing Net Assets. . . . . . . 2
3. Conditions to Closing . . . . . . . . . . . . . . . . . . 10
4. Representations and Warranties of Seller. . . . . . . . . 14
5. Covenants of Seller . . . . . . . . . . . . . . . . . . . 48
6. Representations and Warranties of Buyer . . . . . . . . . 65
7. Covenants of Buyer. . . . . . . . . . . . . . . . . . . . 68
8. Mutual Covenants. . . . . . . . . . . . . . . . . . . . . 69
9. Employees and Employee Benefits . . . . . . . . . . . . . 82
10. Further Assurances. . . . . . . . . . . . . . . . . . . . 88
11. Indemnification . . . . . . . . . . . . . . . . . . . . . 88
12. Tax Matters . . . . . . . . . . . . . . . . . . . . . . .106
13. Assignment. . . . . . . . . . . . . . . . . . . . . . . .112
14. No Third-Party Beneficiaries. . . . . . . . . . . . . . .113
15. Termination . . . . . . . . . . . . . . . . . . . . . . .113
16. Survival of Representations . . . . . . . . . . . . . . .115
17. Expenses. . . . . . . . . . . . . . . . . . . . . . . . .115
18. Amendments. . . . . . . . . . . . . . . . . . . . . . . .116
19. Notices . . . . . . . . . . . . . . . . . . . . . . . . .116
20. Interpretation. . . . . . . . . . . . . . . . . . . . . .117
21. Counterparts. . . . . . . . . . . . . . . . . . . . . . .119
22. Entire Agreement. . . . . . . . . . . . . . . . . . . . .119
23. Brokerage Fees. . . . . . . . . . . . . . . . . . . . . .119
24. Severability. . . . . . . . . . . . . . . . . . . . . . .120
25. Governing Law . . . . . . . . . . . . . . . . . . . . . .120
26. Disclosure Schedule, etc. . . . . . . . . . . . . . . . .120
27. Waiver of Compliance; Consents. . . . . . . . . . . . . .121
28. Remedies Cumulative . . . . . . . . . . . . . . . . . . .121
Exhibit A Principles and Methodology for Determining Closing
Net Assets
Exhibit B Form of Opinion of Faegre & Benson
Exhibit C Form of Opinion of General Counsel of Seller
Exhibit D Form of Opinion of Skadden, Arps, Slate, Meagher &
Flom
Exhibit E Form of Opinion of Local Counsel to Buyer
Exhibit F Interim Statement of Net Assets
Exhibit G Audited Financial Statements
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of March 17, 1994,
between INTERNATIONAL MULTIFOODS CORPORATION, a Delaware
corporation ("Seller"), and DOSKOCIL COMPANIES INCORPORATED, a
Delaware corporation ("Buyer").
Buyer desires to purchase from Seller, and Seller desires
to sell to Buyer, all the issued and outstanding shares of Common
Stock, par value $1.00 per share, of International Multifoods
Foodservice Corp., a Delaware corporation and wholly owned
subsidiary of Seller (the "Company"). The issued and outstanding
shares of Common Stock of the Company are hereinafter collectively
called the "Shares".
Accordingly, in consideration of the premises set forth
herein, the parties hereto hereby agree as follows:
1. Purchase and Sale of the Shares. On the terms and
subject to the conditions of this Agreement, in reliance upon the
representations, warranties and agreements of the respective
parties contained herein, on the Closing Date (as defined in
Section 2(a) hereof) Seller shall sell, transfer and deliver to
Buyer, and Buyer shall purchase from Seller, the Shares for an
aggregate cash purchase price equal to the sum of (i) $70,500,000,
plus (ii) the lesser of (A) the amount of the Closing Net Assets,
determined in the manner set forth in Section 2(b) hereof, or
(B) $72,000,000.
2. Closing; Determination of Closing Net Assets.
(a) Closing. The Closing (the "Closing") of the
purchase and sale of the Shares shall be held at the offices of
Faegre & Benson, 2200 Norwest Center, 90 South Seventh Street,
Minneapolis, Minnesota, at 9:00 a.m. Minneapolis time on May 31,
1994, or, if the conditions to Closing set forth in Section 3 of
this Agreement shall not have been satisfied or waived by the
appropriate party by such time of day on such date, at such time of
day as the parties shall agree on the first business day to occur
following the date on which all of the conditions to Closing set
forth in Section 3 shall have been satisfied or waived as provided
therein (subject to the provisions of Section 15 hereof), or at
such other time of day, place or date as the parties may agree.
Notwithstanding the foregoing, if all of the conditions to Closing
set forth in Section 3 shall have been satisfied or waived as
provided therein by the time and date of Closing determined as
provided above, but Buyer shall not have obtained by such time on
such date financing which, together with Buyer's available cash, is
sufficient to enable Buyer to consummate the transactions
contemplated by this Agreement (which financing Buyer agrees to use
its best efforts to obtain as promptly as practicable), then the
time and date of Closing shall be delayed until such time of day as
the parties shall agree on the first business day to occur
following the date on which such financing first becomes available,
provided that in no event shall the Closing be delayed beyond the
Termination Date (as defined in Section 15(a)(iv) hereof) without
Seller's prior written consent. Buyer agrees that, notwithstanding
the foregoing, the obtaining by Buyer of such financing is not a
condition to Buyer's obligation to purchase and pay for the Shares,
and that nothing stated above shall limit Seller's rights, if any,
to terminate this Agreement under Section 15 hereof and/or to
proceed against Buyer for breach of this Agreement if the Closing
does not occur on or prior to the Termination Date as a result of
the failure of Buyer to obtain such financing. The date on which
the Closing actually occurs and the transactions contemplated
hereby become effective is hereinafter referred to as the "Closing
Date", and the transfer shall for all purposes be considered
effective as of 12:01 a.m. Minneapolis time on the Closing Date.
At the Closing, (i) Buyer shall pay to Seller, by wire transfer to
a bank account designated in writing by Seller prior to the
Closing, immediately available funds in an amount (the "Closing
Date Amount") equal to (A) $70,500,000, plus (B) the lesser of
(1) the amount of the Closing Net Assets, determined in the manner
set forth in Section 2(b) hereof without regard to any post-Closing
determination by the Arbitrator (as hereinafter defined) pursuant
to Section 2(b)(iv) hereof, or (2) $72,000,000, and (ii) Seller
shall deliver to Buyer certificates representing the Shares, duly
endorsed by Seller for transfer to Buyer or accompanied by stock
powers duly executed by Seller in proper form for transfer to
Buyer.
(b) Determination of Closing Net Assets.
(i) A physical inventory of the Frozen Specialty
Business (as defined in Section 8(h) hereof) shall be conducted by
Seller in accordance with the written inventory policies of the
Frozen Specialty Business, copies of which have been delivered to
Buyer, as of the close of business on the last day immediately
preceding the Closing Date, and Buyer shall have the right to
observe the taking of such physical inventory and the
reconciliation thereof. The value of the inventory shown on the
Closing Statement (as hereinafter defined) and included in the
determination of Closing Net Assets shall be based on such physical
inventory. The quantities of each item of inventory determined
pursuant to such physical inventory shall be final and binding for
purposes of determining the value of such inventory and not subject
to any post-Closing adjustment except as may be necessary to
correct manifest computational errors.
(ii) Prior to the Closing, Seller shall prepare, with
Buyer's full participation, a statement (the "Closing Statement")
setting forth Net Assets (as hereinafter defined) as of the close
of business on the last day immediately preceding the Closing Date
("Closing Net Assets"). If there are any disputes between Seller
and Buyer with respect to any matters regarding Closing Net Assets
(other than disputes regarding the quantities of inventory
determined pursuant to the physical inventory conducted under
Section 2(b)(i) hereof, to the extent such physical inventory has
been made final and binding pursuant to Section 2(b)(i)), Seller
and Buyer shall use all reasonable efforts to resolve such disputes
prior to the scheduled time of Closing, which resolutions shall be
reflected in the determination of Closing Net Assets and shall be
final and binding and not subject to any post-Closing adjustment
except as may be necessary to correct manifest computational
errors.
(iii) If there are any disputes between Seller and Buyer
with respect to matters regarding Closing Net Assets (other than
disputes regarding the quantities of inventory determined pursuant
to the physical inventory conducted under Section 2(b)(i) hereof,
to the extent such physical inventory was made final and binding
pursuant to Section 2(b)(i)) which Seller and Buyer mutually
conclude they will be unable to resolve prior to the scheduled time
of Closing, then promptly after reaching such mutual conclusion
each such party, acting in good faith and exercising reasonable
judgment, shall prepare a written statement setting forth in
reasonable detail such matters which remain in dispute and the
Closing Net Assets determined by such party, and shall submit
copies of the same to the other party. If the Closing Net Assets
set forth in Seller's written statement exceed the Closing Net
Assets set forth in Buyer's written statement by $200,000 or less,
then the Closing shall proceed as scheduled based on the Closing
Net Assets set forth in Seller's written statement, which shall be
final and binding and not subject to any post-Closing adjustment
except as may be necessary to correct manifest computational
errors. If the Closing Net Assets set forth in Seller's written
statement exceed the Closing Net Assets set forth in Buyer's
written statement by more than $200,000, then Seller and Buyer
shall immediately submit copies of their written statements to
Arthur Andersen & Co. or, if Arthur Andersen & Co. is unable or
unwilling to act, such nationally recognized independent public
accounting firm as shall be agreed upon by Seller and Buyer in
writing (the "Arbitrator"). The Arbitrator shall review all
matters which remain in dispute (which shall not include any
disputes regarding the quantities of inventory determined pursuant
to the physical inventory conducted under Section 2(b)(i) hereof,
to the extent such physical inventory has been made final and
binding pursuant to Section 2(b)(i)) and endeavor to render in
writing decisions resolving such matters at or prior to the
scheduled time of Closing, which decisions shall be reflected in
the determination of Closing Net Assets (provided that the Closing
Net Assets so determined shall in no event be less than those set
forth in Buyer's written statement nor more than those set forth in
Seller's written statement) and shall be final and binding and not
subject to any post-Closing adjustment except as may be necessary
to correct manifest computational errors. With respect to any such
disputes regarding the value of inventory of the Frozen Specialty
Business, the Arbitrator shall, prior to rendering a decision
resolving such disputes, consult with one or more third parties
selected by the Arbitrator who are recognized industry experts. If
the Arbitrator informs Seller and Buyer that it is unable at or
prior to the scheduled time of Closing to render a decision
resolving all matters which remain in dispute, then the Closing
shall be delayed until such time of day as the parties shall agree
on the first business day to occur following the date on which all
remaining disputes have been resolved, subject to the provisions of
clause (iv) below and Section 15 hereof, provided that the
Arbitrator shall in all events render its decision within five
business days after the previously scheduled time of Closing.
(iv) Notwithstanding the foregoing, if the Arbitrator
informs Seller and Buyer that it is unable at or prior to the
scheduled time of Closing to render a decision only as to any
dispute regarding the value of inventory of the Frozen Specialty
Business (which shall not include any disputes regarding the
quantities of inventory determined pursuant to the physical
inventory conducted under Section 2(b)(i) hereof, to the extent
such physical inventory has been made final and binding pursuant to
Section 2(b)(i)), then the Closing shall proceed as scheduled on
the basis provided below and shall not be delayed until resolution
of such dispute. If the value of such disputed inventory set forth
in Seller's written statement exceeds the value of such disputed
inventory set forth in Buyer's written statement by $200,000 or
less in the aggregate, then the Closing shall proceed based on the
value of such disputed inventory set forth in Seller's written
statement, which shall be final and binding and not subject to any
post-Closing adjustment except as may be necessary to correct
manifest computational errors. If the value of such disputed
inventory set forth in Seller's written statement exceeds the value
of such disputed inventory set forth in Buyer's written statement
by more than $200,000 in the aggregate, then (A) the Closing shall
proceed based on an assumed value of such disputed inventory which
shall equal either (1) the value of such disputed inventory set
forth in Seller's written statement, if the amount in dispute is
$1,000,000 or less, or (2) the average of the value of such
disputed inventory set forth in Seller's written statement and the
value of such disputed inventory set forth in Buyer's written
statement, if the amount in dispute is more than $1,000,000, and
(B) the Arbitrator shall promptly (but in any event within 30 days)
after the Closing render in writing a decision resolving all
remaining disputes regarding such inventory (which shall not
include any disputes regarding the quantities of inventory
determined pursuant to the physical inventory conducted under
Section 2(b)(i) hereof, to the extent such physical inventory has
been made final and binding pursuant to Section 2(b)(i)), provided
that the value of such disputed inventory determined by the
Arbitrator shall in no event be less than the value of such
disputed inventory set forth in Buyer's written statement nor more
than the value of such disputed inventory set forth in Seller's
written statement. If (A) the sum of (1) $70,500,000, plus (2) the
lesser of (x) the Closing Net Assets, determined in the manner set
forth in this Section 2(b) after giving effect to the Arbitrator's
determination, or (y) $72,000,000, exceeds (B) the Closing Date
Amount, then Buyer shall, within ten business days after the
Arbitrator renders its written decision, make payment to Seller by
wire transfer in immediately available funds of the amount of such
excess, together with interest thereon at a rate of 3% per annum
from the Closing Date to the date of payment. If (A) the Closing
Date Amount exceeds (B) the sum of (1) $70,500,000, plus (2) the
lesser of (x) the Closing Net Assets, determined in the manner set
forth in this Section 2(b) after giving effect to the Arbitrator's
determination, or (y) $72,000,000, then Seller shall, within ten
business days after the Arbitrator renders its written decision,
make payment to Buyer by wire transfer in immediately available
funds of the amount of such excess, together with interest thereon
at a rate of 3% per annum from the Closing Date to the date of
payment. As used in this Agreement, the term "Adjusted Purchase
Price" shall mean the Closing Date Amount, less the principal
portion of any amount paid by Seller to Buyer after the Closing
pursuant to this clause (iv) or plus the principal portion of any
amount paid by Buyer to Seller after the Closing pursuant to this
clause (iv), as the case may be, all as adjusted to reflect the
correction of any manifest computational errors.
(v) The procedures for any arbitration pursuant to this
Section 2(b) shall be determined by the Arbitrator, provided that
all disputed matters shall be resolved by the Arbitrator in
accordance with the provisions of clause (vi) hereof. The fees and
disbursements of the Arbitrator shall be borne 50% by Buyer and 50%
by Seller; provided, however, that all other costs and expenses of
Buyer and Seller in connection with any arbitration pursuant to
this Section 2(b) shall be paid in accordance with Section 17.
(vi) As used in this Section 2(b), the term "Net Assets"
shall mean (A) the book value (net of appropriate reserves) of all
assets of the Frozen Specialty Business of a type not expressly
excluded from Net Assets in accordance with the Statement of
Principles and Methodology attached hereto as Exhibit A (the
"Statement of Principles and Methodology"), less (B) the book value
of all liabilities of the Frozen Specialty Business of a type
required to be recorded as liabilities on the face of balance
sheets prepared in accordance with generally accepted accounting
principles and not expressly excluded from Net Assets in accordance
with the Statement of Principles and Methodology; all as determined
on a basis consistent with generally accepted accounting principles
applied by Seller in the preparation of Seller's audited
consolidated financial statements and the methodology set forth in
the Statement of Principles and Methodology.
3. Conditions to Closing.
(a) Buyer's Obligation. The obligation of Buyer to
purchase and pay for the Shares is subject to the satisfaction
prior to the Closing of the following conditions, any one or more
of which may be waived by Buyer:
(i) The representations and warranties of Seller
set forth in this Agreement shall be true and correct in
all material respects as of the date hereof and
immediately prior to the Closing, as though made
immediately prior to the Closing, and Seller shall have
performed and complied in all material respects with all
obligations and covenants required by this Agreement to
be performed and complied with by Seller prior to the
Closing; and Seller shall have delivered to Buyer a
certificate dated the Closing Date and signed by a duly
authorized officer of Seller on its behalf confirming the
foregoing.
(ii) All consents or waivers from third parties to
any instruments, contracts, commitments or agreements
required to be described in Section 4(a) of the
Disclosure Schedule (as defined in the preamble to
Section 4 of this Agreement) in order to avoid a
misrepresentation under Section 4(a) of this Agreement
(which consents or waivers are necessary to permit the
consummation of the transactions contemplated hereby)
shall have been obtained.
(iii) All material consents, approvals, licenses,
permits, orders, authorizations or waivers from
governmental authorities necessary to permit the
consummation of the transactions contemplated hereby, or
the operation by the Company or the Subsidiary (as
defined in Section 4(c)) of the Frozen Specialty Business
immediately after the Closing in substantially the same
manner in which it was operated prior to the Closing,
shall have been obtained.
(iv) Buyer shall have received an opinion dated the
Closing Date of Faegre & Benson, special counsel to
Seller, substantially in the form of Exhibit B attached
hereto and an opinion of Frank W. Bonvino, General
Counsel of Seller, substantially in the form of Exhibit C
attached hereto, together with letters from each such
counsel to Buyer's financing sources permitting such
financing sources to rely on the opinion of such counsel
as if it were addressed and delivered to such financing
sources.
(v) No injunction or order of any court or
administrative agency of competent jurisdiction shall be
in effect as of the Closing which restrains or prohibits
the purchase or sale of the Shares.
(vi) The waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act") shall
have expired or terminated.
(vii) The Frozen Specialty Business shall have had
positive net earnings before interest and income taxes
for the period from November 27, 1993 through and
including the close of business on the last day
immediately preceding the Closing Date, and Seller shall
have delivered to Buyer a certificate dated the Closing
Date and signed by a duly authorized officer of Seller on
its behalf confirming the same (it being understood that
nothing stated in this clause (vii) limits the condition
set forth in clause (i) hereof).
(b) Seller's Obligation. The obligation of Seller to
sell and deliver the Shares to Buyer is subject to the satisfaction
prior to the Closing of the following conditions, any one or more
of which may be waived by Seller:
(i) The representations and warranties of Buyer set
forth in this Agreement shall be true and correct in all
material respects as of the date hereof and immediately
prior to the Closing, as though made immediately prior to
the Closing, and Buyer shall have performed and complied
in all material respects with all obligations and
covenants required by this Agreement to be performed and
complied with by Buyer prior to the Closing; and Buyer
shall have delivered to Seller a certificate dated the
Closing Date and signed by a duly authorized officer of
Buyer on its behalf confirming the foregoing.
(ii) All material consents, approvals, licenses,
permits, orders, authorizations or waivers from
governmental authorities necessary to permit the
consummation of the transactions contemplated hereby
shall have been obtained.
(iii) Seller shall have received an opinion dated
the Closing Date of Skadden, Arps, Slate, Meagher & Flom,
special counsel to Buyer, substantially in the form of
Exhibit D attached hereto and an opinion of special
counsel to Buyer licensed to practice law in the State of
Minnesota and reasonably acceptable to Seller
substantially in the form of Exhibit E attached hereto.
(iv) No injunction or order of any court or
administrative agency of competent jurisdiction shall be
in effect as of the Closing which restrains or prohibits
the purchase or sale of the Shares.
(v) The waiting period under the HSR Act shall have
expired or terminated.
(c) Certificates. Each of the parties hereto will
furnish to the other party such certificates of such party's
officers or others and such other documents to evidence fulfillment
of the conditions set forth in this Section 3 as the other party
may reasonably request.
4. Representations and Warranties of Seller. Seller
hereby represents and warrants to Buyer that, except as set forth
in the Disclosure Schedule accompanying this Agreement (the
"Disclosure Schedule"), the statements contained in this Section 4
are true and correct as of the date of this Agreement.
(a) Organization and Authority of Seller. Seller is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Seller has full corporate
power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. All corporate
acts and proceedings required to be taken to authorize the
execution, delivery and performance by Seller of this Agreement and
the consummation by Seller of the transactions contemplated hereby
have been duly and properly taken. This Agreement has been duly
executed and delivered by Seller and, assuming due authorization,
execution and delivery of this Agreement by Buyer, constitutes a
valid and binding obligation of Seller, enforceable against Seller
in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, moratorium and other similar
laws affecting creditors' rights generally and by general
principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law). The execution and
delivery by Seller of this Agreement do not, and the consummation
by Seller of the transactions contemplated hereby (including
without limitation the transactions contemplated by Section 8(i)
hereof) and compliance by Seller with any of the provisions hereof
will not, with or without notice or passage of time, or both,
(i) conflict with, or result in any violation of, any provision of
the charter or by-laws of any of Seller, the Company or the
Subsidiary, (ii) conflict with, result in any violation of, or
constitute a default (or, with respect to instruments, contracts,
commitments or agreements relating primarily to the Frozen
Specialty Business, give rise to any right of termination,
cancellation or acceleration) under, any instruments, contracts,
commitments or agreements to which Seller, the Company or the
Subsidiary is a party or by which Seller, the Company or the
Subsidiary or the property or assets of Seller, the Company or the
Subsidiary are bound (provided that this clause (ii) excludes, and
no representation under this Section 4(a) is made with respect to,
any instruments, contracts, commitments or agreements relating
primarily to the Frozen Specialty Business which do not constitute
Contracts (as defined in Section 4(m) of this Agreement)), or
(iii) conflict with, or result in any violation of, any judgment,
order, writ, injunction or decree to which Seller, the Company or
the Subsidiary has been specifically identified as subject, or any
material statute, law, ordinance, rule or regulation applicable to
Seller, the Company or the Subsidiary or the property or assets of
Seller, the Company or the Subsidiary. No material consent,
approval, license, permit, order or authorization of, or waiver by,
or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority
or instrumentality, domestic or foreign, is required to be obtained
or made by or with respect to Seller, the Company or the Subsidiary
in order for Seller to execute, deliver and perform this Agreement
or to consummate the transactions contemplated hereby other than
compliance by Seller with and filings by Seller under the HSR Act
and Section 13(a) of the Securities Exchange Act of 1934, as
amended.
(b) The Shares. Seller is the record and beneficial
owner of (and has the right to transfer to Buyer) all of the
Shares, free and clear of all pledges, claims, liens, encumbrances,
security interests, options, charges, rights of third parties and
restrictions whatsoever, except for restrictions upon transfer of
the Shares other than in compliance with federal and state
securities laws, and except for rights of Buyer under this
Agreement and liens created by Buyer. The Shares are not subject
to any voting trust agreement or other contract, agreement,
arrangement, commitment or understanding, including any such
contract, agreement, arrangement, commitment or understanding
restricting or otherwise relating to the voting, dividend rights or
disposition of the Shares, other than this Agreement.
(c) Organization and Standing of the Company and the
Subsidiary. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware. Minnesota Foodservice, Inc. (the "Subsidiary") is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Minnesota. Each of the Company and
the Subsidiary has full corporate power and authority necessary to
own, lease or otherwise hold and operate its properties and assets
and to carry on the Frozen Specialty Business as presently
conducted. Each of the Company and the Subsidiary is duly
qualified or licensed and in good standing to do business as a
foreign corporation in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except where
the failure to be so qualified or licensed would not have a
Material Adverse Effect (as defined in Section 20(i)).
Section 4(c) of the Disclosure Schedule sets forth a complete and
correct list of all jurisdictions in which the Company and the
Subsidiary are qualified or licensed to do business as a foreign
corporation. Seller has made available to Buyer true and complete
copies of the charter, as amended to date, and the by-laws, as in
effect on the date hereof, of each of the Company and the
Subsidiary, and true and complete copies of the stock certificates
and the stock transfer ledgers of each of the Company and the
Subsidiary. The minutes of the meetings of the shareholders and
directors of each of the Company and the Subsidiary made available
by Seller to Buyer are, to the Knowledge of Seller, correct and
complete in all material respects.
(d) Capital Stock of the Company and the Subsidiary.
The authorized capital stock of the Company consists of 1,000
shares of Common Stock, par value $1.00 per share, all 1,000 of
which shares are duly authorized, validly issued and outstanding
and fully paid and nonassessable. The authorized capital stock of
the Subsidiary consists of 1,000 shares of Common Stock, par value
$1.00 per share, all 1,000 of which shares are duly authorized,
validly issued and outstanding and fully paid and nonassessable.
Except as set forth above, there are no shares of capital stock of
either the Company or the Subsidiary outstanding. Neither the
Shares nor any outstanding shares of capital stock of the
Subsidiary have been issued in violation of any preemptive or
similar rights. There are no outstanding subscriptions, calls,
warrants, options, agreements, convertible or exchangeable
securities or other commitments pursuant to which Seller, the
Company or the Subsidiary is or may become obligated to issue,
sell, transfer or otherwise dispose of, or purchase, return, redeem
or otherwise acquire, any of the Shares or any other shares of
capital stock of the Company or the Subsidiary other than this
Agreement, and no capital stock of the Company or the Subsidiary is
reserved for issuance for any purpose. The Company owns
beneficially and of record all of the outstanding shares of capital
stock of the Subsidiary, free and clear of all pledges, claims,
liens, encumbrances, security interests, options, charges, rights
of third parties and restrictions whatsoever, except for
restrictions upon transfer of such shares other than in compliance
with federal and state securities laws.
(e) Equity Interests. Except for the Subsidiary, there
are no direct or indirect subsidiaries of the Company or the
Subsidiary, or corporations, partnerships, joint ventures,
unincorporated associations, trusts or other organizations or
entities in which the Company or the Subsidiary, directly or
indirectly, has, or pursuant to any agreement or agreements will
have the right to acquire, any equity interest or investment.
(f) Financial Statements.
(i) Attached hereto as, respectively, Exhibits F and G
are (A) audited Special-Purpose Statements of Assets, Liabilities
and Investments and Advances by Parent of the Frozen Specialty
Business as of February 29, 1992, February 27, 1993 and
November 27, 1993, and audited Special-Purpose Statements of
Revenues and Expenses, and Special-Purpose Statements of Cash
Flows, of the Frozen Specialty Business for the fiscal years ended
February 29, 1992 and February 27, 1993, and for the nine-month
period ended November 27, 1993, together with the report thereon of
KPMG Peat Marwick (collectively, the "Audited Financial
Statements"), and (B) an unaudited Pro Forma Statement of Net
Assets of the Frozen Specialty Business as of November 27, 1993
(the "Interim Statement"). Except as expressly disclosed therein,
the Audited Financial Statements fairly present, in all material
respects, the assets, liabilities and financial condition of the
Frozen Specialty Business at their respective dates and the results
of operations of the Frozen Specialty Business for the periods
covered thereby, and have been prepared from and in accordance with
the books and records of the Frozen Specialty Business and in
conformity with generally accepted accounting principles applied on
a basis consistent with Seller's audited consolidated financial
statements. Except as expressly disclosed therein, the Interim
Statement fairly presents, in all material respects, the Net Assets
of the Frozen Specialty Business at November 27, 1993, and has been
prepared from and in accordance with the books and records of the
Frozen Specialty Business and in conformity with the methodology
set forth in the Statement of Principles and Methodology.
(ii) Except as and to the extent of the amounts
specifically reflected or reserved against in the most recent
Special-Purpose Statement of Assets, Liabilities and Investments
and Advances by Parent included in the Audited Financial
Statements, or except as expressly disclosed therein or excepted
therefrom, neither the Company nor the Subsidiary had, as of the
date of such statement, any material liabilities or obligations of
any nature (whether secured or unsecured, whether absolute,
accrued, contingent or otherwise and whether due or to become due)
which would be required by generally accepted accounting principles
to be reflected on the face of such statement or in the footnote
disclosures thereto, other than the Surimi Liabilities (as defined
in Section 8(h) hereof).
(iii) Notwithstanding the foregoing or any other
provision of this Agreement, no representation is made as to the
accuracy, fairness or reasonableness of any projections provided to
Buyer or the assumptions used in preparing the same, or as to the
likelihood that such projections will be achieved.
(g) Nonforeign Certification. Seller is not a "foreign
person" within the meaning of Section 1445 of the Code (as defined
below).
(h) Taxes.
(i) For purposes of this Agreement, (A) "Tax" or "Taxes"
shall mean any and all federal, state, local, foreign and other
taxes, levies, fees, imposts, duties and governmental charges of
whatever kind (including any interest, penalties or additions to
tax imposed in connection therewith or with respect thereto),
including, without limitation, taxes imposed on, or measured by,
income, franchise, profits or gross receipts, and ad valorem, value
added, sales, use, service, real or personal property, capital
stock, license, payroll, withholding, employment, social security,
unemployment compensation, utility, severance, production, excise,
stamp, occupation, premium, windfall profits, transfer and gains
taxes, and customs duties; (B) "Pre-Closing Tax Period" shall mean
all taxable periods ending before the Closing Date and the portion
ending before the Closing Date of any taxable period that includes
(but does not begin on) such day; (C) "Code" shall mean the
Internal Revenue Code of 1986, as amended, and the regulations
thereunder; and (D) "Tax Return" shall mean returns, reports,
information statements and other documentation (including any
additional or supporting material) filed or maintained, or required
to be filed or maintained, in connection with the calculation,
determination, assessment or collection of any Tax.
(ii) Each of the Company and the Subsidiary, and any
affiliated group, within the meaning of Section 1504 of the Code,
of which the Company or the Subsidiary is or has been a member, has
filed or caused to be filed in a timely manner or has received an
appropriate extension of time to file all material Tax Returns
required to be filed by it. All Taxes shown to be due on such Tax
Returns have been paid in full, or will be specifically identified
by nature, period and amount in the Closing Statement, included as
a liability in the final determination of Closing Net Assets and
taken into account in the calculation of the Adjusted Purchase
Price.
(iii) Neither Seller nor any of its affiliates has made
with respect to the Company or the Subsidiary, or any property held
by the Company or the Subsidiary, any consent under Section 341(f)
of the Code. No property of the Company or the Subsidiary is "tax
exempt use property" within the meaning of Section 168(h) of the
Code. Neither the Company nor the Subsidiary is a party to any
lease made pursuant to Section 168(f)(8) of the Internal Revenue
Code of 1954, as amended. Neither the Company nor the Subsidiary
is a party to any agreement that has resulted in or could result in
an obligation to make payments that would not be deductible under
Section 280G of the Code.
(iv) With respect to any Taxes which are attributable to
the business or operations of the Company or the Subsidiary,
(A) all tax deficiencies asserted or assessed have been paid or
finally settled; (B) all amounts that are required to be collected
or withheld in connection with amounts paid or owing to any
employee or other third party have been duly collected or withheld,
and have been duly remitted or deposited in accordance with law;
(C) to the Knowledge of Seller, no Tax Returns filed or required to
be filed are being examined by the Internal Revenue Service or
other appropriate taxing authority; (D) there is no outstanding
request for any extension of time within which to pay any Taxes or
file any Tax Return; (E) there has been no waiver or extension of
any applicable statute of limitations for the assessment or
collection of any Taxes; (F) there is, to the Knowledge of Seller,
no pending or threatened action, audit, proceeding or investigation
for the assessment or collection of any Taxes; (G) there are no
requests for rulings, subpoenas or information pending with respect
to any taxing authority; (H) any adjustment of Taxes made by the
Internal Revenue Service in any examination which is required to be
reported to state, local, foreign or other taxing authorities has
been so reported, and any additional Taxes due with respect thereto
have been paid; and (I) no power of attorney has been granted by
the Company and/or the Subsidiary, and is currently in force, with
respect to any matter relating to Taxes.
(i) Title to Tangible Personal Property. Each of the
Company and the Subsidiary has good and valid title to all tangible
personal property which it owns, in each case free and clear of all
liens, security interests and other encumbrances, except
(i) mechanics', materialmen's, carriers', workmen's,
warehousemen's, repairmen's, landlord's or other like liens
securing obligations that are not delinquent; (ii) liens for Taxes
and other governmental charges which are not due and payable or
which may be paid without penalty; (iii) liens, security interests
and other encumbrances evidenced by any mortgage agreement, deed of
trust, security agreement, financing statement, purchase money
agreement, conditional sales contract, capital lease, operating
lease or license which is described in Section 4(m)(iv), (v) or (x)
of the Disclosure Schedule or the non-disclosure of which therein
does not constitute a misrepresentation under Section 4(m)(iv), (v)
or (x) of this Agreement; (iv) imperfections of title and
encumbrances which do not, individually or in the aggregate,
materially impair the value or the continued use and operation in
the current manner of the assets to which they relate; and
(v) other liens, security interests and encumbrances, if any,
described in Section 4(i) of the Disclosure Schedule (the liens,
security interests and other encumbrances described in clauses (i),
(ii) and (iii) above being hereinafter referred to collectively as
"Permitted Liens"). This paragraph (i) does not relate to the
capital stock of the Subsidiary, such stock being the subject of
Section 4(d).
(j) Title to Real Property. Section 4(j) of the
Disclosure Schedule sets forth a complete list and brief
description of all real property owned in fee by the Company or the
Subsidiary (individually, an "Owned Property" and collectively, the
"Owned Properties") and all real property leased by the Company or
the Subsidiary (individually, a "Leased Property" and collectively,
the "Leased Properties"). The Company or the Subsidiary has good
fee title to each Owned Property and, assuming good title in the
landlord, a valid leasehold interest in each Leased Property (the
Owned Properties and the Leased Properties being sometimes referred
to herein individually as a "Company Property" and collectively as
the "Company Properties"), in each case free and clear of all
mortgages, liens, security interests, easements, restrictive
covenants, rights-of-way and other encumbrances, except
(i) Permitted Liens; (ii) mortgages, liens, security interests,
easements, restrictive covenants, rights-of-way and other
encumbrances on any Company Property covered by the Title
Commitments (as hereinafter defined) which are shown on the Title
Commitments or are otherwise of record (other than any such
encumbrance not shown on the Title Commitments of which Seller has
Knowledge and which materially interferes with the continued use
and operation of the Company Property to which it relates in the
manner in which such Company Property is currently used and
operated); (iii) any conditions that may be shown by a current,
accurate survey or physical inspection of any Company Property
(other than any such condition not shown on the Surveys (as
hereinafter defined) of which Seller has Knowledge and which
materially interferes with the continued use and operation of the
Company Property to which it relates in the manner in which such
Company Property is currently used and operated); (iv) mortgages,
liens, security interests, easements, restrictive covenants,
rights-of-way and other encumbrances and/or defects, whether or not
of record, against the fee title or other estate held by the
landlord with respect to any Leased Property; (v)(A) platting,
subdivision, zoning, building and other similar legal requirements,
(B) easements, restrictive covenants, rights-of-way, encroachments
and other similar encumbrances, whether or not of record, and
(C) reservations of coal, oil, gas, minerals and mineral interests,
whether or not of record, none of which items set forth in this
clause (v) individually or in the aggregate materially interfere
with the continued use and operation of the Company Property to
which they relate in the manner in which such Company Property is
currently used and operated; and (vi) other mortgages, liens,
security interests, easements, restrictive covenants, rights-of-way
and encumbrances, if any, described in Section 4(j) of the
Disclosure Schedule. There are no eminent domain proceedings
pending or, to the Knowledge of the Seller, threatened against any
Company Property or any material portions thereof. Seller has
delivered or caused to be delivered to Buyer, with respect to the
Owned Properties and certain parcels of Leased Property, true and
correct copies of the title insurance commitments and endorsements
described in Section 4(j) of the Disclosure Schedule (collectively,
the "Title Commitments") and true and correct copies of the surveys
described in Section 4(j) of the Disclosure Schedule (collectively,
the "Surveys").
(k) Condition of Assets. The facilities and equipment
of the Company and the Subsidiary relating to the Frozen Specialty
Business, in the aggregate, are adequate to conduct the Frozen
Specialty Business substantially in the manner in which the Frozen
Specialty Business was conducted during the nine-month period ended
November 27, 1993.
(l) Intellectual Property. Section 4(l) of the
Disclosure Schedule sets forth a true and complete list of (i) all
domestic and foreign letters patent, patents and patent
applications, and all registrations of trademarks, trade names,
service marks and copyrights, and applications for such
registrations, which are held by the Company or the Subsidiary
(other than those used primarily in the operation of the Surimi
Business (as defined in Section 8(h) hereof)), or which are held by
Seller and used in the operation of the Frozen Specialty Business,
together in each case with the identity of the owner thereof, and
(ii) all licenses of the Company or the Subsidiary of, and all
other material rights of the Company or the Subsidiary to use, any
patents, trademarks, software and know-how held by others (other
than those used primarily in the operation of the Surimi Business),
and all licenses of Seller of, and other material rights of Seller
to use, any patents, trademarks, software and know-how held by
others and used in the operation of the Frozen Specialty Business
(in each case other than licenses of commercially available
computer software and licenses calling for annual payments not in
excess of $25,000 per license or $50,000 in the aggregate for all
such licenses), together in each case with the identity of the
licensor (or other owner) and licensee (or other user) thereof.
The Company or the Subsidiary owns (free and clear of all liens,
security interests and other charges and encumbrances other than
(i) liens for Taxes and other governmental charges which are not
due and payable or which may be paid without penalty, and
(ii) other liens, security interests and encumbrances, if any,
described in Section 4(l) of the Disclosure Schedule), or Seller,
the Company or the Subsidiary has a valid right to use without
payment to any other party (other than pursuant to a license
described in Section 4(l) of the Disclosure Schedule or the
non-disclosure of which therein would not constitute a
misrepresentation under Section 4(l) of this Agreement), the
patents, trademarks, trade names, service marks and copyrights used
in the operation of the Frozen Specialty Business (the
"Intellectual Property"), except where the failure of the Company
or the Subsidiary to own, or the failure of Seller, the Company or
the Subsidiary to have the right to use, any such Intellectual
Property would not have, individually or in the aggregate, a
Material Adverse Effect. There is no claim or litigation pending
(with respect to which Seller, the Company or the Subsidiary has
been served or otherwise notified) or, to the Knowledge of Seller,
threatened by any other person challenging or questioning either
the right of the Company or the Subsidiary to use, or the validity
of, any of the Intellectual Property in any jurisdiction, domestic
or foreign. To the Knowledge of Seller, no Intellectual Property,
or product, process, method, substance, part or other material of
the Frozen Specialty Business, presently being sold or employed by
the Company or the Subsidiary infringes on the rights owned or held
by any other person in any material respect. To the Knowledge of
Seller, no product, license, patent, trade name, trade dress,
trademark, process, method, substance, part or other material
presently being sold or employed by any other person infringes any
rights of the Company or the Subsidiary with respect to the
Intellectual Property. None of Seller, the Company or the
Subsidiary has received any written notice that any of the
Intellectual Property has been declared unenforceable or otherwise
invalid by any court or governmental authority.
(m) Contracts. Section 4(m) of the Disclosure Schedule
describes all of the following agreements, contracts,
understandings or arrangements (and all amendments thereto)
relating primarily to the Frozen Specialty Business to which
Seller, the Company or the Subsidiary is a party or by which
Seller, the Company or the Subsidiary or the property or assets of
Seller, the Company or the Subsidiary are bound:
(i) each employment agreement (other than those that
are or at the Closing will be terminable at will by the
Company or the Subsidiary without penalty);
(ii) each agreement containing a covenant not to
compete that restricts the freedom of the Company or the
Subsidiary to compete in any line of business with any
person or in any area or territory;
(iii) each agreement or contract with Seller or any
affiliate of Seller (other than the Company or the
Subsidiary) or any current officer or director of the
Company or the Subsidiary or of Seller or any other
affiliate of Seller (other than (A) employment agreements
which are described in Section 4(m)(i) of the Disclosure
Schedule or the non-disclosure of which therein does not
constitute a misrepresentation under Section 4(m)(i) of
this Agreement, (B) agreements or contracts constituting
Seller's Plans (as defined in Section 4(p) hereof), and
(C) agreements or contracts calling for annual payments
not in excess of $25,000 per agreement or contract or
$50,000 in the aggregate for all such agreements and
contracts);
(iv) each operating lease (as lessor or lessee) of
any Company Property or any tangible personal property
(except leases of tangible personal property calling for
annual payments not in excess of $25,000 per lease or
$50,000 in the aggregate for all such leases);
(v) each license agreement (other than licenses of
commercially available software and licenses calling for
annual payments not in excess of $25,000 per license or
$50,000 in the aggregate for all such licenses);
(vi) each management, service, consulting or other
similar type of contract under which there exists an
aggregate future liability in excess of $25,000 per
contract;
(vii) each advertising agreement under which there
exists an aggregate future liability in excess of $25,000
per contract;
(viii) each written agreement for the purchase or
sale of raw materials, supplies or products in effect as
of the date of this Agreement (other than purchase orders
entered into in the ordinary course of business on an
order-by-order basis and ongoing purchase or sale
agreements calling for annual purchases or sales not in
excess of $50,000 per agreement);
(ix) other than with respect to intercompany loans
or advances to be cancelled without repayment effective
at the Closing pursuant to Section 8(g) hereof, each
agreement or contract under which any money has been
borrowed or loaned, each note, bond, indenture or other
instrument evidencing indebtedness for borrowed money,
and each guaranty of indebtedness for borrowed money;
(x) each mortgage agreement, deed of trust, security
agreement, purchase money agreement, conditional sales
contract or capital lease (other than (A) any purchase
money agreement, conditional sales contract or capital
lease evidencing liens only on tangible personal property
under which there exists an aggregate future liability
not in excess of $25,000 per contract or lease,
(B) protective filings of financing statements under the
Uniform Commercial Code and (C) mortgage agreements,
deeds of trust, security agreements, purchase money
agreements, conditional sales contracts and capital
leases evidencing liens on any Company Property covered
by Title Commitments which are shown on the Title
Commitments or are otherwise of record (other than any
such agreement not shown on the Title Commitments of
which Seller has Knowledge and which materially
interferes with the continued use and operation of the
Company Property to which it relates in the manner in
which such Company Property is currently used and
operated);
(xi) each partnership or joint venture agreement; or
(xii) each other agreement, contract, understanding
or arrangement (other than contracts for the purchase or
sale of goods or services entered into in the ordinary
course of business, Collective Bargaining Agreements, and
agreements, contracts, understandings or arrangements
constituting Seller's Plans) which (A) is not terminable
on ninety or fewer days' notice without penalty, (B) is
over one year in length of obligation by the Seller,
Company or the Subsidiary, and (C) involves an aggregate
future liability in excess of $50,000 per contract.
Each agreement, contract, understanding and arrangement required to
be described in Section 4(m) of the Disclosure Schedule and each
mortgage agreement, deed of trust, security agreement, purchase
money agreement, conditional sales contract and capital lease which
would have been required to be described in Section 4(m) of the
Disclosure Schedule but for the exclusion set forth in
clause (x)(C) above (collectively, the "Contracts") is or at the
Closing will be (i) a valid and binding obligation of the Company
or the Subsidiary and, to the Knowledge of Seller, the other
parties thereto, (ii) in full force and effect, and
(iii) enforceable by the Company or the Subsidiary in all material
respects in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium
and other similar laws affecting creditors' rights generally and by
general principles of equity (regardless of whether enforceability
is considered in a proceeding in equity or at law). None of
Seller, the Company or the Subsidiary is (with or without the lapse
of time or the giving of notice, or both) in material breach of or
in material default under any of the Contracts. To the Knowledge
of Seller, no other party to any of the Contracts is (with or
without the lapse of time or the giving of notice, or both) in
material breach of or in material default under such Contract, or
has given written notice that it intends to terminate prior to its
expiration date, or alter in any manner materially adverse to the
Company or the Subsidiary, its performance under such Contract. A
true and correct copy of each of the written Contracts and an
accurate summary of each of the other Contracts has been made
available to Buyer. For purposes of this Section 4(m), contracts
terminable at will shall mean oral or written agreements which do
not provide for specified terms, are expressly made terminable at
will or are terminable without penalty, regardless of whether any
covenants of good faith and fair dealing may be implied, as a
matter of law, in connection with any termination thereof.
(n) Litigation; Decrees. No legal, administrative,
arbitration or other proceeding or governmental investigation is
pending (with respect to which Seller, the Company or the
Subsidiary has been served or otherwise notified) or, to the
Knowledge of Seller, threatened (i) against Seller which, if
decided adversely to Seller, would adversely affect the ability of
Seller to consummate the transactions contemplated hereby, or
(ii) against Seller, the Company or the Subsidiary with respect to
the Frozen Specialty Business (other than (A) worker's compensation
claims consistent with the historical experience of the Frozen
Specialty Business which were not pending (or which were pending
but with respect to which none of Seller, the Company or the
Subsidiary had been served or otherwise notified) or, to the
Knowledge of Seller, threatened prior to February 25, 1994, and
(B) legal, administrative, arbitration or other proceedings or
governmental investigations described in the Environmental
Reports). The foregoing representation does not relate to Taxes,
all representations with respect to which are the subject of
Section 4(h). Neither the Company nor the Subsidiary is
specifically identified as a party subject to any restrictions or
limitations under any judgment, order, injunction or decree of any
court, arbitrator, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign.
(o) Insurance. The primary, excess and umbrella
policies of insurance currently maintained with respect to the
Company and the Subsidiary and their respective assets, properties
and businesses are listed in Section 4(o) of the Disclosure
Schedule. None of Seller, the Company or the Subsidiary has at any
time during the three years immediately preceding the date of this
Agreement been unable to obtain at competitive rates insurance
coverage with respect to the Frozen Specialty Business of types and
in amounts customary for similar companies in the same business.
(p) Employee Benefits; ERISA.
(i) Section 4(p) of the Disclosure Schedule identifies
each employee pension, retirement, profit sharing, stock bonus,
stock option, stock purchase, bonus, incentive, deferred
compensation, hospitalization, medical, dental, vision, vacation,
insurance, sick pay, disability, severance, or other plan, fund,
program, policy, contract or arrangement (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")) providing employee benefits maintained or contributed to
by Seller, the Company or the Subsidiary in which any employees of
the Frozen Specialty Business are participating or under which any
current or former employees of the Frozen Specialty Business have
accrued any benefits to which they remain entitled (the "Seller's
Plans"). Seller has provided Buyer with true and complete copies
of all written Seller's Plans and accurate summaries of all other
Seller's Plans.
(ii) Except as provided in Section 9 of this Agreement
(and except with respect to (A) the general severance policy
included within Seller's Plans (provided that nothing herein shall
limit Seller's agreement with Buyer under Section 9(d) of this
Agreement to pay severance to certain employees of the Frozen
Specialty Business after the Closing), (B) any "multiemployer plan"
(as defined in Section 3(37) of ERISA) included within Seller's
Plans, and (C) any incentive plan included within Seller's Plans
which is designated as a "Non-Executive Incentive Plan" in
Section 4(p) of the Disclosure Schedule ("Non-Executive Incentive
Plan(s)")), none of Buyer, the Company or the Subsidiary will have
after the Closing any liability of any kind payable with respect to
any Seller's Plan that is attributable to benefits accrued prior to
the Closing or the operation or administration of such Seller's
Plan prior to the Closing. In addition, none of Buyer, the Company
or the Subsidiary will have after the Closing any liability of any
kind with respect to any similar plan, fund, program, policy,
contract or arrangement maintained by Seller or any of its
affiliates which is not a Seller's Plan as defined in the preceding
paragraph.
(iii) All contributions required to be made or accrued
by Seller, the Company or the Subsidiary to any Seller's Plan which
is a multiemployer plan or a Non-Executive Incentive Plan for all
periods ending prior to the Closing Date (including periods from
the first day of the current plan year through the last day
immediately preceding the Closing Date) have been or will be prior
to the Closing Date either made by Seller, or made or accrued by
the Company or the Subsidiary. If Seller, the Company and the
Subsidiary were to engage in a complete withdrawal from any such
multiemployer plan immediately prior to the Closing, no withdrawal
liability would be owed to that plan because of the "de minimis"
rule in Section 4209 of ERISA.
(q) Absence of Changes or Events. Since November 27,
1993, the Frozen Specialty Business has been conducted in the
ordinary course substantially consistent with past practice.
Without limiting the generality of the immediately preceding
sentence, since November 27, 1993, the Frozen Specialty Business
has not (except that clauses (ii), (iii) and (iv) apply only to the
Company and the Subsidiary and not the Frozen Specialty Business),
and neither the Company nor the Subsidiary has, as the case may be,
except as contemplated by this Agreement:
(i) suffered any event, change, situation or development
which would have a Material Adverse Effect, other than changes
relating to the historic seasonality of the Frozen Specialty
Business;
(ii) amended its charter or by-laws;
(iii) declared, paid or set aside for payment or making
any dividend or made any other distribution of any of its assets
with respect to the Shares or the capital stock of the Subsidiary
(other than (A) distributions (as dividends, loans or advances) of
any assets by the Subsidiary to the Company) or (B) distributions
(as dividends, loans or advances) of cash by the Company or the
Subsidiary to Seller);
(iv) redeemed or otherwise acquired any shares of its
capital stock, or issued, or authorized or proposed the issuance
of, any capital stock or any option, warrant or right relating
thereto;
(v) adopted or amended any Seller's Plan prior to the
date of this Agreement in a manner which would materially increase
the benefits of employees of the Frozen Specialty Business or
entered into or amended any Collective Bargaining Agreement;
(vi) granted to any employee of the Frozen Specialty
Business any increase in compensation payable or to become payable
or other material benefits, except as was required under existing
agreements or in the ordinary course of business consistent with
past practice or increases for which Seller or any of its
affiliates (other than the Company or the Subsidiary) are solely
obligated; or permitted any sums or other corporate assets to be
paid to or withdrawn from the Company or the Subsidiary by the
directors or officers of the Company or the Subsidiary, except for
ordinary compensation and fees, payments under established benefit
plans and ordinary expense reimbursement and similar payments;
(vii) incurred, assumed or guaranteed any indebtedness
for borrowed money other than intercompany indebtedness to be
cancelled without repayment effective at the Closing pursuant to
Section 8(g) hereof and other indebtedness incurred in the ordinary
course of business consistent with past practice that does not
exceed $50,000 in aggregate principal amount and is prepayable at
any time without penalty;
(viii) granted any mortgage, pledge, lien or encumbrance
on, or agreed to the imposition of any restriction or charge of any
kind (including any lease or license) with respect to, any of its
assets, other than pursuant to purchase money agreements,
conditional sales contracts, capital leases, operating leases or
licenses the non-disclosure of which in Section 4(m)(iv), (v) or
(x) of the Disclosure Schedule would not constitute a
misrepresentation under Section 4(m)(iv), (v) or (x) of this
Agreement;
(ix) cancelled any indebtedness for borrowed money owing
to it having an aggregate value, together with all other such
indebtedness cancelled since November 27, 1993, of more than
$50,000, or waived any other claims or rights of material value
(other than settlements of trade accounts in the ordinary course of
business);
(x) except for distributions (as dividends, loans or
advances) described in clause (iii) above and except for
intercompany transactions in the ordinary course of business,
loaned or advanced any amount to, or sold, transferred or leased
any of its assets to, or entered into any agreement or arrangement
with, Seller or any of its affiliates (other than the Company or
the Subsidiary);
(xi) made any change in any method of accounting or
accounting practice or policy other than those required by
generally accepted accounting principles or contemplated in the
Statement of Principles and Methodology;
(xii) purchased or otherwise acquired any assets of the
Frozen Specialty Business or made any capital expenditures relating
to the Frozen Specialty Business (other than (i) purchases of
inventory in the ordinary course of business consistent with past
practice and (ii) capital expenditures and other purchases of
assets which, together with all other capital expenditures and
other purchases of assets relating to the Frozen Specialty Business
made since November 27, 1993, do not exceed $2,000,000 in the
aggregate);
(xiii) sold or otherwise disposed of any assets of the
Frozen Specialty Business (other than (i) inventory in the ordinary
course of business consistent with past practice and (ii) any other
assets with an individual book value of less than $100,000 and an
aggregate book value, together with all such other assets disposed
of since November 27, 1993, of less than $250,000);
(xiv) modified, amended or terminated in any respect
materially adverse to the business, assets, condition (financial or
otherwise) or results of operations of the Frozen Specialty
Business any of the Contracts, except terminations upon expiration
of a Contract's term;
(xv) paid, discharged or satisfied any material claim,
lien, encumbrance or liability (whether absolute, accrued,
contingent or otherwise and whether due or to become due) other
than in the ordinary course of business consistent with past
practice; or
(xvi) agreed, whether in writing or otherwise, to do any
of the foregoing.
(r) Compliance with Laws. Seller, the Company and the
Subsidiary are conducting the Frozen Specialty Business in
compliance with all applicable statutes, laws, ordinances, rules,
orders, codes, zoning restrictions, licenses, concessions, permits
and regulations of any governmental authority or instrumentality,
domestic or foreign (including common law), including but not
limited to, all applicable labor, civil rights, food and
occupational safety and health laws and regulations, except for
noncompliance disclosed in the Environmental Reports and
noncompliance which would not have, individually or in the
aggregate, a Material Adverse Effect. Seller, the Company and the
Subsidiary together have all governmental licenses and permits
necessary to conduct the Frozen Specialty Business as currently
conducted, such governmental licenses and permits are in full force
and effect, and no proceedings are pending (with respect to which
Seller, the Company or the Subsidiary has been served or otherwise
notified) or, to the Knowledge of Seller, threatened seeking the
revocation or limitation of any such governmental licenses or
permits, except in each case for governmental licenses and permits
the lack of possession of which by Seller, the Company or the
Subsidiary would not have, individually or in the aggregate, a
Material Adverse Effect. All material governmental licenses and
permits possessed by Seller, the Company or the Subsidiary and used
in the operation of the Frozen Specialty Business are listed in
Section 4(r) of the Disclosure Schedule. Neither the Company nor
the Subsidiary is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended. This Section 4(r) does
not relate to Taxes, all representations with respect to which are
the subject of Section 4(h).
(s) Environmental Matters.
(i) Each of the Company and the Subsidiary is, and the
Frozen Specialty Business is being conducted, in compliance with
all Environmental Laws relating to the property of the Frozen
Specialty Business or otherwise applicable to the Frozen Specialty
Business, except for noncompliance disclosed in the Environmental
Reports and noncompliance which would not have, individually or in
the aggregate, a Material Adverse Effect.
(ii) Except as disclosed in the Environmental Reports,
and except for allegations of noncompliance which would not have,
individually or in the aggregate, a Material Adverse Effect,
neither the Company nor the Subsidiary have received any written
communication within the three years preceding the date of this
Agreement from a governmental authority that alleges that the
Company or the Subsidiary is not in full compliance with any
Environmental Laws relating to the property of the Frozen Specialty
Business or otherwise applicable to the Frozen Specialty Business.
(iii) Except as disclosed in the Environmental Reports,
and except for Environmental Claims which would not have,
individually or in the aggregate, a Material Adverse Effect, there
have been no Environmental Claims made against the Company and the
Subsidiary within the three years preceding the date of this
Agreement.
(iv) To the Knowledge of Seller, except as disclosed in
the Environmental Reports, no Hazardous Substance has been disposed
of, spilled or otherwise released by the Company, the Subsidiary or
any other person on any parcel of Company Property, or by the
Company or the Subsidiary from any parcel of Company Property to
the surrounding environment or any site away from such parcel of
Company Property, at any time since such parcel of Company Property
was directly or indirectly acquired by Seller, in such a way as to
create any material current unpaid or future liability of the
Company or the Subsidiary under any Environmental Laws.
(v) To the Knowledge of Seller, except as disclosed in
the Environmental Reports, there are no underground storage tanks,
abandoned wells or landfills on any parcel of Company Property.
(vi) Seller has delivered or caused to be delivered to
Buyer, with respect to the Owned Properties and certain parcels of
Leased Property, true and complete copies of the environmental
reports described in Section 4(s) of the Disclosure Schedule
(collectively, the "Environmental Reports").
(vii) The following definitions apply to this
Section 4(s):
(A) "Hazardous Substance" shall have the meaning
set out in Section 101(14) of the Federal Comprehensive
Environmental Response, Compensation and Liability Act of
1980, 42 U.S.C. 9601(14), as in effect on the date
hereof, except that, for purposes of this Agreement, the
term also shall include (A) petroleum (crude oil) and
natural gas (whether existing as a gas or a liquid), and
(B) with respect to any Company Property, any substance
defined as hazardous or toxic by any state or local
regulatory agency having jurisdiction over the operations
of the Company or the Subsidiary at such Company
Property;
(B) "Environmental Laws" means all federal, state,
local and foreign laws, duties and regulations (including
common law) now in effect relating to pollution,
compensation for damage or injury caused by pollution or
protection of human health or the environment;
(C) "Environmental Claim" means any written
communication by a governmental authority alleging
potential liability of the Company or the Subsidiary with
respect to the Frozen Specialty Business (including,
without limitation, potential liability for investigatory
costs, cleanup costs, governmental response costs,
natural resource damages, property damages, personal
injuries or penalties), or by any other person
threatening litigation for alleged liability of the
Company or the Subsidiary with respect to the Frozen
Specialty Business (including, without limitation,
liability for property damages or personal injuries), in
either case arising out of, based upon or resulting from
(1) the presence, or release into the environment, of any
material or form of energy at any location, whether or
not owned by the Company or the Subsidiary or (2) any
violation, or alleged violation, of any Environmental
Laws.
(t) Employee and Labor Relations. Section 4(t) of the
Disclosure Schedule lists all written personnel policies, rules or
procedures applicable to employees of the Frozen Specialty
Business. As of November 27, 1993 and as of the last day
immediately preceding the Closing Date, the Company and the
Subsidiary had or will have paid in full to, or accrued on behalf
of, all employees of the Frozen Specialty Business all material
wages, salaries, vacation pay, commissions, bonuses (other than
bonuses payable under any incentive plan which is designated as an
"Executive Incentive Plan" in Section 4(p) of the Disclosure
Schedule, for all of which bonuses that are not settled at or prior
to the Closing Seller will remain liable after the Closing) and
other direct compensation for services performed by them to such
date, and all amounts required to be reimbursed to such employees
as of such date. Section 4(t) of the Disclosure Schedule lists all
collective bargaining agreements and other contracts with any labor
union representing employees of the Frozen Specialty Business to
which Seller, the Company or the Subsidiary is a party or by which
Seller, the Company or the Subsidiary is bound (collectively, the
"Collective Bargaining Agreements"), and all such agreements or
contracts currently being negotiated. No labor strikes, lockouts
or material labor disputes or work stoppages involving the
employees of the Frozen Specialty Business are, or at any time
during the three years immediately preceding the date of this
Agreement have been, pending or, to the Knowledge of Seller,
threatened against the Company or the Subsidiary. There are (i) no
unfair labor practice charges or grievances pending (with respect
to which Seller, the Company or the Subsidiary has been served or
otherwise notified) before the National Labor Relations Board or
any comparable foreign, state or local agency as of the date of
this Agreement relating to any past or present employee of the
Frozen Specialty Business, and (ii) to the Knowledge of Seller, no
union organizational campaigns presently in progress and no
existing questions concerning representation with respect to the
employees of the Frozen Specialty Business. Neither the Company
nor the Subsidiary has any existing bargaining obligations with any
labor organization that represents employees of the Frozen
Specialty Business. None of Seller, the Company or the Subsidiary
has received at any time during the three years immediately
preceding the date of this Agreement any written notice of any
complaints or charges alleging employment discrimination or
violations of employment laws relating to any past or present
employee of the Frozen Specialty Business which are currently
unresolved or which were resolved during such period following
commencement of a judicial or administrative proceeding. During
the three years immediately preceding the date of this Agreement,
the Company has not effectuated (i) a "plant closing" (as defined
in the Worker Adjustment and Retraining Notification Act (the "WARN
Act")) affecting any site of employment or one or more facilities
or operating units within any site of employment or facility of the
Frozen Specialty Business, or (ii) a "mass layoff" (as defined in
the WARN Act) affecting any site of employment or facility of the
Frozen Specialty Business; nor has either the Company or the
Subsidiary been affected by any transaction or engaged in layoffs
or employment terminations relating to the Frozen Specialty
Business sufficient in number to trigger application of any similar
state or local law. None of the employees of the Frozen Specialty
Business has suffered an "employment loss" (as defined in the WARN
Act) within ninety days prior to the Closing Date.
(u) Banks. Section 4(u) of the Disclosure Schedule sets
forth the name of each financial institution at which the Company
or the Subsidiary has a checking account, deposit account,
securities account, lock box, safe deposit box or other similar
safekeeping arrangement, the number or other identification of all
such accounts and arrangements, and the names of all persons
authorized to draw thereon or have access thereto.
(v) Major Customers and Suppliers. Section 4(v) of the
Disclosure Schedule lists (i) the names of the ten largest
customers (by revenues generated) of the Frozen Specialty Business,
and the approximate total amount of revenues of the Frozen
Specialty Business generated by each such customer, during the
nine-month period ended November 27, 1993, and (ii) the names of
the ten largest suppliers (by purchases made) of products to the
Frozen Specialty Business, and the approximate total amount of the
purchases made by the Frozen Specialty Business from each such
supplier, during such nine-month period. As of the date of this
Agreement, Seller has no Knowledge, based upon any notice received
by Seller, the Company or the Subsidiary from any such customer or
supplier, of any facts or circumstances which have resulted, or are
reasonably likely to result, in a termination of the business
relationships of the Company or the Subsidiary with such customer
or supplier, if termination of such business relationships would
have a Material Adverse Effect.
(w) Directors, Officers and Major Employees.
Section 4(w) of the Disclosure Schedule sets forth (i) a complete
and accurate list of the names and titles of all directors and
officers of the Company and the Subsidiary, and all employees of
the Frozen Specialty Business who report directly to the President
of Seller's Prepared Foods Division or whose annual base salary for
the fiscal year ended February 28, 1994 exceeds $100,000, (ii) the
family relationships, if any, among such persons, and (iii) the
annual base salary for the fiscal year ended February 28, 1994 (and
the annual bonuses for the immediately preceding fiscal year) of
each such person who is an employee of the Frozen Specialty
Business.
(x) Inventory. Substantially all inventory of the
Frozen Specialty Business disposed of by the Company or the
Subsidiary since November 27, 1993 has been disposed of in the
ordinary course of business and at prices and under terms that were
substantially consistent with the past practice of the Frozen
Specialty Business regarding the disposition of similar quantities
of inventory of similar quality. As of the date of this Agreement
and as of the Closing Date, the quantities of inventory of the
Frozen Specialty Business are or will be sufficient for the
operation of the Frozen Specialty Business as conducted at such
date.
(y) Intercompany Services. All material general and
administrative services provided by Seller or any of its affiliates
(other than the Company or the Subsidiary) to the Company or the
Subsidiary in connection with the operation of the Frozen Specialty
Business are described in Section 4(y) of the Disclosure Schedule.
(z) Disclosure. To the Knowledge of Seller, the
representations and warranties of Seller in this Agreement and the
statements contained in the Disclosure Schedule, when considered as
a whole, do not contain any untrue statement of a material fact and
do not omit to state any material fact necessary to make any such
representations, warranties and statements not misleading.
5. Covenants of Seller. Seller covenants and agrees as
follows:
(a) Access. Prior to the Closing, Seller will, and will
cause each of the Company and the Subsidiary to, give Buyer and its
officers, employees, agents and representatives reasonable access,
during normal business hours (and at all times during the weekend
immediately preceding the Closing Date) and upon reasonable notice,
to the personnel, facilities, properties, books and records of the
Company and the Subsidiary which relate to the Frozen Specialty
Business (including without limitation the work papers compiled by
Seller in connection with the preparation of the Closing Statement)
and will cause their officers to furnish Buyer with such financial
and operating data and other information with respect to the
business and properties of the Frozen Specialty Business as Buyer
may from time to time reasonably request, all to enable Buyer to
perform a full due diligence review of the business, assets and
operations of the Frozen Specialty Business and to review the
Closing Statement and resolve any disputes relating thereto;
provided, however, that (i) such access shall not unreasonably
disrupt the normal operations of Seller, the Company or the
Subsidiary, and (ii) Seller may excise from any books and records
to which Buyer and its officers, employees, agents and
representatives have access all information that does not relate to
the Frozen Specialty Business.
(b) Ordinary Conduct. Except as expressly contemplated
by this Agreement (including without limitation Sections 8(g) and
(h) hereof), from the date hereof to the Closing, Seller will and
will cause the Company and the Subsidiary to conduct the Frozen
Specialty Business in the ordinary course in substantially the same
manner as presently conducted and will cause the Company and the
Subsidiary to maintain their corporate existence in good standing,
maintain proper business and accounting records, and make all
reasonable efforts consistent with past practices to preserve their
business organization and relationships with their respective
material customers and suppliers, key employees and others with
whom they have a material business relationship. In addition,
except as expressly contemplated by this Agreement (including
without limitation Sections 8(g) and (h) hereof), prior to the
Closing, Seller will not permit the Company or the Subsidiary to do
any of the following without the prior written consent of Buyer:
(i) amend its charter or by-laws;
(ii) declare, pay or set aside for payment or making
any dividend or make any other distribution of any of its
assets with respect to the Shares or the capital stock of
the Subsidiary; provided, however, that (A) distributions
(as dividends, loans or advances) of any assets may be
made by the Subsidiary to the Company at any time prior
to the Closing, and (B) distributions (as dividends,
loans or advances) of cash may be made by the Company or
the Subsidiary to Seller at any time prior to the close
of business on the last day immediately preceding the
Closing Date (it being understood that the Company and
the Subsidiary intend to distribute directly or
indirectly to Seller on a daily basis substantially all
of their cash and that such intercompany distributions
will be subject to Section 8(g) hereof);
(iii) redeem or otherwise acquire any shares of its
capital stock, or issue, or authorize or propose the
issuance of, any capital stock or any option, warrant or
right relating thereto;
(iv) adopt or amend any Seller's Plan maintained by
the Company or the Subsidiary (rather than by Seller), or
adopt or amend any Seller's Plan (other than any
severance plan for which Seller (and not the Company or
the Subsidiary) shall be solely obligated) maintained by
Seller unless such Seller's Plan also covers other
employees of Seller or any of its affiliates in addition
to employees of the Frozen Specialty Business and Seller
notifies Buyer of such adoption or amendment promptly
after effecting the same, or enter into or amend any
Collective Bargaining Agreement;
(v) grant to any employee of the Frozen Specialty
Business any increase in compensation payable or to
become payable or other material benefits, except as may
be required under existing agreements or in the ordinary
course of business consistent with past practice or
increases for which Seller or any of its affiliates
(other than the Company or the Subsidiary) shall be
solely obligated; or permit any sums or other corporate
assets to be paid to or withdrawn from the Company or the
Subsidiary by the directors or officers of the Company or
the Subsidiary, except for ordinary compensation and
fees, payments under established benefit plans and
ordinary expense reimbursement and similar payments;
(vi) incur, assume or guarantee any indebtedness for
borrowed money other than intercompany indebtedness to be
cancelled without repayment effective at the Closing
pursuant to Section 8(g) hereof and other indebtedness
incurred in the ordinary course of business consistent
with past practice that, together with all such other
indebtedness incurred since November 27, 1993, does not
exceed $50,000 in aggregate principal amount and is
prepayable at any time without penalty, provided that in
no event shall the Company or the Subsidiary incur,
assume or guarantee any long-term indebtedness for
borrowed money;
(vii) grant any mortgage, pledge, lien or
encumbrance on, or agree to the imposition of any
restriction or charge of any kind (including any lease
or license) with respect to, any of its assets, other
than pursuant to purchase money agreements, conditional
sales contracts, capital leases, operating leases or
licenses the non-disclosure of which in Section 4(m)(iv),
(v) or (x) of the Disclosure Schedule would not
constitute a misrepresentation under Section 4(m)(iv),
(v) or (x) of this Agreement;
(viii) cancel any indebtedness for borrowed money
owing to it having an aggregate value, together with all
other such indebtedness cancelled since November 27,
1993, of more than $50,000, or waive any other claims or
rights of material value (other than settlements of trade
accounts in the ordinary course of business);
(ix) except for distributions (as dividends, loans
or advances) permitted under clause (ii) above and except
for intercompany transactions in the ordinary course of
business, loan or advance any amount to, or sell,
transfer or lease any of its assets to, or enter into any
agreement or arrangement with, Seller or any of its
affiliates (other than the Company or the Subsidiary);
(x) make any change in any method of accounting or
accounting practice or policy other than those required
by generally accepted accounting principles or
contemplated in the Statement of Principles and
Methodology;
(xi) purchase or otherwise acquire any assets of the
Frozen Specialty Business or make any capital
expenditures relating to the Frozen Specialty Business
(other than (i) purchases of inventory in the ordinary
course of business consistent with past practice and
(ii) capital expenditures and other purchases of assets
which, together with all other capital expenditures and
other purchases of assets relating to the Frozen
Specialty Business made since November 27, 1993, do not
exceed $2,000,000 in the aggregate);
(xii) sell or otherwise dispose of any of the assets
of the Frozen Specialty Business (other than
(i) inventory in the ordinary course of business
consistent with past practice and (ii) any other assets
with an individual book value of less than $100,000, and
an aggregate book value, together with all such other
assets disposed of since November 27, 1993, of less than
$250,000);
(xiii) modify, amend or terminate in any respect
materially adverse to the business, assets, condition
(financial or otherwise) or results of operations of the
Frozen Specialty Business any of the Contracts, except
terminations upon expiration of a Contract's term;
(xiv) pay, discharge or satisfy any material claim, lien,
encumbrance or liability (whether absolute, accrued,
contingent or otherwise and whether due or to become due)
other than in the ordinary course of business consistent with
past practice; or
(xv) agree, whether in writing or otherwise, to do
any of the foregoing.
(c) Confidentiality. Seller will keep confidential and
cause its affiliates to keep confidential all non-public
information relating to the Frozen Specialty Business or the
Company or Subsidiary (other than any such information which
relates to the Surimi Business), except for (i) disclosures
required by law or administrative process (including without
limitation disclosures required in Tax Returns or in other
governmental filings) and disclosures in the defense of any Third
Party Claim (as defined in Section 11(f)) or the contest of any Tax
Claim (as defined in Section 11(g)), provided that Seller shall
provide Buyer with prompt advance notice of any such required
disclosure so that, if appropriate, Buyer may seek an appropriate
protective order with respect to such disclosure, and
(ii) information which becomes public other than as a result of a
breach of this Section 5(c) or is disclosed by Seller in the
defense of any claim by Buyer or any of its affiliates against
Seller. Seller will, to the extent practicable, excise from any
books and records of Seller or any of its affiliates that relate to
both the Frozen Specialty Business and any other businesses of
Seller or any of its affiliates all information that relates solely
to the Frozen Specialty Business prior to the disclosure of such
books and records to any third party.
(d) Insurance. Seller shall keep, or cause to be kept,
all insurance policies set forth in Section 4(o) of the Disclosure
Schedule, or equivalent replacements therefor, in full force and
effect through the Closing.
(e) Resignations. At the Closing, Seller shall cause to
be delivered to Buyer duly signed resignations, effective
immediately after the Closing, of all directors and officers of the
Company and the Subsidiary (other than those directors and officers
designated in writing by Buyer to Seller at least five business
days prior to the Closing Date), or shall take such other action as
is necessary to assure that such persons are not directors or
officers of the Company or the Subsidiary after the Closing.
(f) Covenant Not to Compete.
(i) Seller hereby agrees that, except as hereinafter
provided, for a period commencing on the Closing Date and
terminating on the third anniversary of the Closing Date, it will
not, except in the case of a Permitted Investment or a Permitted
Co-Pack Arrangement (each as hereinafter defined), without Buyer's
prior written consent, directly or indirectly engage or participate
in (or become a partner, co-venturer, co-marketer or shareholder in
or otherwise participate in the management or operation of any
venture or enterprise of any kind that engages in) the business of
(x) manufacturing any Restricted Products (as hereinafter defined)
for sale anywhere in the Non-Competition Area hereinafter referred
to (the "Restricted Manufacturing Business") or (y) distributing
anywhere in the Non-Competition Area any Restricted Products
manufactured for Seller, under Seller's labels, pursuant to co-pack
or other arrangements with any person other than the Company (the
businesses described in clauses (x) and (y) above being herein
collectively called the "Restricted Business"), provided that
Seller may directly or indirectly own in the aggregate up to 5% of
any outstanding class of equity securities of any entity engaged in
the Restricted Business or any portion thereof in the
Non-Competition Area, the equity securities of which are actively
traded on a national or regional stock exchange, in the national
over-the-counter market in the United States or in an
over-the-counter market in Canada. It is understood that none of
(A) the marketing or distribution by Seller, directly or
indirectly, of products of any nature manufactured by others (other
than products manufactured for Seller, under Seller's labels,
pursuant to co-pack or other arrangements with any person other
than the Company), (B) the manufacture by Seller, directly or
indirectly, of products currently manufactured by the Meat unit of
Seller's Prepared Foods Division, or (C) the manufacture by Seller,
directly or indirectly, of analog seafood products (including
without limitation appetizers containing analog seafood products),
shall be deemed to constitute a Restricted Business for any purpose
hereof. As used herein, the phrase "Restricted Products" shall
mean any products of a type manufactured or under development by
the Frozen Specialty Business at any time during the one-year
period immediately prior to the Closing, including without
limitation frozen appetizers, frozen Italian products, frozen
Mexican products, frozen entrees and frozen portion meats, other
than products of a nature manufactured for sale by the Meat unit of
Seller's Prepared Foods Division as described in Section 4(m)(iii)
of the Disclosure Schedule (provided that a product shall not be
deemed to be "under development" at any time during the one-year
period immediately prior to the Closing if a prototype of such
product has not been produced by the Company during such period, as
evidenced by the written records maintained by the Company's test
kitchens). As used herein, the phrase "Non-Competition Area" shall
mean the United States and Canada.
(ii) For purposes of this Section 5(f), a Permitted
Investment shall be defined as:
(A) an acquisition after the Closing of an entity
(or all or any portion of its equity interests) or
business (the entity or business so acquired being herein
called the "Acquired Business") engaged in the Restricted
Manufacturing Business, if that portion of the Acquired
Business that is engaged in the Restricted Manufacturing
Business generated less than $15,000,000 in revenues and
accounted for less than 15% of the total revenues of the
Acquired Business during the most recently completed
fiscal year of the Acquired Business preceding the date
of the acquisition; and
(B) an acquisition after the Closing (other than
under clause (A) above) of an Acquired Business engaged
in the Restricted Manufacturing Business (or all or any
portion of its equity interests), if (1) that portion of
the Acquired Business that is engaged in the Restricted
Manufacturing Business (the "Competing Business")
generated less than $50,000,000 in revenues and accounted
for less than 25% of the total revenues of the Acquired
Business during the most recently completed fiscal year
of the Acquired Business preceding the date of the
acquisition, (2) Seller gives written notice to Buyer of
the proposed acquisition, the identity of the Acquired
Business and a description of the businesses conducted by
it, including without limitation the Competing Business,
at least ten days before the acquisition if Seller then
has Knowledge that the Acquired Business includes a
Competing Business (or if Seller does not then have such
Knowledge, within ten days after Seller acquires such
Knowledge), (3) Seller has at all times prior to the
disposition of the Competing Business referred to in
clause (4) below the direct or indirect legal right to
dispose of the Competing Business without the consent of
any other holder of a debt or equity interest in the
Acquired Business, and (4) Seller uses its best efforts
to dispose of, or cause the Acquired Business to dispose
of, the Competing Business on commercially reasonable
terms within 18 months after the acquisition.
(iii) Prior to any disposition of a Competing Business
pursuant to clause (ii)(B)(4) above or any solicitation of
proposals or offers from anyone other than Buyer to purchase a
Competing Business to be so disposed of, Seller shall give notice
to Buyer (the "Seller's Notice") of its intent to dispose of, or
cause the Acquired Business to dispose of, such Competing Business.
For 30 days after receipt of the Seller's Notice, Buyer from time
to time shall be given information relating to the Competing
Business of a nature that Seller customarily would give prospective
buyers of the Competing Business at a comparable stage of
evaluation or negotiation (subject to customary confidentiality
obligations of Buyer) and the opportunity to discuss with
representatives of Seller the possible acquisition of the Competing
Business. During the 30 day period referred to above, (A) Buyer
promptly shall give notice to Seller at such time, if any, as it
ceases to be interested in acquiring the Competing Business, in
which event this clause (iii) shall be of no further effect, and
(B) unless any such notice shall have been given by Buyer, Seller
shall negotiate in good faith with Buyer to determine whether the
parties can reach agreement concerning an acquisition of the
Competing Business. If at the end of such period, or any extension
thereof agreed to by the parties, Seller shall determine that it
will be unable to reach such an agreement with Buyer, then Seller
may sell the Competing Business to any person who is not an
affiliate of Seller at such price and on such other terms as Seller
shall in its sole discretion determine without being subject to any
further obligation to Buyer pursuant to this clause (iii) (provided
that if Seller determines after the end of such period to engage in
a general solicitation of bids for the Competing Business, Buyer
shall be given the same opportunity to bid for the Competing
Business as is afforded other prospective buyers).
(iv) For purposes of this Section 5(f), a Permitted
Co-Pack Arrangement shall be defined as:
(A) in the case of an acquisition after the Closing
of an Acquired Business (or all or any portion of its
equity interests) which at the time of such acquisition
distributes one or more Restricted Products in the
Non-Competition Area which are manufactured for it, under
its labels, pursuant to one or more co-pack or other
arrangements, the continued distribution after such
acquisition of such Restricted Products pursuant to one
or more co-pack or other arrangements; and
(B) the distribution by Seller of any Restricted
Products in the Non-Competition Area which are
manufactured for Seller, under Seller's labels, pursuant
to one or more co-pack or other arrangements with one or
more persons other than the Company, if, prior to
entering into such co-pack or other arrangements,
(i) Seller shall have requested that the Company co-pack
such Restricted Products for Seller in accordance with
the bona fide product specifications and other non-price
terms specified by Seller, and (ii) the Company shall
have failed, within a reasonable period of time (not to
exceed seven days) after the making of such request, to
have agreed to co-pack such Restricted Products for
Seller in accordance with such product specifications and
other non-price terms and at a price per unit which is no
higher than the lowest price per unit charged at the time
by the Company to its similar customers purchasing on
similar non-price terms similar quantities of Restricted
Products meeting similar product specifications (or, if
no such customer then exists, for a commercially
reasonable price).
(v) Seller hereby also agrees that, for a period
commencing on the Closing Date and terminating on the third
anniversary of the Closing Date, it will not, without Buyer's prior
written consent, directly or indirectly enter into any agreement or
arrangement with any person other than the Company to purchase any
Restricted Products manufactured by such person, if Seller should
have reasonably known that such agreement or arrangement would,
given the volume of Restricted Products to be acquired under such
agreement or arrangement and the then existing physical capacity of
such person to manufacture such Restricted Products and utilization
by such person of such physical capacity, cause such person to
materially expand such physical manufacturing capacity or to add
additional employee shifts to produce such Restricted Products
(unless any such expansion of physical manufacturing capacity or
addition of employee shifts was primarily caused by factors other
than the entering into of such agreement or arrangement).
(vi) Seller hereby further agrees that, except as
hereinafter provided, for a period commencing on the Closing Date
and terminating on the first anniversary of the Closing Date, it
will not, without Buyer's prior written consent, directly or
indirectly solicit any person who was at any time during the
one-year period immediately prior to the Closing Date a customer of
the Frozen Specialty Business to purchase from Seller any
Restricted Products acquired by Seller from any person other than
the Company, provided that if Seller directly or indirectly
acquires after the Closing an Acquired Business (or all or any
portion of its equity interests) which at the time of such
acquisition sells one or more Restricted Products to any such
customers of the Frozen Specialty Business, such Acquired Business
may continue after such acquisition to solicit such customers to
purchase such Restricted Products.
(vii) Buyer and Seller agree that the duration and the
Non-Competition Area for which the covenant not to compete set
forth in this Section 5(f) is to be effective are reasonable.
However, in the event that any court determines that the duration
or the Non-Competition Area, or both of them, are unreasonable and
that such covenant is to that extent unenforceable, Buyer and
Seller agree that the covenant shall remain in full force and
effect for the greatest time period not longer than that duration
and for the greatest area within the Non-Competition Area that
would not render it unenforceable. Buyer and Seller agree that the
covenant shall be deemed to be a series of separate covenants, one
for each and every state, county or province in the Non-Competition
Area where the covenant not to compete is intended to be effective.
(g) Delivery of Records. At the Closing or as soon
thereafter as practicable, but in no event later than 30 days after
the Closing Date, Seller will deliver or cause to be delivered to
Buyer all corporate records of the Company and the Subsidiary, and
all other original agreements, documents, books and records
relating primarily to the Frozen Specialty Business in the
possession of Seller to the extent not then in the possession of
the Company or the Subsidiary (other than work papers relating to
Taxes, which Seller may retain subject to Buyer's rights of access
pursuant to Section 12(c) hereof); provided, however, that
(i) subject to Seller's obligations under Section 5(c) hereof,
Seller shall have the right to keep copies (but not originals) of
all such Tax Returns and accounting books and records and to use
such copies, and (ii) with respect to books and records (including
without limitation Tax Returns and accounting books and records)
relating to both the Frozen Specialty Business, on the one hand,
and to any other business or operation presently or formerly
conducted by Seller or any of its affiliates, on the other hand,
(A) subject to Seller's obligations under Section 5(c) hereof,
Seller shall have the right to keep copies (but not originals) of
such books and records and to use such copies or otherwise transfer
them to a third party, and (B) excerpts from such books and records
that do not relate to the Frozen Specialty Business may be excised
from the books and records that are delivered to Buyer.
(h) No Shopping. Seller will not, and will cause the
Company and the Subsidiary not to, directly or indirectly, solicit,
encourage, facilitate, participate or engage in (including by way
of furnishing any nonpublic information concerning the business,
properties or assets of the Frozen Specialty Business), any
Acquisition Proposal (as defined below). Seller will notify Buyer
promptly if any formal, written Acquisition Proposal is received by
Seller, the Company or the Subsidiary (but need not disclose to
Buyer the identity of the person making such Acquisition Proposal).
As used in this Agreement, "Acquisition Proposal" shall mean any
proposal received by Seller, the Company or the Subsidiary from a
person other than Buyer for a merger or other business combination
involving the Company or the Subsidiary, for the acquisition of a
substantial equity interest in the Company or the Subsidiary, or
for the acquisition of a substantial portion of the assets of the
Frozen Specialty Business.
(i) Current Information. During the period from the
date of this Agreement to the Closing, Seller (i) shall notify or
cause the Company and the Subsidiary to notify Buyer of (A) any
change in the normal course of business or operations of the Frozen
Specialty Business that would have a Material Adverse Effect,
(B) the making or commencement of any governmental complaints,
investigations or hearings relating to the Frozen Specialty
Business of which Seller has Knowledge that would have a Material
Adverse Effect (or the receipt by Seller, the Company or the
Subsidiary of any communications indicating that the same may be
contemplated), (C) the institution or threat of any material
litigation relating to the Frozen Specialty Business of which
Seller has Knowledge, or the settlement of any material litigation
relating to the Frozen Specialty Business, and (D) any facts or
circumstances of which Seller first obtains Knowledge after the
date of this Agreement, based upon any notice received by Seller,
the Company or the Subsidiary from any customer or supplier named
in Section 4(v) of the Disclosure Schedule, which have resulted, or
are reasonably like to result, in a termination of the business
relationships of the Company or the Subsidiary with such customer
or supplier, if termination of such business relationships would
have a Material Adverse Effect; and (ii) shall keep Buyer fully
informed of such events.
(j) No Representations or Warranties. Seller
acknowledges that neither Buyer nor any other person has made any
representation or warranty, expressed or implied, as to the
accuracy or completeness of any information regarding Buyer not
included in this Agreement or in any certificate delivered pursuant
hereto, and neither Buyer nor any other person will have or be
subject to any liability to Seller, the Company, the Subsidiary or
any other person resulting from the distribution to Seller, the
Company or the Subsidiary, or Seller's use, of any such
information, except as expressly provided in this Agreement.
(k) No Solicitation. For a period of one year from the
date of this Agreement, Seller will not, directly or indirectly,
(i) affirmatively solicit the employment (including any consulting
or similar arrangement) of any employee of the Frozen Specialty
Business listed in Section 5(k) of the Disclosure Schedule at any
time while such person is employed in the Frozen Specialty
Business, or (ii) affirmatively solicit any such person to
otherwise leave such person's employment with the Frozen Specialty
Business.
6. Representations and Warranties of Buyer. Buyer
hereby represents and warrants to Seller that the statements
contained in this Section 6 are true and correct as of the date of
this Agreement.
(a) Organization and Authority of Buyer. Buyer is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Buyer has full corporate
power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. All corporate
acts and proceedings required to be taken to authorize the
execution, delivery and performance by Buyer of this Agreement and
the consummation by Buyer of the transactions contemplated hereby
have been duly and properly taken, including the due and valid
authorization of the Board of Directors of Buyer. This Agreement
has been duly executed and delivered by Buyer and, assuming the due
authorization, execution and delivery of this Agreement by Seller,
constitutes a valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium
and other similar laws affecting creditors' rights generally and by
general principles of equity (regardless of whether enforceability
is considered in a proceeding in equity or at law). The execution
and delivery by Buyer of this Agreement do not, and the
consummation by Buyer of the transactions contemplated hereby and
compliance by Buyer with any of the provisions hereof will not,
with or without notice or passage of time, or both, (i) conflict
with, or result in any violation of, any provision of the charter
or by-laws of Buyer, (ii) conflict with, result in any violation
of, or constitute a default under, any instruments, contracts,
commitments or agreements to which Buyer is a party or by which
Buyer or the property or assets of Buyer are bound (except where
any such conflict, violation or default would not adversely effect
the validity of this Agreement or Buyer's ability to consummate the
transactions contemplated hereby or to comply with the provisions
hereof), or (iii) conflict with, or result in any violation of, any
judgment, order, writ, injunction or decree to which Buyer has been
specifically identified as subject, or any statute, law, ordinance,
rule or regulation applicable to Buyer or its property or assets
(except where any such conflict or violation would not adversely
effect the validity of this Agreement or Buyer's ability to
consummate the transactions contemplated hereby or to comply with
the provisions hereof). No material consent, approval, license,
permit, order or authorization of, or waiver by, or registration,
declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality,
domestic or foreign, is required to be obtained or made by or with
respect to Buyer in order for Buyer to execute, deliver and perform
this Agreement or to consummate the transactions contemplated
hereby other than compliance by Buyer with and filings by Buyer
under the HSR Act, and compliance by Buyer with and filings by
Buyer under Section 13(a) or 15(d), as the case may be, of the
Securities Exchange Act of 1934, as amended.
(b) Securities Laws. The Shares purchased by Buyer
pursuant to this Agreement are being acquired for investment only
and not with a view to, or for sale in connection with, any public
distribution thereof, nor with any present intention of
distributing or selling the Shares.
(c) Litigation; Decrees. There are no judgments,
orders, injunctions or decrees of any court, arbitrator,
administrative agency or commission or other governmental authority
or instrumentality, domestic or foreign, to which Buyer is subject
which prohibit or enjoin, or otherwise adversely affect the ability
of Buyer to consummate, the transactions contemplated hereby.
There are no legal, administrative, arbitration or other
proceedings or governmental investigations pending (with respect to
which Buyer has been served or otherwise notified) or, to the
knowledge of Buyer, threatened against Buyer which, if decided
adversely to Buyer, would adversely affect the ability of Buyer to
consummate the transactions contemplated hereby.
(d) Availability of Funds. Buyer has delivered to
Seller a true and correct copy of a commitment of Chemical Bank to
provide financing which, together with Buyer's available cash, is
sufficient to enable Buyer to consummate the transactions
contemplated by this Agreement, and such commitment is in full
force and effect.
7. Covenants of Buyer. Buyer covenants and agrees as
follows:
(a) Confidentiality. Buyer acknowledges that the
information being provided to it by Seller is subject to the terms
of a confidentiality agreement between Buyer and Seller relating to
the Frozen Specialty Business (the "Confidentiality Agreement"),
the terms of which are incorporated herein by reference. The
Confidentiality Agreement shall remain in effect after the Closing
as to all confidential information that does not relate to the
Frozen Specialty Business.
(b) No Representations or Warranties. Buyer
acknowledges that none of Seller, the Company, the Subsidiary or
any other person has made any representation or warranty, expressed
or implied, as to the accuracy or completeness of any information
regarding Seller, the Company, the Subsidiary or the Frozen
Specialty Business not included in this Agreement or in any
certificate delivered pursuant hereto, and none of Seller, the
Company, the Subsidiary or any other person will have or be subject
to any liability to Buyer or any other person resulting from the
distribution to Buyer, or Buyer's use, of any such information,
except as expressly provided in this Agreement.
(c) Retention of Records. Without limiting the
provisions of Sections 11 and 12 hereof, unless otherwise consented
to in writing by Seller (which consent shall not be unreasonably
withheld), Buyer shall at no time after the Closing cause or permit
the Company or the Subsidiary to destroy or otherwise dispose of
any of its books and records existing as of the Closing, which
books and records are less than seven years old at the time of such
proposed destruction, without first offering to surrender to the
Seller such books and records or any portion thereof.
8. Mutual Covenants. Each of Seller and Buyer
covenants and agrees as follows:
(a) Consents. With respect to (i) consents to the
transactions contemplated by this Agreement required from parties
to instruments, contracts, commitments, agreements or arrangements
relating primarily to the Frozen Specialty Business, and (ii) new
governmental licenses, permits and authorizations required as a
result of the change in control of the Company and the Subsidiary
occurring at Closing in order for the Company and the Subsidiary to
conduct the Frozen Specialty Business following the Closing in the
same manner in which the Frozen Specialty Business was conducted
prior to the Closing, Seller and Buyer shall cooperate in any
commercially reasonable manner to attempt to obtain any such
consents and any such new governmental licenses, permits or
authorizations; provided, however, that such cooperation shall not
include any requirement of Seller, Buyer or any of their respective
affiliates to pay money or offer or grant any accommodation
(financial or otherwise) to any third party.
(b) Cooperation. Buyer and Seller shall cooperate with
each other and shall cause their respective, and their respective
affiliates', officers, employees, agents and representatives to
cooperate with each other for a period of 60 days after the Closing
Date to ensure the orderly transition of the Frozen Specialty
Business from Seller to Buyer and to minimize any disruption to the
respective businesses of Seller, Buyer, the Company and the
Subsidiary that might result from the transactions contemplated
hereby. Neither party shall be required by this Section 8(b) to
take any action that would unreasonably interfere with the conduct
of its or its affiliate's businesses.
(c) Use of Trademarks.
(i) With respect to all stationery and packaging
materials of the Company or the Subsidiary which are owned or on
order at the time of Closing and which bear the corporate name of
Seller, the Company or any other affiliate of Seller (other than
the Subsidiary), the name of the Prepared Foods Division of Seller,
or any other trade name, trademark, service mark or logo of Seller
or any affiliate of Seller other than those set forth in
Section 4(l) of the Disclosure Schedule (collectively, the
"Marks"), Seller hereby grants to the Company and the Subsidiary,
effective at the time of Closing, the nontransferable right and
non-exclusive license to use for a reasonable time (not to exceed
12 months) after the Closing all of such stationery and packaging
materials in the ordinary course of conduct of the Frozen Specialty
Business. Buyer agrees that the nature and quality of all products
of the Company or the Subsidiary sold under any of the Marks shall
substantially conform to Seller's past practices, standards and
specifications. If Seller at any time during the Company's or the
Subsidiary's use of such materials after the Closing reasonably
determines that the requirements of the foregoing provision have
not been complied with in all material respects, Seller shall have
the right to immediately terminate the right and license granted
under this Section 8(c) by giving written notice of such
termination to Buyer.
(ii) Immediately after the Closing, Buyer shall take and
cause the Company to take all corporate actions as may be necessary
or required to change the Company's name to a name that does not
include the word "Multifoods" or any variant thereof, including
without limitation the filing with the Delaware Secretary of State
of a certificate of amendment to the Company's charter reflecting
such name change, and shall promptly thereafter file with the
appropriate governmental authorities in each and every jurisdiction
specified in Section 4(c) of the Disclosure Schedule in which the
Company is qualified to do business as a foreign corporation
appropriate forms reflecting such name change.
(iii) As soon as reasonably practicable following the
Closing (but in any event within six months after the Closing
Date), Buyer shall cause the Company and the Subsidiary to relabel
all of their vehicles, building signs and other tangible fixed
assets bearing any of the Marks.
(iv) Other than as contemplated under clause (i), (ii)
or (iii) above, Buyer shall not, without the prior written consent
of Seller, use or permit the Company or the Subsidiary at any time
after the Closing to use in any manner any of the Marks.
(d) Publicity. Seller and Buyer agree that no public
release or announcement concerning the transactions contemplated
hereby shall be issued by either party or the Company prior to the
Closing without the prior written consent of the other party,
except as such release or announcement may be required by law or
the rules or regulations of any United States or foreign securities
exchange, in which case the party required to make the release or
announcement shall, if practicable under the circumstances, allow
the other party reasonable time to comment on such release or
announcement in advance of such issuance.
(e) Best Efforts. Subject to the terms and conditions
of this Agreement (including the limitations set forth in
Section 8(a)), each party will use its best efforts as promptly as
practicable to satisfy all conditions to Closing set forth in this
Agreement that are within such party's control.
(f) Filings. Each of Seller and Buyer will as promptly
as practicable, but in no event later than five days following the
execution and delivery of this Agreement, file with the United
States Federal Trade Commission (the "FTC") and the United States
Department of Justice (the "DOJ") the notification and report form
required for the transactions contemplated hereby and any
supplemental information requested in connection therewith pursuant
to the HSR Act. Such notification and report form and all such
supplemental information filed by Buyer or Seller will be in
substantial compliance with the requirements of the HSR Act. All
filing fees under the HSR Act will be paid by Buyer. Subject to
the terms and conditions of this Agreement (including the
limitations set forth in Section 8(a)), each of Seller and Buyer
will use their best efforts to make or cause to be made all such
other filings and submissions, if any, as may be required under
applicable laws and regulations for the consummation of the
transactions contemplated by this Agreement. Each of Buyer and
Seller shall furnish to the other such necessary information and
reasonable assistance as the other may request in connection with
its preparation of any of the foregoing filings or submissions.
Seller and Buyer shall keep each other apprised of the status of
any communications with, and inquiries or requests for additional
information from, the FTC or the DOJ, and shall use their best
efforts to comply promptly with any such inquiry or request. Each
of Seller and Buyer will request the acceleration of the
termination of the waiting period required under the HSR Act as a
condition to the purchase and sale of the Shares.
(g) Intercompany Accounts. Buyer and Seller agree that
(i) all intercompany accounts between the Company or the
Subsidiary, on the one hand, and Seller or any of its other
affiliates, on the other hand (including without limitation all
receivables of the Company or the Subsidiary for cash advanced
directly or indirectly to Seller and all payables of the Company or
the Subsidiary for direct or indirect overdrafts on Seller's bank
accounts), shall be cancelled effective at the Closing
(automatically and without any repayment or other action of Buyer,
the Company, the Subsidiary or Seller), which cancellation shall be
treated as a distribution and/or a contribution to capital, as the
case may be, and (ii) Closing Net Assets shall be determined after
giving effect to such cancellation.
(h) Disposition of Surimi Business. Buyer and Seller
acknowledge that, prior to the Closing, Seller shall (i) cause the
Company to transfer to any affiliate of Seller designated by it
(for no consideration) all of the assets of the Company (the
"Surimi Assets") primarily constituting, or primarily used in the
conduct of, its business of manufacturing, marketing and
distributing surimi-based analog seafood products (the "Surimi
Business"), including without limitation the assets described in
Section 8(h)(i) of the Disclosure Schedule, which transferred
assets shall in no event include (A) the distribution facilities
located in Rialto, California and Noblesville, Indiana or (B) the
headquarters of Seller's Prepared Foods Division located in
Riverside, California; (ii) cause the Company to transfer to such
affiliate all persons then employed by the Company primarily in
connection with the Surimi Business, including without limitation
each such person on medical, disability, family or other leave of
absence, and each divisional employee named in Section 8(h)(ii) of
the Disclosure Schedule, which transferred employees shall in no
event include any person employed at the distribution facilities or
the headquarters referred to above other than the persons named in
Section 8(h)(ii) of the Disclosure Schedule; and (iii) cause such
affiliate to assume all of the liabilities of the Company (whether
known or unknown, asserted or unasserted, absolute or contingent,
liquidated or unliquidated, or due or to become due) primarily
relating to the ownership of the Surimi Assets or the conduct by
the Company of the Surimi Business (the "Surimi Liabilities").
Buyer and Seller agree that to effectuate such transfers, the
Company may adopt a "Plan of Liquidation" under Section 332 of the
Code. The documents executed to effect the foregoing transactions
shall be in form and substance reasonably satisfactory to Buyer.
As used in this Agreement, the term "Frozen Specialty Business"
shall mean the Company's and the Subsidiary's business of
manufacturing, marketing and distributing appetizers, Italian
products, Mexican products, entrees and portion meats, including
all products listed in Section 8(h)(iii) of the Disclosure
Schedule, and all references in this Agreement to the employees of
the Frozen Specialty Business shall be deemed to include all
persons employed by the Company or the Subsidiary, including those
working at the distribution facilities and headquarters referred to
above, other than any such person employed primarily in connection
with the Surimi Business.
(i) Certain Contracts and Agreements. Subject to the
provisions set forth below, effective at the Closing (automatically
and without any further action of Buyer, the Company or Seller)
(i) Seller shall assign to the Company all of Seller's rights, if
any, under all Collective Bargaining Agreements, Contracts and
other instruments, contracts, commitments, agreements or
arrangements which are described in Section 4(i), 4(j), 4(l), 4(m)
or 4(t) of the Disclosure Schedule, and (ii) without affecting the
indemnification obligations of Buyer, the Company and the
Subsidiary under Section 11 of this Agreement, the Company shall
assume all of Seller's obligations and liabilities, if any, under
such Collective Bargaining Agreements, Contracts and other
instruments, contracts, commitments, agreements or arrangements
(including without limitation Seller's obligations, if any, under
the Collective Bargaining Agreements to participate in the Western
Conference of Teamsters multiemployer pension plan (the "Western
Conference Plan") and all other multiemployer plans referred to in
the Collective Bargaining Agreements), but only to the extent such
obligations or liabilities (x) have been included in the final
determination of Closing Net Assets and taken into account in the
calculation of the Adjusted Purchase Price or (y) accrue after the
Closing. To the extent requested by Seller, Buyer shall use all
reasonable efforts to reach, or cause the Company to reach,
agreements with the local unions that are parties to the Collective
Bargaining Agreements that reflect the agreements of Seller and
Buyer with respect to the Collective Bargaining Agreements set
forth above and in Section 9 hereof. Notwithstanding anything
stated above in this Section 8(i), if the Closing shall occur as a
result of satisfaction or waiver of the conditions set forth in
Sections 3(a) and 3(b) hereof, any instrument, contract,
commitment, agreement or arrangement described in Section 4(i),
4(j), 4(l), 4(m) or 4(t) of the Disclosure Schedule or any right or
obligation thereunder that is not capable of being assigned by
Seller to, or assumed by, the Company without the approval, consent
or waiver of a third party shall not be deemed to have been
assigned or assumed pursuant to this Section 8(i) unless such
approval, consent or waiver shall have been obtained prior to the
Closing, and neither Seller nor Buyer shall be deemed to have
violated this Section 8(i) as a result of such non-assignment or
non-assumption, provided that Seller hereby agrees to hold its
interest in the benefits thereof in trust for the Company or to
enter into such other arrangements as Buyer may reasonably request
in order to permit the Company to obtain the intended benefits
therefrom, and Buyer agrees to indemnify Seller and hold it
harmless, and cause the Company to indemnify Seller and hold it
harmless, from any obligations and liabilities thereunder, but only
to the extent such obligations or liabilities (x) have been
included in the final determination of Closing Net Assets and taken
into account in the calculation of the Adjusted Purchase Price or
(y) accrue after the Closing. In such event Seller and Buyer agree
to use all commercially reasonable efforts following the Closing to
obtain all necessary approvals, consents and waivers to complete
such assignments and assumptions (provided that neither Seller nor
Buyer or their affiliates shall be required to pay money or offer
or grant any accommodation (financial or otherwise) to any third
party to obtain any such approval, consent or waiver), and shall
promptly execute, and Buyer shall cause the Company to promptly
execute, all documents necessary to complete such assignments and
assumptions if such approvals, consents or waivers are obtained.
(j) Disclosure Supplements. From time to time prior to
the Closing, Seller will promptly supplement or amend the
Disclosure Schedule with respect to any matter hereafter arising
which would make any representation or warranty set forth in
Section 4 inaccurate if updated to the Closing Date or as is
necessary to correct any information in the Disclosure Schedule or
in any representation or warranty of Seller made in Section 4. For
purposes of determining the fulfillment of the conditions set forth
in Section 3(a)(i) hereof prior to the Closing and the accuracy of
the representations and warranties contained in Section 4 if the
Closing does not occur, the Disclosure Schedule shall be deemed to
include only that information contained therein on the date of this
Agreement and shall be deemed to exclude any information contained
in any subsequent supplement or amendment thereto. However, for
purposes of determining the accuracy of the representations or
warranties of Seller contained in Section 4 or the liability of
Seller with respect thereto under Section 11(b)(i) should the
Closing occur, the Disclosure Schedule shall be deemed to include
all information contained in any subsequent supplement or amendment
thereto.
(k) Guaranty of Unpaid Accounts Receivable.
(i) Buyer shall, within five days after the
Determination Date referred to below, provide to Seller a notice
listing all accounts receivable of the Frozen Specialty Business
included in the determination of Closing Net Assets (the "Accounts
Receivable") which have not been paid in full on or prior to the
first business day to occur at least 120 days after the Closing
Date (the "Determination Date"), and which Buyer has determined, in
its sole discretion, will be assigned by the Company to Seller
hereunder (the "Unpaid Accounts Receivable"). On the first
business day to occur at least ten days after the giving of Buyer's
notice (the "Receivables Settlement Date"), Buyer shall cause the
Company to assign to Seller all of the Unpaid Accounts Receivable
referred to in the notice that have not been paid in full prior to
the Receivables Settlement Date, and any security granted in
connection with such Unpaid Accounts Receivable, and Seller shall
pay to the Company, by wire transfer in immediately available
funds, the amount, if any, by which the aggregate unpaid face
amount of such Unpaid Accounts Receivable assigned to Seller, as of
the Receivables Settlement Date, exceeds the sum of (A) the
aggregate amount of any valid customer offsets against such Unpaid
Accounts Receivable for promotions payable and customary customer
cash discounts, plus (B) the aggregate amount of the reserve for
doubtful accounts, if any, deducted from the Accounts Receivable in
determining the net value thereof for purposes of calculating
Closing Net Assets.
(ii) Except as provided herein, for purposes of
determining the Accounts Receivable which remain unpaid on the
Determination Date and the Receivables Settlement Date, any payment
from a customer received on or after the Closing Date will be
applied to the unpaid Accounts Receivable of such customer (other
than those with respect to which valid offsets have been claimed by
such customer for promotions payable and customary customer cash
discounts), to the extent of such valid offsets) in order of the
dates of the invoices therefor (i.e., the earliest dated invoices
will be deemed to have been paid first). Notwithstanding the
immediately preceding sentence, if, without solicitation from Buyer
or the Company, a customer designates in writing a different
application at the time of payment or submits with a payment a
different invoice of such customer, or a different application is
clearly established from the timing and amount of a payment, then
the application of such payment shall be as so designated or to the
Accounts Receivable evidenced by such different invoice or as so
clearly established, as the case may be. Buyer shall provide
Seller with a weekly aging of the Accounts Receivable on the last
day of each week prior to the Determination Date. Buyer shall have
no obligation hereunder to bring or cause the Company to bring any
legal proceeding, but shall otherwise use or cause the Company to
use reasonable efforts, in accordance with Buyer's customary
collection procedures, to attempt to collect the Accounts
Receivable. If either Buyer or the Company is notified by a
customer that it is disputing its obligation to pay all or any
portion of the Accounts Receivable, then Buyer will promptly
endeavor to notify Seller of such dispute, provided that failure of
Buyer to give timely notice of any disputed Accounts Receivable
shall not limit the obligations of Seller to make any payment
provided for herein, except to the extent that the delay in giving,
or failure to give, such notice has a material adverse effect upon
the ability of Seller to prevail with respect to the disputed
Accounts Receivable.
(iii) Subject to Sellers' confidentiality obligations
under Section 5(c), Seller and its representatives shall have
reasonable access from time to time after the Closing to the
Company's books and records relating to the Accounts Receivable for
purposes of verifying the status of payment of the Accounts
Receivable.
(iv) Seller shall be entitled to exercise all
commercially reasonably collection procedures to collect the Unpaid
Accounts Receivable assigned to Seller pursuant to clause (i)
above. Such efforts may include the initiation of legal
proceedings. In connection with such collection efforts, Buyer
shall cause the Company to provide Seller and its representatives
with reasonable access to the Company's books and records relating
to such Unpaid Accounts Receivable, subject to Seller's
confidentiality obligations under Section 5(c). It is understood
that nothing in this Agreement shall be deemed to require personnel
of the Company to testify in any legal proceedings initiated by
Seller to collect any Unpaid Accounts Receivable, provided that
nothing stated herein shall limit any rights that Seller may have
under applicable law to subpoena any person to require such
testimony. Notwithstanding anything to the contrary stated in
Section 5(c), nothing therein shall prohibit Seller from disclosing
information obtained pursuant to this Section 8(k) to the extent
such disclosure is required in connection with Seller's efforts to
collect any Unpaid Accounts Receivable.
9. Employees and Employee Benefits.
(a) Provision of Buyer's Plans. Effective at the
Closing, Buyer shall provide or cause the appropriate Company or
Subsidiary to provide (or continue to provide) to each person
employed by the Frozen Specialty Business immediately prior to the
Closing, including without limitation each such person on medical,
disability, family or other leave of absence immediately prior to
the Closing who subsequently returns to active employment with the
Company after the Closing (collectively, the "Employees"), employee
benefit plans (collectively, "Buyer's Plans") under which such
person will be entitled to pension and other benefits (excluding
post-retirement medical, dental or life insurance benefits)
substantially similar to those provided by Buyer in the aggregate
to its existing employees. Buyer represents and warrants to Seller
that true and correct copies of Buyer's existing employee benefit
plans have been previously provided to Seller. Notwithstanding the
foregoing, (i) in the case of Employees covered by a Collective
Bargaining Agreement which provides for the participation by such
Employees in any Seller's Plan which is not a multiemployer plan,
Buyer shall provide or cause the appropriate Company or Subsidiary
to provide (or continue to provide) to such Employees a plan under
which such Employees will be entitled to benefits which, in
combination with benefits accrued under such Seller's Plan prior to
the Closing, are identical to those provided to such Employees
under such Seller's Plan, and (ii) Buyer shall not be obligated to
provide or cause the Company or the Subsidiary to provide any plans
entitling Employees to post-retirement medical, dental or life
insurance benefits. Nothing in this Section 9(a) shall obligate
Buyer, the Company or the Subsidiary to continue to maintain any of
Buyer's Plans for any specific period of time after the Closing,
and, to the maximum extent permitted by law, Buyer shall have the
ability to revise, modify, amend or terminate any of Buyer's Plans
in its sole discretion at any time; provided, however, that Buyer
shall provide to the Employees for a period of at least three years
after the Closing Date (or, if shorter, such period as Buyer shall
provide employee pension plans for its other employees) employee
pension plans under which the Employees will be entitled to
benefits which are no less favorable than the pension benefits, if
any, then provided by Buyer to its other employees. Effective at
the Closing, the Company and the Subsidiary shall withdraw from and
cease to be participating employers in each Seller's Plan
maintained by Seller or any affiliate thereof (other than the
Company or the Subsidiary).
(b) Credit Under Buyer's Plans. For purposes of
eligibility, vesting and entitlement to vacation and severance
benefits, each Employee shall be given credit under Buyer's Plans
(including without limitation the vacation policy(ies) and
severance plans included within Buyer's Plans, but excluding any
post-retirement medical, dental or life insurance plans included
within Buyer's Plans) for such Employee's service with Seller, the
Company, the Subsidiary or any other affiliate of Seller prior to
the Closing Date to the extent such service was credited under
Seller's Plans; and each Employee and covered dependent thereof
shall be allowed to participate in each of Buyer's Plans without
regard to preexisting conditions, waiting periods, or other
exclusions or limitations not imposed on such individual by the
Seller's Plans immediately prior to the Closing Date. Each
Employee shall be credited under the vacation policy(ies) included
within Buyer's Plans with all vacation (including without
limitation all banked vacation), if any, accrued by such Employee
prior to the Closing Date under the vacation policy(ies) included
within the Seller's Plans and not used by such Employee prior to
the Closing Date. Upon termination after the Closing of any
Employee's employment with the Company or the Subsidiary, Buyer
shall pay or cause the appropriate Company or Subsidiary to pay to
such Employee the amount of all banked vacation, if any, accrued by
such Employee prior to the Closing Date and not used by such
Employee prior to such termination of employment.
(c) Incentive Payments. Seller will use reasonable
efforts to cause any incentive plans included within Seller's Plans
which are maintained by the Company or the Subsidiary (other than
the Non-Executive Incentive Plans) to be terminated at or prior to
the Closing, and will either settle at or prior to Closing, or
indemnify and hold harmless Buyer, the Company and the Subsidiary
from, all obligations and liabilities for claims, if any, of
Employees to incentive payments due at Closing or that may
thereafter become due under such incentive plans.
(d) Severance Payments. Seller shall, at the request of
Buyer, directly pay all severance required to be paid under the
severance plans included within Buyer's Plan to any Employees (not
exceeding 90 in number and in no event including the President of
Seller's Prepared Foods Division) who immediately prior to the
Closing are employed at the headquarters of Seller's Prepared Foods
Division located in Riverside, California and whose employment with
Buyer or any of its affiliates (including the Company or the
Subsidiary) is terminated on or prior to the earlier of the date
Buyer closes or causes the Company to close such headquarters or
December 31, 1994, but only to the extent Seller would have been
required to pay such severance to such Employees under the general
severance policy included within Seller's Plans (which is listed
under Item E(1) of Section 4(p) of the Disclosure Schedule) had
such Employees been employed by Seller or any affiliate thereof at
the time of such termination. In addition to the foregoing, Seller
acknowledges that it will be solely obligated after the Closing for
any payments required to be made to any Employees under the
individual severance agreements between Seller and such Employees
which are listed under Item E(2) of Section 4(p) of the Disclosure
Schedule. In no event shall Seller be obligated hereunder to make
any severance or other similar payments to any Employees required
as a result of any failure by Buyer to give on a timely basis any
notice required under the WARN Act or any similar state or local
law or otherwise required by statute.
(e) Medical, Dental, Disability and Life Insurance Plan
Liabilities. Seller shall pay or shall cause the applicable
Seller's Plan to pay any benefits or expenses covered by the group
medical, dental, disability and life insurance plans included
within the Seller's Plans which (i) in the case of any such medical
or dental plans, are incurred with respect to services performed
for the Employees or their dependents prior to the Closing Date,
(ii) in the case of any such disability plans, are payable with
respect to a disability suffered by an Employee prior to the
Closing Date (but not with respect to the recurrence on or after
the Closing Date of any such disability), if such Employee, at the
effective time of the Closing, has qualified for long-term
disability benefits (or subsequently qualifies for such benefits
after meeting any applicable waiting or elimination period) under
such plans with respect to such disability, and (iii) in the case
of any such life insurance plans, are payable to the beneficiaries
of any Employee who dies prior to the Closing Date. To the extent
Employees have enrolled in the applicable Buyer's Plan, Buyer shall
pay or shall cause the applicable Buyer's Plan to pay any such
benefits or expenses which (x) in the case of any such medical or
dental plans, are incurred with respect to services performed for
the Employees or their dependents on or after the Closing Date,
(y) in the case of any such disability plans, are payable with
respect to either (A) a disability suffered by an Employee prior to
the Closing Date, if such Employee, at the effective time of the
Closing, has not yet qualified for long-term disability benefits
(and subsequently does not qualify for such benefits after meeting
any applicable waiting or elimination period) under the group
disability plans included in Seller's Plans with respect to such
disability, or (B) a disability suffered by an Employee at any time
on or after the Closing Date (including without limitation a
recurrence on or after the Closing Date of a disability of an
Employee suffered prior to the Closing Date), and (z) in the case
of any such life insurance plans, are payable to the beneficiaries
of any Employee who dies on or after the Closing Date.
(f) Western Conference Plan Liabilities. In the event
that any of the transactions under this Agreement would result in
a complete or partial withdrawal from the Western Conference Plan
for which withdrawal liability would be imposed under Subtitle E of
Title IV of ERISA, Buyer and Seller, at the request of Seller,
shall each cause the appropriate actions (including the provision
of bonds) to be taken pursuant to Section 4204 of ERISA to avoid
the imposition of such liability. It is agreed that if, at any
time after the Closing, Buyer or any of its affiliates completely
or partially withdraws from the Western Conference Plan with
respect to the operations of the Company or the Subsidiary,
(i) Buyer and its affiliates will be primarily liable for any
withdrawal liability to such plan imposed under Subtitle E of
Title IV of ERISA, and (ii) during the first five plan years
commencing after the Closing Date, Seller will be secondarily
liable for any withdrawal liability it would have had to such plan
at the time of Closing with respect to those operations but for
Section 4204 of ERISA if the liability of Buyer and its affiliates
with respect to such plan is not paid.
(g) Seller's Obligation for Certain Benefits.
Notwithstanding any other provision of this Section 9, Seller
agrees that following the Closing it shall retain, assume or cause
to be assumed liability for any post-retirement life insurance and
medical benefits (including COBRA rights) that the Company or the
Subsidiary is as of the Closing providing to any person whose
employment with the Company or the Subsidiary terminated (or
divorce, if applicable, occurred) prior to the Closing (or any such
former employee's spouse, dependents or beneficiaries), including
without limitation any such person who retired prior to the
Closing.
10. Further Assurances. From time to time after the
Closing, as and when requested by any party hereto, the other party
shall execute and deliver, or cause to be executed and delivered,
all such documents and instruments and shall take, or cause to be
taken, all such further or other actions (subject to the limitation
set forth in Section 8(i)), as may be necessary or desirable to
give full effect to this Agreement.
11. Indemnification.
(a) Tax Indemnification. Seller shall indemnify Buyer
and hold it harmless from (i) all liability of Buyer or any of its
affiliates (including the Company and the Subsidiary) for Taxes of
the Company or the Subsidiary for the Pre-Closing Tax Period,
(ii) all liability (as a result of Treasury Regulation 1.1502-6(a)
or otherwise) of Buyer or any of its affiliates (including the
Company and the Subsidiary) for Taxes of Seller or any other
corporation (other than the Company or the Subsidiary) affiliated
at any time prior to the Closing with the Company or the
Subsidiary, (iii) all liability of Buyer or any of its affiliates
(including the Company and the Subsidiary) for income Taxes of the
Company or the Subsidiary to the extent such liability results from
a deemed sale of assets as a result of the Section 338 Election (as
hereinafter defined) required by Section 12(a) of this Agreement,
except to the extent Buyer has specifically agreed to indemnify
Seller with respect to such income Taxes pursuant to the provisions
of clause (iii) of the following paragraph of this Section 11(a),
and (iv) all liability of Buyer or any of its affiliates (including
the Company and the Subsidiary) for reasonable legal fees and
expenses attributable to any item in clause (i), (ii) or (iii)
above. Notwithstanding the foregoing, Seller shall not indemnify
and hold harmless Buyer from any liability of Buyer or any of its
affiliates (including the Company and the Subsidiary) for Taxes of
the Company or the Subsidiary for the Pre-Closing Tax Period, to
the extent such liability has been specifically identified by
nature, period and amount in the Closing Statement, included as a
liability in the final determination of Closing Net Assets and
taken into account in the calculation of the Adjusted Purchase
Price.
Buyer shall, and shall cause the Company and the
Subsidiary to, indemnify Seller and hold it harmless from (i) all
liability of Seller or any of its affiliates for Taxes of the
Company or the Subsidiary for any taxable period ending on or after
the Closing Date (other than Taxes of the Company or the Subsidiary
for which indemnification by Seller has been expressly provided
under the foregoing paragraph of this Section 11(a)), (ii) all
liability of Seller or any of its affiliates for Taxes of the
Company or the Subsidiary for the Pre-Closing Tax Period, to the
extent such liability has been specifically identified by nature,
period and amount in the Closing Statement, included as a liability
in the final determination of Closing Net Assets and taken into
account in the calculation of the Adjusted Purchase Price,
(iii) all liability of Seller or any of its affiliates for income
Taxes of the Company or the Subsidiary payable to any state or
local jurisdiction to the extent such income Taxes are imposed on
a deemed sale of assets as a result of the Section 338 Election and
such jurisdiction successfully asserts that Seller is liable for
income Taxes to such jurisdiction on the sale of the Shares
(provided, however, that Buyer's obligation to indemnify Seller
pursuant to this clause (iii) with respect to any income Taxes
payable to any jurisdiction shall terminate and be of no further
force or effect if, without Buyer's prior written consent (which
consent shall not be unreasonably withheld), Seller or any of its
affiliates, employees or officers (A) reports gain from the sale of
the Shares as taxable income on a Tax Return filed in such
jurisdiction, or (B) takes a position inconsistent with past
practice in such jurisdiction which gives rise to Buyer's
obligation to indemnify Seller pursuant to this clause (iii)), and
(iv) all liability of Seller or any of its affiliates for
reasonable legal fees and expenses attributable to any item in
clause (i), (ii) or (iii) above. If any claim is made by a taxing
authority of any state or local jurisdiction that Seller is liable
to such jurisdiction for income Taxes on the sale of the Shares,
Seller shall promptly notify Buyer in writing of such claim. If
notice of any such claim is received by Seller after the Closing
Date and is not given to Buyer within a sufficient period of time
to allow Buyer to effectively contest such claim, Buyer shall not
be liable to Seller or any of its affiliates to the extent that
Buyer's position is actually prejudiced as a result thereof. If
the amount of any income Taxes of the Company or the Subsidiary
payable to one or more such jurisdictions on the deemed sale of
assets imposed as a result of the Section 338 Election exceeds
$50,000 on an aggregate basis, taking all such jurisdictions into
account, then Buyer shall have the right, at Buyer's option and
expense, to jointly control with Seller the contest of Seller's
liability for income Taxes owed to such jurisdiction or
jurisdictions on the sale of the Shares. Seller and its
affiliates, officers and employees shall cooperate with Buyer in
all reasonable respects in any such contest (with reimbursement by
Buyer of all reasonable out-of-pocket expenses incurred by Seller
in connection therewith at the request of Buyer), including without
limitation extending statutes of limitation or executing forms and
powers of attorney, and upon reasonable notice shall provide Buyer
and its affiliates, employees and officers with access during
normal business hours to all of Seller's books and records
(including Tax Returns) as Buyer reasonably shall deem necessary or
appropriate to such contest. In no case shall Seller admit any
liability with respect to, or settle, compromise or discharge, any
such claim without Buyer's prior written consent, which consent
shall not be unreasonably withheld.
In the case of any taxable period that includes (but does
not begin on) the Closing Date, including without limitation the
final taxable year of the Company for federal income tax purposes
as a member of Seller's affiliated group (a "Straddle Period"):
(1) real, personal and intangible property Taxes
("Property Taxes") of the Company and the Subsidiary for
the Pre-Closing Tax Period (which are subject to
indemnification by Seller to the extent set forth in this
Section 11(a)) shall be equal to the amount of such
Property Taxes assessed with respect to the entire
Straddle Period (regardless of when such Property Taxes
were due and payable) multiplied by a fraction, the
numerator of which is the number of days during the
Straddle Period that are in the Pre-Closing Tax Period
and the denominator of which is the total number of days
in the Straddle Period; and
(2) all other Taxes of the Company and the
Subsidiary for the Pre-Closing Tax Period (which are
subject to indemnification by Seller to the extent set
forth in this Section 11(a)) shall be computed using a
closing-of-the-books method as of the last day
immediately preceding the Closing Date, with all standard
deductions, exemptions, progressivity in rates and other
items calculated with respect to the full Straddle Period
apportioned to the Pre-Closing Tax Period based upon the
ratio of the number of days during the Straddle Period
that are in the Pre-Closing Tax Period to the total
number of days in the Straddle Period.
Seller's indemnity obligation in respect of Taxes for a Straddle
Period shall initially be effected by its payment to Buyer of the
excess of (x) such Taxes for the Pre-Closing Tax Period, over
(y) the sum of (i) the amount of such Taxes paid by Seller or any
of its affiliates (other than the Company or the Subsidiary) at any
time, plus (ii) the amount of such Taxes paid by the Company or the
Subsidiary prior to the close of business on the last day
immediately preceding the Closing Date, plus (iii) the amount of
such Taxes specifically identified by nature, period and amount in
the Closing Statement, included as a liability in the final
determination of Closing Net Assets and taken into account in the
calculation of the Adjusted Purchase Price. Seller shall initially
pay such excess to Buyer within 30 days after the Tax Return with
respect to the liability for such Taxes is required to be filed
(or, if later, is actually filed). If, in the second preceding
sentence, the amount of (y) exceeds (x), Buyer shall pay or cause
the appropriate Company or Subsidiary to pay to Seller the amount
of such excess, in the case of Property Taxes, at the Closing and,
in all other cases, within 30 days after the Tax Return with
respect to the liability for such Taxes is required to be filed.
The payments to be made pursuant to this paragraph by Seller or
Buyer with respect to any Straddle Period shall be appropriately
adjusted to reflect any final determination with respect to Taxes
for such Straddle Period.
(b) Other Indemnification by Seller. Seller shall
indemnify and reimburse Buyer and hold Buyer harmless from any
loss, liability, claim, damage or expense (including reasonable
legal fees and expenses, except as otherwise provided in
Section 11(f) hereof) suffered or incurred by Buyer or any of its
affiliates, including the Company and the Subsidiary (other than
any relating to Taxes, for which indemnification provisions are set
forth in paragraph (a) of this Section 11) to the extent caused by:
(i) any breach of any representation or warranty of
Seller contained in this Agreement or any certificate
delivered pursuant hereto, or
(ii) the Surimi Liabilities or the consummation of
the transactions described in Section 8(h) of this
Agreement, or
(iii) any products liability or similar claims with
respect to products of the Frozen Specialty Business
produced by Seller, the Company or the Subsidiary prior
to the Closing other than any such products sold after
the Closing which were not adulterated at the time of
Closing (or which were adulterated at the time of Closing
if such adulteration should reasonably have been
discovered after the Closing during the course of normal
pre-sale inspection), or
(iv) (A) any worker's compensation claims reported
to Seller or the Company prior to the Closing that are
based upon an occupational condition or disease, and
(B) any worker's compensation claims that are based upon
an injury (and not an occupational condition or disease),
general liability claims or automobile liability claims
arising from an incident occurring prior to the Closing,
or
(v) any other action, lawsuit or proceeding relating
to the Frozen Specialty Business which is pending (and
with respect to which Seller, the Company or the
Subsidiary has been served or otherwise notified)
immediately prior to the Closing in a court of competent
jurisdiction, or
(vi) any claim by a customer of the Frozen Specialty
Business arising out of the institution by Seller after
the Closing of legal proceedings to collect Unpaid
Accounts Receivable assigned to Seller pursuant to
Section 8(k)(i) that does not relate primarily to the
operation of the Frozen Specialty Business after the
Closing;
provided, however, that (A) Seller shall not have any liability
under clause (i) above (except for breaches of Section 4(b), 4(d)
or 4(p) of this Agreement) unless the aggregate of all losses,
liabilities, claims, damages and expenses under clause (i) for
which Seller would, but for this clause (A), be liable exceeds on
a cumulative basis $500,000, and then only to the extent of any
such excess, and (B) Seller shall not have any liability under
clause (i) above (except for breaches of Section 4(b), 4(d) or 4(p)
of this Agreement) to the extent the aggregate of all losses,
liabilities, claims, damages and expenses under clause (i) for
which Seller would, but for the provisions of this clause (B), be
liable exceeds on a cumulative basis an amount equal to 75% of the
Adjusted Purchase Price.
Buyer acknowledges and agrees that, except with respect
to claims based upon breaches of covenants or intentionally
fraudulent breaches of representations and warranties, its sole and
exclusive remedy with respect to any and all claims relating to the
subject matter of this Agreement (including without limitation
claims for breaches of representations and warranties contained in
this Agreement) shall be pursuant to the indemnification provisions
set forth in this Section 11. In furtherance of the foregoing,
Buyer hereby waives, to the fullest extent permitted under
applicable law, except with respect to claims based upon breaches
of covenants and intentionally fraudulent breaches of
representations and warranties, any and all rights, claims and
causes of action Buyer, the Company or the Subsidiary may have
against Seller as a matter of equity or arising under or based upon
any federal, state, local or foreign statute, law, ordinance, rule
or regulation (including, without limitation, those relating to any
hazardous substances) or arising under or based upon common law or
otherwise, except to the extent provided in Sections 11(a) and
11(b).
(c) Other Indemnification by Buyer. Buyer shall, and
after the Closing shall cause each of the Company and the
Subsidiary to, indemnify and reimburse Seller against and hold
Seller harmless from any loss, liability, claim, damage or expense
(including reasonable legal fees and expenses, except as otherwise
provided in Section 11(f)) suffered or incurred by Seller or any of
its affiliates (other than any relating to Taxes, for which
indemnification provisions are set forth in paragraph (a) of this
Section 11) to the extent caused by:
(i) any breach of any representation or warranty of
Buyer contained in this Agreement or any certificate
delivered pursuant hereto, or
(ii) without limiting the generality of clause (iii)
or (iv) hereof, any claims (including without limitation
products liability, auto liability and general liability
claims) in respect of products sold by the Company or the
Subsidiary after the Closing under any of the Marks or
any other use of the Marks by the Company or the
Subsidiary after the Closing, which claims are brought
against Seller or any of its affiliates as a result of
any right or license to use the Marks after the Closing
granted by Seller pursuant to Section 8(c) of this
Agreement, or
(iii) without limiting the generality of clause (iv)
hereof, any action, lawsuit, proceeding or investigation
relating solely to the Frozen Specialty Business (other
than those for which indemnification by Seller has been
expressly provided under Section 11(a) or (b) and has not
terminated under Section 11(e)), or
(iv) any obligation or liability of the Company, the
Subsidiary or, with respect to obligations or liabilities
relating solely to the Frozen Specialty Business, Seller
(other than, except as otherwise provided in clause (v)
hereof, (A) any such obligation or liability of Seller
under any instruments, contracts, commitments, agreements
or arrangements to which Seller, and not the Company or
the Subsidiary, is a party which are not disclosed in
Section 4(i), 4(j), 4(l), 4(m) or 4(t) of the Disclosure
Schedule, (B) any such obligation or liability of Seller
under any instruments, contracts, commitments,
agreements, or arrangements to which Seller, and not the
Company or the Subsidiary, is a party which are disclosed
in Section 4(i), 4(j), 4(l), 4(m) or 4(t) of the
Disclosure Schedule to the extent such obligation or
liability has not (x) been included in the final
determination of Closing Net Assets and taken into
account in the calculation of the Adjusted Purchase Price
or (y) accrued after the Closing, and (C) any other
obligation or liability of the Company, the Subsidiary or
Seller (including the Surimi Liabilities) for which
indemnification by Seller has been expressly provided
under Section 11(a) or (b)), including, without
limitation, any obligation or liability included in the
final determination of Closing Net Assets and taken into
account in the calculation of the Adjusted Purchase Price
and any obligation or liability assumed by the Company
under Section 8(i), or
(v) any obligation or liability of Seller or any
affiliate of Seller to pay or perform any obligation or
liability of the Company or the Subsidiary (if
indemnification by Buyer for such obligation or liability
of the Company or the Subsidiary has been expressly
provided under clause (iv) above) (A) pursuant to any
guaranty or obligation to assure performance given or
made by Seller or such affiliate, (B) that would not have
arisen except as a result of non-compliance by the
Company or the Subsidiary with the provisions of any
applicable bulk sales, corporate, bankruptcy or similar
laws in connection with the consummation of the
transactions described in Section 8(h) of this Agreement,
or (C) that otherwise arises as a matter of law or
contract;
provided, however, that (A) Buyer shall not have any liability
under clause (i) above unless the aggregate of all losses,
liabilities, claims, damages and expenses under clause (i) for
which Buyer would, but for this clause (A), be liable exceeds on a
cumulative basis $500,000, and then only to the extent of any such
excess, and (B) Buyer shall not have any liability under clause (i)
above to the extent the aggregate of all losses, liabilities,
claims, damages and expenses under clause (i) for which Buyer
would, but for the provisions of this clause (B), be liable exceeds
on a cumulative basis an amount equal to 75% of the Adjusted
Purchase Price.
Seller acknowledges and agrees that, except with respect
to claims based upon breaches of covenants or intentionally
fraudulent breaches of representations or warranties, its sole and
exclusive remedy with respect to any and all claims relating to the
subject matter of this Agreement (including without limitation
claims for breaches of representations and warranties contained in
this Agreement) shall be pursuant to the indemnification provisions
set forth in this Section 11. In furtherance of the foregoing,
Seller hereby waives, to the fullest extent permitted under
applicable law, except with respect to claims based upon breaches
of covenants and intentionally fraudulent breaches of
representations and warranties, any and all rights, claims and
causes of action Seller may have against Buyer, the Company or the
Subsidiary as a matter of equity or arising under or based upon any
federal, state, local or foreign statute, law, ordinance, rule or
regulation (including, without limitation, those relating to any
hazardous substances) or arising under or based upon common law or
otherwise, except to the extent provided in Sections 11(a) and
11(c).
(d) Adjustments.
(i) The amount of any loss, liability, claim, damage or
expense for which indemnification is provided under this Section 11
shall be net of any amounts recovered (regardless of time) by the
indemnified party with respect thereto under insurance policies
(including without limitation any of the title insurance policies
issued under the Title Commitments, which policies Buyer agrees to
obtain promptly following the Closing), provided that the
indemnified party shall have no obligation to seek recovery of any
such amounts under any insurance policies other than, with respect
to Buyer, the title insurance policies issued under the Title
Commitments.
(ii) Any indemnity payment made pursuant to this Section
will be treated as an adjustment to the Adjusted Purchase Price for
Tax purposes, unless a final determination (which shall include the
execution of a Form 870-AD or successor form) with respect to the
indemnified party causes any such payment not to constitute an
adjustment to the Adjusted Purchase Price for federal income Tax
purposes.
(e) Termination of Indemnification. The obligations to
indemnify and hold harmless a party hereto, (x) pursuant to
Section 11(a), shall terminate upon the expiration of the
applicable statute of limitations with respect to the Tax liability
in question (giving effect to any waiver, mitigation or extension
thereof), (y) pursuant to Sections 11(b)(i) and 11(c)(i), shall
terminate when the applicable representation or warranty terminates
pursuant to Section 16, and (z) pursuant to the other clauses of
Sections 11(b) and 11(c), shall not terminate; provided, however,
that such obligations to indemnify and hold harmless shall not
terminate with respect to any item as to which the person to be
indemnified shall have, before the expiration of the applicable
period, previously made a claim by delivering a notice pursuant to
Section 11(f) hereof to the party to be providing the
indemnification.
(f) Procedures Relating to Indemnification (Other than
Under Section 11(a)). In order for a party (the "indemnified
party") to be entitled to any indemnification provided for under
this Agreement (other than under Section 11(a)) in respect of,
arising out of or involving a claim or demand made by any person,
firm, governmental authority, corporation or other entity against
the indemnified party (a "Third Party Claim"), such indemnified
party shall notify the indemnifying party in writing of the Third
Party Claim, and deliver to the indemnifying party copies of all
material notices and documents accompanying or constituting the
Third Party Claim, promptly (but in any event in reasonably
sufficient time for the indemnifying party to file a timely answer
to such Third Party Claim, if applicable) after obtaining notice
thereof; provided, however, that failure to promptly give such
notification shall not affect the indemnification provided
hereunder except to the extent the indemnifying party shall have
been actually prejudiced as a result of such failure. Thereafter,
the indemnified party shall deliver to the indemnifying party,
promptly after the indemnified party's receipt thereof, copies of
all material notices and documents (including court papers)
received by the indemnified party relating to the Third Party
Claim; provided, however that failure to promptly deliver such
copies shall not affect the indemnification provided hereunder
except to the extent the indemnifying party shall have been
actually prejudiced as a result of such failure.
If a Third Party Claim is made against an indemnified
party, the indemnifying party will be entitled to participate in
the defense thereof and (if it so chooses and acknowledges in
writing its obligation to indemnify the indemnified party in
accordance with the terms contained in this Section 11 in respect
of such Third Party Claim) to assume the defense thereof with
counsel selected by the indemnifying party and reasonably
satisfactory to the indemnified party. Should the indemnifying
party so elect to assume the defense of a Third Party Claim, which
election must be made within ten business days (in the case of a
Third Party Claim with respect to which a complaint has been filed)
or 30 days (in the case of all other Third Party Claims) after the
indemnifying party receives notice of the Third Party Claim from
the indemnified party, the indemnifying party will not be liable to
the indemnified party for legal expenses incurred by the
indemnified party in connection with the defense thereof, except as
otherwise expressly provided below. If the indemnifying party
assumes such defense, the indemnified party shall have the right,
but not the obligation, to participate in the defense thereof and
to employ counsel, at its own expense, separate from the counsel
employed by the indemnifying party (it being understood that the
indemnifying party shall control such defense), provided that the
indemnifying party will be responsible for the fees and expenses of
one separate counsel for the indemnified party if the indemnified
party reasonably concludes that the counsel selected by the
indemnifying party has a conflict of interest. If the indemnifying
party has not assumed the defense of a Third Party Claim, the
indemnifying party shall be liable for the fees and expenses of
counsel employed by the indemnified party. If the indemnifying
party chooses to defend or prosecute any Third Party Claim, the
indemnified party shall cooperate in the defense or prosecution
thereof with reimbursement by the indemnifying party of reasonable
out-of-pocket expenses of the indemnified party incurred in
connection therewith. Such cooperation shall include, without
limitation, the retention and (upon the indemnifying party's
request) the provision to the indemnifying party of records and
information which are reasonably relevant to such Third Party
Claim, and making employees available on a mutually convenient
basis to provide additional information and explanation of any
material provided hereunder. Whether or not the indemnifying party
shall have assumed the defense of a Third Party Claim, the
indemnified party shall not admit any liability with respect to
such Third Party Claim without the indemnifying party's prior
written consent, which consent shall not be unreasonably withheld.
Notwithstanding anything to the contrary stated herein, neither the
indemnifying party nor the indemnified party shall settle,
compromise or discharge any Third Party Claim for which indemnity
is required hereunder without the consent of the other such party,
which consent shall not be unreasonably withheld. All Tax Claims
(as defined in Section 11(g)) shall be governed by Section 11(g).
(g) Procedures Relating to Indemnification of Tax
Claims. If a claim shall be made by any taxing authority, which,
if successful, might result in an indemnity payment to Buyer or one
of its affiliates pursuant to Section 11(a), Buyer shall promptly
notify Seller in writing of such claim (a "Tax Claim"). If notice
of a Tax Claim ("Tax Notice") received by any of Buyer, the Company
or the Subsidiary after the Closing Date is not given to Seller
within a sufficient period of time to allow Seller to effectively
contest such Tax Claim, Seller shall not be liable to Buyer or any
of its affiliates to the extent that Seller's position is actually
prejudiced as a result thereof.
With respect to any Tax Claim (except to the extent it
relates to Taxes of the Company or the Subsidiary for a taxable
period that includes (but does not end on) the Closing Date),
Seller shall control all proceedings taken in connection with such
Tax Claim (including, without limitation, selection of counsel)
and, without limiting the foregoing, may in its sole discretion
pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with any taxing authority with respect
thereto, and may, in its sole discretion, either pay the Tax
claimed and sue for a refund where applicable law permits such
refund suits (subject to Buyer's obligations, if any, with respect
to such Taxes under Section 11(a) and Buyer's rights, if any, with
respect to such refund under Section 12(d)) or contest the Tax
Claim in any permissible manner. Seller and Buyer shall jointly
control all proceedings taken in connection with any Tax Claim to
the extent it relates to Taxes of the Company or the Subsidiary for
a taxable period that includes (but does not end on) the Closing
Date. Each party hereto shall cooperate and cause their respective
affiliates to cooperate with the other party in contesting any Tax
Claim (with reimbursement by Seller of reasonable out-of-pocket
expenses of Buyer or its affiliates incurred in connection
therewith, except to the extent the Tax Claim relates to Taxes of
the Company or the Subsidiary for a taxable period that includes
(but does not end on) the Closing Date), which cooperation shall
include, without limitation, the retention and the provision of
records and information which are reasonably relevant to such Tax
Claim, and making employees available on a mutually convenient
basis to provide additional information or explanation of any
material provided hereunder or to testify at proceedings relating
to such Tax Claim.
In no case shall Buyer, the Company or the Subsidiary
admit any liability with respect to, or settle, compromise or
discharge, any Tax Claim without Seller's prior written consent,
which consent shall not be unreasonably withheld. In no case shall
Seller admit any liability with respect to, or settle, compromise
or discharge, any Tax Claim relating to Taxes of the Company or the
Subsidiary for a taxable period that includes (but does not end on)
the Closing Date without Buyer's prior written consent, which
consent shall not be unreasonably withheld.
12. Tax Matters.
(a) Buyer and Seller will take all actions necessary to
effect elections under Sections 338(g) and 338(h)(10) of the Code
and any comparable elections under state or local Tax law
(collectively, the "Section 338 Election") with respect to each of
the Company and the Subsidiary including, without limitation, the
filing of Internal Revenue Service Form 8023 ("Corporate Qualified
Stock Purchase Elections"). In connection with such elections,
Buyer and Seller shall jointly determine the amount of the
"adjusted grossed-up basis" of the Shares and the "modified
aggregate deemed selling price" of the assets of the Company and
the Subsidiary and the allocation of such amounts among the assets
of the Company and the Subsidiary in accordance with
Section 338(b)(5) of the Code and the Treasury Regulations
promulgated thereunder (the "Allocations"). For purposes of
allocating "adjusted grossed-up basis" among the assets of the
Company and the Subsidiary, the parties agree that the fair market
value of the Company's real property located in New Rochelle, New
York is $3,000,000. The parties further agree that such amount
represents the fair market value of the real property interests in
New York State owned by the Company and the amount of the Adjusted
Purchase Price apportioned to such interest for purposes of the New
York Real Property Transfer Gains Tax and the New York Real Estate
Transfer Tax. Seller shall file New York Form TP-580 (Transferor
Questionnaire) and Buyer shall file New York Form TP-581
(Transferee Questionnaire) on a basis consistent with this
allocation. The calculations of the "adjusted grossed-up basis"
and the Allocations shall not include the respective investment
banking, legal, accounting and other fees or costs incurred by each
of Seller and Buyer as a result of the transactions contemplated by
this Agreement ("Transaction Costs"). Seller shall calculate gain
or loss, if any, resulting from such elections in a manner
consistent with the Allocations and shall not take any position
inconsistent with the Allocations in any Tax Return or otherwise;
provided, however, that Seller shall be entitled to take into
account its Transaction Costs when calculating such gain or loss.
Buyer shall allocate the "adjusted grossed-up basis" of the Shares
among the assets of the Company and the Subsidiary in a manner
consistent with the Allocations and shall not take any position
inconsistent with the Allocations in any Tax Return or otherwise;
provided, however, that Buyer shall be entitled to add its
Transaction Costs to the "adjusted grossed-up basis" of the Shares
for purposes of allocating among the assets of the Company and the
Subsidiary.
(b) For any taxable period that includes (but does not
end on) the Closing Date, Buyer shall timely prepare and file or
cause the appropriate Company or Subsidiary to timely prepare and
file with the appropriate authorities all Tax Returns required to
be filed, and shall pay or cause the appropriate Company or
Subsidiary to pay all Taxes due with respect to such Tax Returns,
subject to Seller's obligations, if any, with respect to such Taxes
under Section 11(a). For any taxable period of the Company or the
Subsidiary that ends on or before the Closing Date, Seller shall
timely prepare and file with the appropriate authorities all Tax
Returns required to be filed, and shall pay all Taxes due with
respect to such Tax Returns, subject to Buyer's obligations, if
any, with respect to such Taxes under Section 11(a). Buyer and
Seller agree to cause all Tax Returns for any taxable period that
includes (but does not end on) the Closing Date to be filed on the
basis that the relevant taxable period ended on the Closing Date
and on a basis consistent with prior filings by Seller, unless the
relevant taxing authority will not accept a Tax Return filed on
that basis.
(c) Each of Seller, Buyer, the Company and the
Subsidiary shall reasonably cooperate, and shall cause their
respective affiliates, officers, employees, agents, auditors and
other representatives to reasonably cooperate, in preparing and
filing all Tax Returns (including maintaining and making available
to each other all records necessary in connection with Taxes and in
resolving all disputes and audits with respect to all taxable
periods relating to Taxes), and in preparing and filing all
financial statements and reports. Each party hereto recognizes
that the other will need access from time to time after the
Closing, for Tax and financial reporting purposes, to certain Tax,
accounting and other records and information to the extent such
records and information pertain to events occurring on or prior to
the Closing Date. Each party hereto shall, and Buyer shall cause
the Company and the Subsidiary to, properly retain and maintain
such records and information in accordance with the past custom and
practice of such corporation for a period of 12 years after the
Closing Date. Subject to Seller's obligations under Section 5(c)
and Buyer's obligations under the Confidentiality Agreement, each
party, its affiliates and their agents and representatives, at
times and dates mutually acceptable, shall afford the other party
the ability to inspect, review and make copies of such records and
information as is necessary or appropriate from time to time, such
activities to be conducted during normal business hours and at such
other party's expense.
(d) Any refunds or credits of Taxes of the Company or
the Subsidiary for any taxable period ending before the Closing
Date shall be for the account of Seller. Any refunds or credits of
Taxes of the Company or the Subsidiary for any taxable period
beginning on or after the Closing Date shall be for the account of
Buyer. Any refunds or credits of Taxes of the Company or the
Subsidiary for any Straddle Period shall be equitably apportioned
between Seller and Buyer (based on each party's respective
indemnification obligations with respect to such Taxes). Buyer
shall, if Seller so requests and at Seller's expense, cause the
Company or Subsidiary so requested by Seller to file for and obtain
any refunds or credits to which Seller is entitled under this
Section 12(d). Buyer shall permit Seller to control the
prosecution of any such refund claim (other than any such claim for
refund of Taxes for any taxable period that includes (but does not
end on) the Closing Date, which shall be controlled jointly by
Buyer and Seller) and, where deemed appropriate by Seller, shall
cause the applicable Company or Subsidiary to authorize by
appropriate powers of attorney such persons as Seller shall
designate to represent the applicable Company or Subsidiary with
respect to such refund claim. Buyer shall cause the applicable
Company or Subsidiary to forward to Seller any refund to which
Seller is entitled under this Section 12(d) within ten days after
such refund is received (or reimburse Seller for any credit to
which Seller is entitled under this Section 12(d) within ten days
after such credit is allowed or applied against other Tax
liability). Seller and Buyer shall treat any payments under the
preceding sentence that Seller shall receive pursuant to this
Section 12(d) as an adjustment to the Adjusted Purchase Price for
Tax purposes, unless a final determination (which shall include the
execution of a Form 870-AD or successor form) with respect to Buyer
or any of its affiliates causes any such payment not to be treated
as an adjustment to the Adjusted Purchase Price for federal income
Tax purposes.
(e) Seller shall be responsible for filing any amended,
consolidated, combined or unitary Tax Returns for taxable years
ending on or prior to the Closing Date (and, subject to Buyer's
obligations under Section 11(a) hereof, to pay any amount of Tax
due which is shown thereon) which are required as a result of
examination adjustments made by the Internal Revenue Service or by
the applicable state, local or foreign taxing authorities for such
taxable years as finally determined. For those jurisdictions in
which separate Tax Returns are filed by the Company or the
Subsidiary, any required amended Tax Returns resulting from such
examination adjustments, as finally determined, shall be prepared
by Seller and furnished to the applicable Company or Subsidiary for
approval (which approval shall not be unreasonably withheld),
signature and filing at least 10 days prior to the due date for
filing such Tax Returns.
(f) Notwithstanding anything to the contrary provided in
Section 11(a) or otherwise provided in this Agreement, all real
estate transfer and real estate gains, documentary, sales, use,
motor vehicle transfer, gross receipts, registration and other such
Taxes (including any penalties, interest and additions to Tax), if
any, incurred in connection with this Agreement and the
transactions contemplated hereby (other than any such Taxes
expressly required pursuant to the next sentence hereof to be paid
by Seller) shall be paid one-half by Buyer and one-half by Seller,
and Seller and Buyer shall cooperate in timely filing all Tax
Returns as may be required to comply with the provisions of such
Tax laws. Seller shall pay all such Taxes, if any, incurred in
connection with the transactions contemplated by Section 8(h)
hereof which are not paid by the Company or the Subsidiary prior to
Closing (or specifically identified by nature, period and amount on
the Closing Statement, included as a liability in the final
determination of Closing Net Assets and taken into account in the
calculation of the Adjusted Purchase Price) and all stock transfer
Taxes, if any, due as a result of the sale of the Shares.
(g) Seller shall deliver to Buyer at the Closing an
affidavit (a so called "FIRPTA affidavit") in form and substance
reasonably satisfactory to Buyer, duly executed and acknowledged,
certifying facts that would exempt the transaction contemplated
hereby from the provisions of the Foreign Investors Real Property
Tax Act.
(h) Seller shall cause the provisions of any Tax sharing
or apportionment agreement to which the Company or the Subsidiary
is a party or which affects the liability of the Company or the
Subsidiary for the payment of Taxes (or the Company's and the
Subsidiary's obligations under any such agreement) to be terminated
on or before the Closing Date.
13. Assignment. This Agreement and the rights hereunder
shall not be assignable or transferable by either party without the
prior written consent of the other party. Notwithstanding the
foregoing, either party may assign its rights under this Agreement
to an affiliate of such party without the consent of the other
party, provided that no such assignment shall relieve the assigning
party of its obligations hereunder.
14. No Third-Party Beneficiaries. This Agreement is for
the sole benefit of the parties hereto and their permitted
successors and assigns, and nothing herein expressed or implied
shall give or be construed to give to any person or entity, other
than the parties hereto and such successors and assigns, any legal
or equitable rights hereunder.
15. Termination. (a) Anything contained herein to the
contrary notwithstanding, this Agreement may be terminated and the
transactions contemplated hereby abandoned at any time prior to the
Closing:
(i) by mutual written consent of Seller and Buyer;
(ii) by Seller if any of the conditions set forth in
Section 3(b) hereof shall have become incapable of
fulfillment, and shall not have been waived in writing by
Seller;
(iii) by Buyer if any of the conditions set forth in
Section 3(a) hereof shall have become incapable of
fulfillment, and shall not have been waived in writing by
Buyer; or
(iv) by either party hereto, if the Closing does not
occur on or prior to June 15, 1994 (the "Termination
Date");
provided, however, that the party seeking termination pursuant to
clause (ii), (iii) or (iv) is not in breach in any material respect
of any of its representations, warranties, covenants or agreements
contained in this Agreement.
(b) In the event of termination by Seller or Buyer
pursuant to this Section 15, written notice thereof shall forthwith
be given to the other party and the transactions contemplated by
this Agreement shall be terminated, without further action by
either party. If the transactions contemplated by this Agreement
are terminated as provided herein:
(i) Buyer shall return to Seller all documents and
other material received from or on behalf of Seller, the
Company or the Subsidiary relating to the transactions
contemplated hereby, whether so obtained before or after
the execution hereof; and
(ii) all confidential information received by Buyer
shall be treated in accordance with the Confidentiality
Agreement which shall remain in full force and effect in
accordance with the terms thereof notwithstanding the
termination of this Agreement.
(c) If this Agreement is terminated and the transactions
contemplated hereby are abandoned as described in this Section 15,
this Agreement shall become void and of no further force and
effect, except for the provisions of (i) Section 7(a) hereof
relating to the obligation of Buyer to keep confidential certain
information and data obtained by it from Seller, (ii) Section 17
hereof relating to certain expenses, (iii) Section 8(d) hereof
relating to publicity, (iv) Section 23 hereof relating to finder's
fees and broker's fees and (v) this Section 15. Nothing in this
Section 15 shall be deemed to release either party from any
liability for any breach by such party of the terms and provisions
of this Agreement.
16. Survival of Representations. Except as hereinafter
provided in this Section 16, the representations and warranties of
Seller and Buyer in this Agreement and in any certificate delivered
pursuant hereto shall survive the Closing and any investigation at
any time made by or on behalf of any party, solely for purposes of
Section 11 of this Agreement, until the close of business on the
second anniversary of the Closing Date, whereupon such
representations and warranties shall terminate. The
representations and warranties in Section 4(h) shall survive for so
long as the Tax indemnification is available under Section 11(a).
The representations and warranties in Sections 4(b), 4(d) and 4(p)
shall terminate upon expiration of the applicable statute of
limitations.
17. Expenses. Whether or not the transactions
contemplated hereby are consummated, and except as otherwise
provided in this Agreement, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such costs or expenses;
provided, however, that Seller shall pay all such material expenses
of the Company and the Subsidiary incurred prior to the Closing to
the extent the liability therefor has not been included in the
final determination of Closing Net Assets and taken into account in
the calculation of the Adjusted Purchase Price.
18. Amendments. No amendment to this Agreement shall be
effective unless it shall be in writing and signed by both parties
hereto.
19. Notices. All notices or other communications
required or permitted to be given hereunder shall be in writing and
shall be delivered by hand, or sent by telecopy, or sent, postage
prepaid, by United States registered, certified or express mail, or
reputable overnight courier service, and shall be deemed given, if
delivered by hand, when so delivered, or if sent by telecopy, when
received, or if sent by mail, three business days after mailing
(two business days in the case of express mail), or if sent by
overnight courier service, one business day after delivery to such
service, as follows:
(i) if to Buyer, to
Doskocil Companies Incorporated
2601 NW Expressway
Suite 1000
Oklahoma City, Oklahoma 73112
Attention: Bryant Bynum, Vice President,
Planning and Corporate Finance
Facsimile No.: (405)879-5458
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attention: Mark C. Smith, Esq.
Facsimile No.: (212)735-2000
(ii) if to Seller, to
International Multifoods Corporation
Multifoods Tower
P. O. Box 2942
33 South Sixth Street
Minneapolis, Minnesota 55402
Attention: Anthony Luiso, Chairman of the Board,
President and Chief Executive Officer
Facsimile No.: (612)340-6502
with copies to:
John E. Sampson, Vice President-
Corporate Planning and Development
Frank W. Bonvino, Vice President,
General Counsel and Secretary
International Multifoods Corporation
Multifoods Tower
P. O. Box 2942
33 South Sixth Street
Minneapolis, Minnesota 55402
Facsimile No.: (612)340-6502
Any party hereto may change the address to which notices and other
communications are to be delivered or sent by giving the other
party notice in the manner herein set forth, provided that notices
of a change of address shall be effective only upon receipt
thereof.
20. Interpretation. In this Agreement, the Disclosure
Schedule and any exhibits annexed hereto:
(a) words denoting the singular include the plural and
vice versa and words denoting any gender include all genders;
(b) the word "including" shall mean "including without
limitation";
(c) the use of headings is for convenience of reference
only and shall not affect the meaning or interpretation of this
Agreement, the Disclosure Schedule or any exhibits annexed hereto;
(d) when calculating the period of time within which or
following which any act is to be done or step taken, the date which
is the reference day in calculating such period shall be excluded
and, if the last day of such period is not a business day (meaning
for all purposes of this Agreement any day other than a Saturday,
Sunday or a day which is a statutory holiday under the laws of the
United States or the State of Minnesota), the period shall end on
the next day which is a business day;
(e) all dollar amounts are expressed in United States
funds;
(f) unless otherwise expressly provided herein, money
shall be tendered by wire transfer of immediately available federal
funds;
(g) as used in this Agreement, the term "affiliate" shall
have the meaning set forth in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended;
(h) as used in this Agreement, the term "person" shall
mean and include an individual, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a
government or any department or agency thereof;
(i) as used in this Agreement, any reference to any
event, change, situation or development having a Material Adverse
Effect means such event, change, situation or development is
materially adverse to the condition (financial or otherwise),
properties, business or results of operations of the Frozen
Specialty Business; and
(j) as used in this Agreement, "Knowledge" of Seller
means the actual knowledge of any officer of Seller, the President
or any Vice President of the Prepared Foods Division of Seller, and
any employee of the Frozen Specialty Business at or above the level
of plant manager.
21. Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original, but all of which
shall be considered one and the same agreement, and shall become
effective when counterparts have been signed by each of the parties
and delivered to the other party.
22. Entire Agreement. This Agreement (including the
Disclosure Schedule, the exhibits annexed hereto and the
certificates referred to herein), and the Confidentiality Agreement
contain the entire agreement and understanding between the parties
hereto with respect to the subject matter hereof and supersede all
prior agreements and understandings relating to such subject
matter. There are no restrictions, promises, representations,
warranties, covenants or undertakings, other than those expressly
set forth or referred to herein.
23. Brokerage Fees. Each party hereto hereby represents
and agrees that (a) the only brokers or finders that have acted for
such party in connection with this Agreement or the transactions
contemplated hereby or that may be entitled to any brokerage fee,
finder's fee or commission in respect thereof are Lehman Brothers
with respect to Seller, and (b) Seller will pay all fees or
commissions which may be payable to Lehman Brothers.
24. Severability. If any provision of this Agreement or
the application of any such provision to any person or circumstance
shall be held invalid, illegal or unenforceable in any respect by
a court of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision hereof.
25. Governing Law. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of
Minnesota applicable to agreements made and to be performed
entirely within such state, without regard to the conflicts of law
principles of such state.
26. Disclosure Schedule, etc. The Disclosure Schedule
and all exhibits attached hereto are hereby incorporated in and
made a part of this Agreement as if set forth in full herein.
Matters reflected in the Disclosure Schedule are not necessarily
limited to matters required by this Agreement to be reflected in
the Disclosure Schedule. Such additional matters are set forth for
informational purposes and do not necessarily include other matters
of a similar nature. The Disclosure Schedule has been arranged in
sections corresponding to the Sections contained in this Agreement,
provided that a disclosure made in any section of the Disclosure
Schedule that is sufficient to reasonably inform Buyer of
information required to be disclosed in another section of the
Disclosure Schedule to avoid a misrepresentation under the
counterpart Section of this Agreement shall be deemed, for all
purposes of this Agreement, to have been made under such other
section of the Disclosure Schedule. In no event shall the mere
listing in the Disclosure Schedule of a document or other item be
deemed adequate to disclose an exception to a representation or
warranty made herein (unless the representation or warranty has to
do with the existence of the document or other item itself or the
mere listing of the document or item in the Disclosure Schedule
otherwise reasonably informs Buyer of an exception to such
representation or warranty).
27. Waiver of Compliance; Consents. Except as otherwise
provided in this Agreement, any failure of either of the parties to
comply with any obligation, covenant, agreement or condition herein
may be waived by the party entitled to the benefits 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 27.
28. Remedies Cumulative. Except as otherwise provided
herein, the remedies provided herein shall be cumulative and shall
not preclude (i) the assertion by Buyer of any other rights
hereunder or the seeking by Buyer of any other remedies against
Seller provided herein, or (ii) the assertion by Seller of any
rights hereunder or the seeking by Seller of any other remedies
against Buyer provided herein.
IN WITNESS WHEREOF, each of the parties have caused this
Agreement to be signed by its duly authorized officer as of the
date first written above.
INTERNATIONAL MULTIFOODS
CORPORATION
(Seller)
By /s/ Duncan H. Cocroft
Name: Duncan H. Cocroft
Title: Vice President-Finance and
Chief Financial OFficer
DOSKOCIL COMPANIES INCORPORATED
(Buyer)
By /s/ John T. Hanes
Name: John T. Hanes
Title: Chairman, President and
Chief Executive Officer
EXHIBITS AND SCHEDULES OMITTED:
Exhibit A Principles and Methodology for Determining Closing Net Assets
Exhibit B Form of Opinion of Faegre & Benson
Exhibit C Form of Opinion of General Counsel of Seller
Exhibit D Form of Opinion of Skadden, Arps, Slate, Meagher & Flom
Exhibit E Form of Opinion of Local Counsel to Buyer
Exhibit F Interim Statement of Net Assets
Exhibit G Audited Financial Statements
Disclosure Schedule relating to representations and warranties of Seller
The Registrant hereby agrees to furnish supplementally a copy of any
omitted exhibit or schedule to the Commission upon request.
