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 26, 1995
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 26, 1995, pursuant to a Stock Purchase Agreement dated as of
June 7, 1995, International Multifoods Corporation (the "Company") sold
all of the issued and outstanding shares of Multifoods Seafood, Inc., a
Delaware corporation and wholly-owned subsidiary of the Company, and all
of the issued and outstanding shares of JAC Creative Foods, Inc., a
California corporation and wholly-owned subsidiary of the Company, to
Tyson Foods, Inc., a Delaware corporation, for an aggregate cash purchase
price of $48,009,000. The purchase price of the shares was arrived at by
negotiation between the Company and Tyson Foods, Inc. The business sold
by the Company pursuant to the Stock Purchase Agreement consisted of the
Company's surimi seafood business and included three processing
facilities.
Item 7. Financial Statements and Exhibits.
(a) Not applicable.
(b) Pro forma financial information reflecting the disposition
of the Company's surimi seafood business, as described
above in Item 2.
(c) Exhibits.
2.1 Stock Purchase Agreement between International
Multifoods Corporation (Seller) and Tyson Foods, Inc.
(Buyer) dated as of June 7, 1995.
INTERNATIONAL MULTIFOODS CORPORATION
Introduction to Pro Forma Consolidated
Condensed Financial Information (Unaudited)
As described in Item 2, on June 26, 1995, the Company completed the sale
of its surimi seafood business.
The following unaudited pro forma financial statements reflect the
impact of the transaction described above, in the manner described in the
accompanying notes, to the historical statement of operations for the year
ended February 28, 1995 and the balance sheet as of February 28, 1995. For
purposes of reporting pro forma results of operations, it is assumed the
business was sold on March 1, 1994. For purposes of reporting the pro forma
balance sheet, it is assumed the business was sold on February 28, 1995.
The sale will result in a net gain which will be reflected in the
Company's results of operations in the quarter ending August 31, 1995.
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 the sale 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, 1995.
International Multifoods Corporation and Subsidiaries
Pro Forma Consolidated Condensed Statement of Operations
Year Ended February 28, 1995
(Unaudited)
(in thousands, except per share data)
Pro Forma
--------------------------
Historical Adjustments(a) Results
Net sales $ 2,295,119 $(63,929) $ 2,231,190
Cost of sales (1,901,932) 39,160 (1,862,772)
Gross profit 393,187 (24,769) 368,418
Delivery and distribution (146,220) 2,615 (143,605)
Selling, general
and administrative (186,616) 11,820 (174,796)
Unusual items 26,240 - 26,240
Operating earnings 86,591 (10,334) 76,257
Financing costs:
Interest, net (12,105) 1,825(b) (10,280)
Foreign exchange loss on
cash and equivalents (2,747) - (2,747)
Total financing costs (14,852) 1,825 (13,027)
Earnings before income taxes 71,739 (8,509) 63,230
Income taxes (14,718) 3,319 (11,399)
Net earnings $ 57,021 $ (5,190) $ 51,831
Net earnings per share
of common stock $ 3.16 $ (.29) $ 2.87
Average shares of common
stock outstanding 17,974 17,974
(a) The pro forma statement of operations for the year ended
February 28, 1995 assumes the divestiture took place on
March 1, 1994. Adjustments include the elimination of net sales and
expenses of the business. The gain on the divestiture has not been
included.
(b) Represents the reduction in interest expense assuming the
divestiture had been consummated on March 1, 1994 and the net
proceeds were used to reduce U.S. debt obligations. Proceeds were reduced
by additional costs directly attributable to the transaction,
including taxes.
International Multifoods Corporation and Subsidiaries
Pro Forma Consolidated Condensed Balance Sheet
February 28, 1995
(Unaudited)
(in thousands)
Pro Forma
-------------------------
Assets Historical Adjustments(a) Results
Current assets:
Cash and equivalents $ 10,792 $ - $ 10,792
Trade accounts receivable,
net of allowance 142,474 (3,428) 139,046
Inventories 256,878 (7,148) 249,730
Other current assets 61,553 (821) 60,732
Total current assets 471,697 (11,397) 460,300
Property, plant and equipment, net 228,025 (15,656) 212,369
Goodwill 108,636 (9,700) 98,936
Other assets 38,347 (422) 37,925
Total assets $846,705 $(37,175) $809,530
Liabilities and Shareholders' Equity
Current liabilities:
Notes payable $ 47,149 $ - $ 47,149
Current portion of
long-term debt 11,083 - 11,083
Accounts payable 167,114 (2,143) 164,971
Other current liabilities 90,646 4,859 95,505
Total current liabilities 315,992 2,716 318,708
Long-term debt,
net of current portion 183,087 (43,152) 139,935
Other liabilities 52,960 (1,739) 51,221
Total liabilities 552,039 (42,175) 509,864
Redeemable preferred stock 3,604 - 3,604
Shareholders' equity 291,062 5,000 296,062
Total liabilities and
shareholders' equity $846,705 $ (37,175) $809,530
(a) The pro forma adjustments assume that the divestiture took place on
February 28, 1995. The adjustments reflect the application of
proceeds, the elimination of assets transferred to and liabilities
assumed by the buyer and accruals for estimated additional costs
directly attributable to the divestiture. Proceeds are assumed to
pay down debt obligations.
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 28, 1995 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 Tyson Foods, Inc. (Buyer) dated as of
June 7, 1995.
STOCK PURCHASE AGREEMENT
between
INTERNATIONAL MULTIFOODS CORPORATION
(Seller)
and
TYSON FOODS, INC.
(Buyer)
Dated as of June 7, 1995
SALE OF SEAFOOD BUSINESS
TABLE OF CONTENTS
SECTION
Page
1. Purchase and Sale of the Shares 1
2. Closing; Purchase Price Adjustment 2
3. Conditions to Closing 7
4. Representations and Warranties of Seller 13
5. Covenants of Seller 44
6. Representations and Warranties of Buyer 54
7. Covenants of Buyer 57
8. Mutual Covenants 58
9. Employees and Employee Benefits 67
10. Further Assurances 73
11. Indemnification 73
12. Tax Matters 92
13. Assignment 98
14. No Third-Party Beneficiaries 98
15. Termination 99
16. Survival of Representations 101
17. Expenses 101
18. Amendments 101
19. Notices 101
20. Interpretation 103
21. Counterparts 104
22. Entire Agreement 104
23. Brokerage Fees 105
24. Severability 105
25. Governing Law 105
26. Disclosure Schedule 105
27. Certain Definitions 106
Exhibit A Form of Opinion of Faegre & Benson
Exhibit B Form of Opinion of General Counsel of Seller
Exhibit C Form of Opinion of Corporate Counsel of Buyer
Exhibit D-1 Audited Financial Statements
Exhibit D-2 Interim Statement
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is entered
into as of June 7, 1995, between INTERNATIONAL MULTIFOODS CORPORATION, a
Delaware corporation ("Seller"), and TYSON FOODS, INC., a Delaware
corporation ("Buyer"). An index of the defined terms used herein is
located at Section 27 hereof.
Buyer desires to purchase from Seller, and Seller desires to
sell to Buyer, (i) all of the issued and outstanding shares of Common
Stock, par value $10.00 per share, of JAC Creative Foods, Inc., a
California corporation and wholly owned subsidiary of Seller ("JAC"),
and (ii) all of the issued and outstanding shares of Common Stock, par
value $1.00 per share, of Multifoods Seafood, Inc., a Delaware
corporation and wholly owned subsidiary of Seller ("Multifoods Seafood"
and, together with JAC, herein sometimes collectively called the
"Companies" and individually called a "Company"). The issued and
outstanding shares of Common Stock of the Companies are herein
collectively called the "Shares".
Accordingly, 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, at the Closing (as
hereinafter defined) Seller shall sell, transfer and deliver to Buyer,
and Buyer shall purchase from Seller, the Shares for an aggregate
purchase price equal to Forty One Million Dollars ($41,000,000),
$6,000,000 of which shall be allocated to the Shares of JAC and
$35,000,000 of which shall be allocated to the Shares of Multifoods
Seafood (the "Purchase Price"), payable as set forth below in
Section 2(a), subject to adjustment as provided in Section 2(b).
2. Closing; Purchase Price Adjustment.
(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 June 26, 1995, or, if the conditions to
Closing set forth in Section 3 of this Agreement shall not have been so
satisfied or waived by the appropriate party by such time on such date,
subject to the provisions of Section 15 hereof, 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 so satisfied or waived. The date on which the Closing
shall occur 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 at least forty-eight (48) hours prior to the Closing,
immediately available funds in an aggregate amount (the "Adjusted
Purchase Price") equal to (A) the Purchase Price, plus or minus (B) the
amount, if any, by which Closing Net Assets (determined in the manner
set forth in Section 2(b) hereof), excluding the Net Deferred Income Tax
Liabilities, exceeds or is less than Nineteen Million Seven Hundred
Thirty Five Thousand ($19,735,000), and minus (C) the amount of Net
Deferred Income Tax Liabilities shown on the Closing Statement, (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 and (iii)
Buyer and Seller shall deliver or cause to be delivered the documents
and other items required to be delivered by each pursuant to Section 3
hereof.
(b) Determination of Closing Net Assets.
(i) A physical inventory of the Seafood Business shall be
conducted by Seller consistent with past practice (and in accordance
with the written inventory policies of the Seafood 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 and included in the determination of Closing Net Assets shall
be based on such physical inventory, and 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 computational errors. For purposes of determining Closing Net
Assets, the Interim Statement shall conclusively be deemed to have been
true and correct, and shall be final and binding, in all respects as of
August 27, 1994. Notwithstanding the foregoing, nothing stated in this
Section 2(b)(i) shall limit in any respect any representation or
warranty of Seller set forth in Section 4(f) of this Agreement.
(ii) Prior to the Closing, Seller, in consultation with
Buyer, shall prepare a statement (the "Closing Statement") setting forth
Net Assets as of the close of business on the last day immediately
preceding the Closing Date, but after giving effect to the transactions
contemplated by Sections 8(g) and (h) hereof ("Closing Net Assets"). If
there are any disputes between Seller and Buyer with respect to any
matters regarding Closing Net Assets not 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 computational
errors.
(iii) If there are any disputes between Seller and Buyer with
respect to matters regarding Closing Net Assets not 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 the
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 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 LLP or, if Arthur Andersen
LLP 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 matters
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 the Buyer's written statement nor more than
those set forth in the 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 computational errors. If the Arbitrator informs
Seller and Buyer that it is unable at or prior to the scheduled time of
Closing to render decisions resolving all matters which remain in
dispute, then, subject to the provisions of Section 15, 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, provided that the Arbitrator
shall in all events render its decision within five business days after
the previously scheduled time of Closing. The difference, if any,
between the Purchase Price and the Adjusted Purchase Price shall be
allocated between the Shares of JAC and the Shares of Multifoods Seafood
in such manner as Seller and Buyer in good faith shall mutually agree.
(iv) 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 principles and methodology set forth in this Section 2(b) and in the
Interim Statement. The fees and disbursements of the Arbitrator in
connection with any arbitration pursuant to this Section 2(b) shall be
borne 50% by Buyer and 50% by Seller.
(v) 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 Seafood Business of a type not expressly excluded from Net Assets on
the Interim Statement, less (B) the book value of (1) the Net Deferred
Income Tax Liabilities and (2) all liabilities of the Seafood Business
of a type required to be recorded as liabilities on the face of balance
sheets prepared in accordance with GAAP and not constituting Net
Deferred Income Tax Liabilities or otherwise expressly excluded from Net
Assets on the Interim Statement or otherwise by this Agreement; all as
determined on a basis consistent with GAAP applied by Seller in
calculating the $19,735,000 of Net Assets (exclusive of the Net Deferred
Income Tax Liabilities) in the preparation of the Interim Statement and
the methodology set forth in the Interim Statement, provided that in no
event shall the Net Assets shown on the Closing Statement include any
liabilities for which Seller (and not the Companies or the Subsidiary)
shall be liable after the Closing pursuant to Section 9 hereof.
3. Conditions to Closing.
(a) Buyer's Obligation. The obligation of Buyer to
purchase and pay for the Shares and consummate the transactions
contemplated by this Agreement is subject to the satisfaction (or waiver
by Buyer) as of the Closing of the following conditions:
(i) The representations and warranties of Seller made in
this Agreement shall be true and correct in all material respects as of
the date hereof and (except as they may be affected by transactions
contemplated hereby or by activities or transactions after the date of
this Agreement in the ordinary course of business) immediately prior to
the Closing, as though made immediately prior to the Closing, and Seller
shall have performed or complied in all material respects with all
obligations and covenants required by this Agreement to be performed or
complied with by Seller by the time of the Closing; and Seller shall
have delivered to Buyer a certificate executed by a duly authorized
officer of Seller dated the Closing Date confirming the foregoing;
(ii) Buyer shall have received an opinion dated the Closing
Date of Faegre & Benson, special counsel to Seller, substantially in the
form of Exhibit A attached hereto and an opinion of Frank W. Bonvino,
General Counsel of Seller, substantially in the form of Exhibit B
attached hereto;
(iii) No action, proceeding, or investigation by or before
any government body shall be pending wherein a judgment, decree or order
is reasonably likely to be issued that would prevent any of the
transactions contemplated hereby or cause such transactions to be
declared unlawful or rescinded and 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 hereunder or the consummation of the transactions contemplated
hereby;
(iv) All filings required pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), shall
have been made, and any approvals required thereunder shall have been
obtained, or the waiting period required thereby shall have expired or
have been terminated, as the case may be;
(v) Since February 25, 1995, no incident or event
(including any damage or destruction) shall have occurred which,
individually or in the aggregate, has a material adverse effect on the
business, assets, financial condition or results of operations of the
Seafood Business, taken as a whole (a "Material Adverse Effect");
(vi) Those consents, approvals, or other actions by third
parties and governmental entities or authorities that are required for
the consummation of the transactions and are set forth in Disclosure
Schedule 3(a)(vi) shall have been obtained; and
(vii) On the Closing Date, Seller shall have delivered to
Buyer, performed or caused the performance of, the following:
(A) Certified copies of the resolutions duly adopted by
Seller's Board of Directors approving the execution, delivery and
performance of this Agreement and the other agreements contemplated
hereby;
(B) Copies of the certificates of incorporation of the
Companies and the Subsidiary certified by the Secretary of State of the
applicable state of incorporation as of a recent date;
(C) Copies of the bylaws of each of the Companies and the
Subsidiary certified by the Secretary of the Companies and the
Subsidiary;
(D) Good standing certificates as of a recent date for the
Companies and the Subsidiary from the Secretary of State (or, with
respect to the Subsidiary, a comparable governmental official) of the
jurisdictions of incorporation of each Company and the Subsidiary and
the jurisdictions in which the Companies and the Subsidiary are
qualified to do business as foreign corporations;
(E) Such instruments of sale, transfer, assignment,
conveyance and delivery, in form and substance reasonably satisfactory
to counsel for Buyer, as are required in order to transfer to Buyer
Seller's right, title and interest in and to the Shares and Seller shall
have delivered any other instrument or taken any other action required
hereunder of Seller or reasonably required by Buyer, to enable Seller to
fulfill its obligations hereunder;
(F) A certificate from Seller stating that Seller is not a
foreign corporation, foreign partnership, foreign trust or foreign
estate and listing Seller's U.S. Employer Identification Number and
address of its principal business office; and
(G) All proceedings to be taken by Seller in connection
with the consummation of the Closing on the Closing Date and the other
transactions contemplated hereby and all documents required to be
delivered by Seller in connection with the transactions contemplated
hereby will be reasonably satisfactory in form and substance to Buyer.
(b) Seller's Obligation. The obligation of Seller to sell
and deliver the Shares to Buyer is subject to the satisfaction (or
waiver by Seller) as of the Closing of the following conditions:
(i) The representations and warranties of Buyer made 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 or
complied in all material respects with all obligations and covenants
required by this Agreement to be performed or complied with by Buyer by
the time of the Closing; and Buyer shall have delivered to Seller a
certificate executed by a duly authorized officer of Buyer dated the
Closing Date confirming the foregoing.
(ii) Seller shall have received an opinion dated the Closing
Date of either David L. Van Bebber or R. Read Hudson, corporate counsel
to Buyer, substantially in the form of Exhibit C attached hereto.
(iii) No action, proceeding, or investigation by or before
any government body shall be pending wherein a judgment, decree or order
is reasonably likely to be issued that would prevent any of the
transactions contemplated hereby or cause such transactions to be
declared unlawful or rescinded and 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 hereunder or the consummation of the transactions contemplated
hereby;
(iv) All filings required pursuant to the HSR Act shall have
been made, and any approvals required thereunder shall have been
obtained, or the waiting period required thereby shall have expired or
have been terminated, as the case may be;
(v) Seller shall have received certified copies of the
resolutions adopted by Buyer's Executive Committee of the Board of
Directors authorizing the execution, delivery and performance of this
Agreement and the other agreements contemplated hereby and of such
charter documents and/or resolutions of the Board of Directors of Buyer
as Seller shall reasonably request establishing the authority of Buyer's
Executive Committee of the Board of Directors to make such
authorization; and
(vi) All proceedings to be taken by Buyer in connection
with the consummation of the Closing on the Closing Date and the other
transactions contemplated hereby and all documents required to be
delivered by Buyer and all payments of funds required by Buyer hereunder
in connection with the transactions contemplated hereby will be made
and/or be reasonably satisfactory in form and substance to Seller.
4. Representations and Warranties of Seller. Seller
hereby represents and warrants to Buyer that 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 all requisite corporate
power and authority to enter into 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. The execution, delivery and
performance by Seller of this Agreement do not, and the consummation by
Seller of the transactions contemplated hereby will not, (i) conflict
with, or result in any violation of, any provision of the charter or by-
laws of any of Seller, the Companies or the Subsidiary, or (ii) except
as set forth in Disclosure Schedule 4(a), conflict with, result in any
violation of, or constitute a default under, any instrument, contract,
commitment, agreement or arrangement to which any of Seller, the
Companies or the Subsidiary is a party or by which any of Seller, the
Companies or the Subsidiary or the property or assets of any of Seller,
the Companies or the Subsidiary is bound (other than those with respect
to which appropriate written consents have been received from the other
parties thereto), or any judgment, order, writ, injunction or decree to
which any of Seller, the Companies or the Subsidiary has been
specifically identified as subject, or any statute, law, ordinance, rule
or regulation applicable to any of Seller, the Companies or the
Subsidiary or the property or assets of any of Seller, the Companies or
the Subsidiary (except where such conflict, violation or default would
not impair the ability of Seller to consummate the transactions
contemplated hereby or have, individually or in the aggregate, a
Material Adverse Effect). Except as set forth in Disclosure Schedule
4(a), no material consent, approval, license, permit, order or
authorization of, 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 any of Seller, the Companies or
the Subsidiary in connection with the execution, delivery and
performance by Seller of this Agreement or the consummation by Seller of
the transactions contemplated hereby other than compliance with and
filings under the HSR Act and Section 13(a) of the Securities Exchange
Act of 1934, as amended; provided, however, that no representation is
made as to whether any new governmental licenses, permits or
authorizations will be required as a result of the change in control of
the Companies and the Subsidiary occurring at Closing in order for the
Companies and the Subsidiary to continue to conduct the Seafood Business
following the Closing in the manner in which the Seafood Business was
conducted prior to the Closing.
(b) The Shares. Seller is the record and beneficial owner
of all of the Shares, free and clear of all claims, pledges, 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.
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 Companies and the
Subsidiary. JAC is a corporation duly organized, validly existing and
in good standing under the laws of the State of California. Multifoods
Seafood is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Multifoods Seafood
(Canada) Inc. (the "Subsidiary") is a corporation duly organized,
validly existing and in good standing under the laws of the Province of
Ontario. Each of the Companies and the Subsidiary has all requisite
corporate power and authority to enable it to own, lease or otherwise
hold its properties and assets and to carry on the Seafood Business as
presently conducted. Each of the Companies and the Subsidiary is duly
qualified 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
in good standing would not have, individually or in the aggregate, a
Material Adverse Effect. Each of the jurisdictions in which any of the
Companies or the Subsidiary are so qualified and in good standing is
identified in Disclosure Schedule 4(c). Seller has delivered 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 Companies and the
Subsidiary, and has made available to Buyer true and complete copies of
the stock certificates and the stock transfer ledgers of each of the
Companies and the Subsidiary. Disclosure Schedule 4(c) lists the
directors and officers of each of the Companies and the Subsidiary. The
minutes of the meetings of the shareholders and directors of each of the
Companies and the Subsidiary made available by Seller to Buyer are true
and correct in all material respects.
(d) Capital Stock of the Companies and the Subsidiary.
The authorized capital stock of JAC consists of 500,000 shares of Common
Stock, par value $10.00 per share, of which 153,450 shares are duly
authorized, validly issued and outstanding and fully paid and
nonassessable. The authorized capital stock of Multifoods Seafood
consists of 1,000 shares of Common Stock, par value $1.00 per share, of
which 1,000 shares are duly authorized, validly issued and outstanding
and fully paid and nonassessable. The authorized capital stock of the
Subsidiary consists of an unlimited number of shares of Common Stock, no
par value, of which 10,000 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 any of the Companies 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 any of
Seller, the Companies 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 any of the Companies or the Subsidiary other than this
Agreement, and no capital stock of any of the Companies or the
Subsidiary is reserved for issuance for any purpose. JAC owns
beneficially and of record all of the outstanding shares of capital
stock of the Subsidiary, free and clear of all claims, pledges, 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. The shares of the Subsidiary's capital stock 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 such
shares.
(e) Equity Interests. Except for the Subsidiary, neither
of the Companies directly or indirectly owns any capital stock of or
other equity interests in any corporation or other entity, including but
not limited to any joint venture or partnership.
(f) Financial Statements. Attached hereto as,
respectively, Exhibits D-1 and D-2 are (i) audited Combined Balance
Sheets of the Seafood Business as of February 27, 1993, February 26,
1994 and February 25, 1995, and audited Statements of Earnings and Cash
Flows of the Seafood Business for the fiscal years ended February 27,
1993, February 26, 1994 and February 25, 1995, together with the notes
thereto and the reports thereon of KPMG Peat Marwick (collectively, the
"Audited Financial Statements"), and (ii) an unaudited Statement of Net
Assets (other than the Net Deferred Income Tax Liabilities) of the
Seafood Business as of August 27, 1994 (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 Seafood Business at their respective dates
and the results of operations of the Seafood Business for the respective
periods covered thereby, and have been prepared in conformity with GAAP
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 (other than the Net Deferred Income Tax Liabilities) of the
Seafood Business at the date thereof, and has been prepared in
conformity with GAAP applied on a basis consistent with Seller's audited
consolidated financial statements. Except as expressly provided in this
Section 4(f), no representation is made by Seller as to any financial
information of the Seafood Business provided to Buyer, including without
limitation any financial information set forth in the Descriptive
Memorandum regarding the Seafood Business provided to Buyer by Lehman
Brothers and Piper Jaffray Inc. Without limiting the generality of the
foregoing, 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.
(h) Taxes.
(i) For purposes of this Agreement, (A) "Tax" or "Taxes"
shall mean all United States and Canadian federal, state, provincial and
local, and all other foreign, taxes and assessments, including all
interest, penalties and additions imposed with respect to such amounts;
(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" or "Tax Returns" 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 Companies and the Subsidiary, and any
affiliated group, within the meaning of Section 1504 of the Code, of
which any of the Companies or the Subsidiary is or has been a member,
has filed or caused to be filed in a timely manner (within any
applicable extension periods) all material Tax Returns required to be
filed by the Code, and all Tax Returns required to be filed by
applicable state, provincial, local or foreign Tax laws, except where
the failure to file such state, provincial, local or foreign Tax Returns
would not have, individually or in the aggregate, a Material Adverse
Effect. All Taxes shown to be due on such Tax Returns have been paid in
full, will be paid in full prior to the close of business on the last
day immediately preceding the Closing Date, or will be included 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 either of the Companies, or any property held by either of
the Companies, any consent under Section 341(f) of the Code. No
property of either of the Companies is "tax exempt use property" within
the meaning of Section 168(h) of the Code. Neither of the Companies is
a party to any lease made pursuant to Section 168(f)(8) of the Internal
Revenue Code of 1954, as amended.
(i) Title to Tangible Personal Property. Each of the
Companies and the Subsidiary has good and valid title to all tangible
personal property and receivables which it owns as of the date hereof,
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 interest or 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 Disclosure Schedule 4(m) or the non-disclosure of
which therein does not constitute a misrepresentation under Section 4(m)
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 Disclosure Schedule 4(i) (the liens,
security interests and other encumbrances described in clauses (i), (ii)
and (iii) above being hereinafter referred to collectively as "Permitted
Liens"). This Section 4(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. Disclosure Schedule 4(j) sets
forth a complete list and legal descriptions of all real property owned
in fee simple by any of the Companies or the Subsidiary (individually,
an "Owned Property") and a complete list of all real property leased by
any of the Companies or the Subsidiary other than public cold storage
space (individually, a "Leased Property"). A Company or the Subsidiary
has good fee simple title to all Owned Property and, assuming good title
in the landlord, a valid leasehold interest in all Leased Property (an
Owned Property or Leased Property 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 of the Company Property covered by the Title
Commitments (as hereinafter defined) which are shown on the Title
Commitments or are otherwise of record; (iii) any conditions that may be
shown by a current, accurate survey or physical inspection of any
Company Property; (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 restrictions,
(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 interferes with the
continued use and operation of the Company Property to which it relates
substantially 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 Disclosure Schedule 4(j). There are no eminent domain
proceedings pending (with respect to which any of Seller, the Companies
or the Subsidiary has been served or otherwise notified) or, to the
Knowledge of Seller, threatened against any Owned Property or any
portions thereof. To the Knowledge of Seller, there are no eminent
domain proceedings pending or threatened against any Leased Property or
any portions thereof. Seller has delivered or caused to be delivered to
Buyer, with respect to the Owned Property, true and correct copies of
the title insurance commitments or reports 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.
(k) Condition of Assets. The assets and properties
utilized in the Seafood Business, whether owned or leased, are, in all
material respects, in operating condition (reasonable wear and tear and
depreciation because of age excepted), and are suitable for the purposes
for which they are presently being used. Except as expressly provided
in this Section 4(k) and in Section 4(s), no further representation is
made concerning the physical condition of any of the Company Properties
or any other assets of any of the Companies or the Subsidiary, all of
which are being accepted "AS IS AND WHERE IS" as of the Closing
(including as to all environmental aspects thereof, except as otherwise
provided in Section 4(s)).
(l) Intellectual Property. Disclosure Schedule 4(l) sets
forth a true and correct list of all material patents and patent
applications, and all material registrations of trademarks, trade names,
service marks and copyrights, and applications for such registrations,
which are held by any of the Companies or the Subsidiary. To the
Knowledge of Seller, except as set forth in Disclosure Schedule 4(l), a
Company or the Subsidiary owns (free and clear of all liens, security
interests and other encumbrances other than (i) Permitted Liens, and
(ii) other liens, security interests and encumbrances, if any, described
in Disclosure Schedule 4(l)) or has the right to use without payment to
any other party (other than pursuant to a license described in
Disclosure Schedule 4(m) or the non-disclosure of which therein would
not constitute a misrepresentation under Section 4(m) of this
Agreement), the patents (provided that maintenance fees are not being
paid with respect to the patents, and as a result of which the patents
will expire prior to the end of their respective terms), trademarks,
trade names, service marks and copyrights used by the Companies and the
Subsidiary in the operation of the Seafood Business, except where the
failure of a Company or the Subsidiary to own or have the right to use
any such patent, trademark, trade name, service mark or copyright would
not have, individually or in the aggregate, a Material Adverse Effect.
To the Knowledge of Seller, except as set forth in Disclosure Schedule
4(l) (i) no claims have been made in writing since January 1, 1993 by
any other person challenging or questioning either the right of any of
the Companies or the Subsidiary to use, or the validity of, any such
patent, trademark, trade name, service mark or copyright in any
jurisdiction, domestic or foreign, (ii) since January 1, 1993, no other
person has claimed in writing the right to use any such patent,
trademark, trade name, service mark or copyright other than pursuant to
a license described in Disclosure Schedule 4(m), and (iii) no claims of
patent, trademark, trade name, service mark or copyright infringement
have been made in writing since January 1, 1993 by any person with
respect to the right of any of the Companies or the Subsidiary to
continue to sell any product or service of the Seafood Business without
payment of a royalty, license fee or similar fee to such person (other
than payments that are currently subject to a license described in
Disclosure Schedule 4(m)). None of Seller, the Companies or the
Subsidiary has received any written notice that any such patent,
trademark, trade name, service mark or copyright has been declared
unenforceable or otherwise invalid by any court or governmental
authority.
(m) Contracts. Disclosure Schedule 4(m) describes the
following agreements, contracts, understandings or arrangements in
effect as of the date of this Agreement (x) relating primarily to the
Seafood Business to which Seller is a party or by which Seller or the
property or assets of Seller is bound or (y) to which any of the
Companies or the Subsidiary is a party or by which any of the Companies
or the Subsidiary or the property or assets of any of the Companies or
the Subsidiary is bound:
(i) each employment agreement (other than those that are or at
the Closing will be terminable at will by a Company or the Subsidiary
without penalty or additional payments);
(ii) each covenant not to compete that materially restricts
the operation of the Seafood Business as presently conducted;
(iii) each material agreement or contract with Seller or any
affiliate of Seller (other than any of the Companies or the Subsidiary)
or any current officer or director of any of the Companies or the
Subsidiary or of Seller or any other affiliate of Seller (other than (A)
employment agreements the non-disclosure of which in Disclosure Schedule
4(m) does not constitute a misrepresentation under Section 4(m)(i) of
this Agreement, or (B) contracts constituting Seller's Plans (as defined
in Section 4(p) hereof));
(iv) each operating lease (as lessor or lessee) of any Company
Property or any other real or tangible personal property (except any
lease of other real or tangible personal property calling for payments
of less than $10,000 per year);
(v) each license (as licensor or licensee) of any patents,
trademarks, trade names, service marks, copyrights or other intellectual
property material to the Seafood Business (other than non-negotiated
licenses of commercially available computer software used in the
operation of the Seafood Business);
(vi) each management, service, consulting or other similar
type of contract under which there exists an aggregate future liability
in excess of $10,000 per contract (other than those which are or at the
Closing will be terminable at will or upon not more than 30 days' notice
by a Company or the Subsidiary without penalty or additional payments);
(vii) each material advertising agreement (other than those
which are or at the Closing will be terminable at will or upon not more
than 30 days' notice by a Company or the Subsidiary without penalty or
additional payments);
(viii) each written agreement for the purchase or sale of raw
materials, supplies or products which calls for performance over a
period of more than one year (other than those which are or at the
Closing will be terminable at will or upon not more than 30 days' notice
by a Company or the Subsidiary without penalty or additional payments);
(ix) other than with respect to intercompany loans or advances
to be paid in full or canceled 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 or any note, bond,
indenture or other evidence of indebtedness has been issued, directly or
indirectly guaranteed or assumed (other than endorsements for the
purpose of collection in the ordinary course of business);
(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 $10,000 per contract or lease, (B) protective filings
of financing statements under the Uniform Commercial Code, and (C)
mortgage agreements, deeds of trust, purchase money agreements,
conditional sales contracts and capital leases evidencing liens on
Company Property covered by the Title Commitments which are shown on the
Title Commitments or are otherwise of record);
(xi) each partnership or joint venture agreement; or
(xii) each other agreement, contract, understanding or
arrangement not made in the ordinary course of business, except those
calling for payments of less than $50,000 per year in the aggregate.
Except as disclosed in Disclosure Schedule 4(m), each agreement,
contract, understanding and arrangement required to be described in
Disclosure Schedule 4(m) 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
Disclosure Schedule 4(m) but for the exclusion set forth in clause
(x)(C) above (collectively, the "Contracts") is valid, binding and in
full force and effect and is or at the Closing will be enforceable by a
Company or the Subsidiary in accordance with its terms, except (A) as
such enforceability may be limited by bankruptcy, insolvency, moratorium
and other similar laws affecting creditors' rights generally and by
general principles of equity or (B) such invalidity, lack of binding
effect or lack of enforceability which would not have, individually or
in the aggregate, a Material Adverse Effect. Except as set forth in
Section 4(m) of the Disclosure Schedule, none of Seller, the Companies
or the Subsidiary is (with or without the lapse of time or the giving of
notice, or both) in material breach of or in default in any material
respect under any of the Contracts, and, 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
default in any material respect under any of the Contracts. A true and
correct copy of each of the written Contracts and an accurate summary of
each of the oral Contracts has been provided 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 or are
expressly made terminable at will, regardless of whether any covenant of
good faith and fair dealing may be implied, as a matter of law, in
connection with the termination thereof.
(n) Litigation; Decrees. As of the date of this
Agreement, no action, lawsuit, proceeding or investigation is pending
(with respect to which any of Seller, the Companies or the Subsidiary
has been served or otherwise notified) or, to the Knowledge of Seller,
threatened against any of Seller, the Companies or the Subsidiary with
respect to the Seafood Business (other than (A) worker's compensation
claims consistent with the historical experience of the Companies and
the Subsidiary which were not pending (and with respect to which none of
Seller, the Companies or the Subsidiary had been served or otherwise
notified) or, to the Knowledge of Seller, threatened prior to May 1,
1995, and (B) actions, lawsuits, proceedings or investigations set forth
in the Environmental Reports (as defined in Section 4(s) of this
Agreement)) which, if decided adversely to such person, (i) would have,
individually or in the aggregate, a Material Adverse Effect, or (ii)
would adversely affect the ability of Seller to consummate the
transactions contemplated hereby. The foregoing representation does not
relate to Taxes, all representations with respect to which are the
subject of Section 4(h). None of the Companies or the Subsidiary is
specifically identified as a party subject to any material restrictions
or limitations under any judgment, order or decree of any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign.
(o) Insurance. The insurance policies currently
maintained with respect to the Companies and the Subsidiary and their
respective assets, properties and businesses (other than those
constituting Seller's Plans) are listed in Section 4(o) of the
Disclosure Schedule. True and correct copies or summaries of each such
insurance policy have been provided to Buyer.
(p) Employee Benefits; ERISA.
(i) Disclosure Schedule 4(p) 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 ERISA) providing employee benefits maintained or
contributed to by any of Seller, the Companies or the Subsidiary in
which any employees of any of the Companies or the Subsidiary are
participating or under which any current or former employees of any of
the Companies or the Subsidiary have accrued any benefits to which they
remain entitled (the "Seller's Plans"). Seller has provided Buyer with
true and correct copies or accurate summaries of all Seller's Plans.
(ii) Except as provided in Section 9 of this Agreement (and
except with respect to any incentive plan included within Seller's Plans
which is designated as a non-executive incentive plan in Disclosure
Schedule 4(p), with respect to which all contributions required to be
made or accrued by any of Seller, the Companies or the Subsidiary 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 made, will be made prior to the
close of business on the last day immediately preceding the Closing
Date, or will be included in the final determination of Closing Net
Assets and taken into account in the calculation of the Adjusted
Purchase Price), none of Buyer, the Companies 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 Companies 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.
(q) Absence of Changes or Events. From February 25, 1995
through the date of this Agreement, except as set forth in Disclosure
Schedule 4(q), the Seafood Business has been conducted in the ordinary
course substantially consistent with past practice. Without limiting
the generality of the immediately preceding sentence, from February 25,
1995 through the date of this Agreement, none of the Companies or the
Subsidiary has, except as set forth in Disclosure Schedule 4(q):
(i) suffered any damage or destruction (not fully covered by
insurance, including business interruption insurance sufficient to fully
compensate for the loss of business, subject to reasonable deductions or
retentions) that has resulted in the discontinuance of operations or
otherwise materially and adversely affected operations at any plant
constituting a part of the Company Properties;
(ii) amended its charter or by-laws;
(iii) declared or 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 assets made by
the Subsidiary to JAC, and (B) distributions (as dividends, loans or
advances) of cash made directly or indirectly by any of the Companies or
the Subsidiary to Seller;
(iv) redeemed or otherwise acquired any shares of its capital
stock or issued any capital stock or any option, warrant or right
relating thereto;
(v) adopted or amended any Seller's Plan maintained by any of
the Companies or the Subsidiary (rather than by Seller);
(vi) granted to any employee of any of the Companies or the
Subsidiary any increase in compensation or other material benefits,
except as required under existing agreements or in the ordinary course
of business consistent with past practice (including such increases
effective May 1, 1995) or increases for which Seller or any affiliate of
Seller (other than any of the Companies or the Subsidiary) is solely
obligated; or permitted any sums or other corporate assets of any of the
Companies or the Subsidiary to be paid to or withdrawn from any of the
Companies or the Subsidiary by the directors or officers of any of the
Companies 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 paid in full
or canceled 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 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
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 Disclosure Schedule
4(m) would not constitute a misrepresentation under Section 4(m) of this
Agreement;
(ix) canceled any material indebtedness for borrowed money
(individually or in the aggregate) owing to it or waived any 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)
or intercompany indebtedness excepted under clause (iii) or (vii) of
this Section 4(q) from the representations made therein, and except for
other intercompany transactions in the ordinary course of business,
loaned or advanced any amount to, or sold, transferred or leased any of
its material assets to, or entered into any material agreement or
arrangement with, Seller or any of its affiliates (other than any of the
Companies or the Subsidiary);
(xi) made any change in any method of accounting or accounting
practice or policy other than those required by GAAP or contemplated in
the Interim Statement;
(xii) purchased or otherwise acquired any assets or made any
capital expenditures which are material, individually or in the
aggregate, to the Seafood Business (other than (A) purchases of
inventory in the ordinary course of business consistent with past
practice and (B) capital expenditures which, together with all other
capital expenditures made by any of the Companies or the Subsidiary
since February 25, 1995, do not exceed $250,000 in the aggregate);
(xiii) sold or otherwise disposed of any of its assets which
are material, individually or in the aggregate, to the Seafood Business
(other than sales of inventory in the ordinary course of business
consistent with past practice);
(xiv) modified or amended any of the Contracts in any respect
materially adverse to the business, assets, financial condition or
results of operations of the Seafood Business, taken as a whole;
(xv) to the Knowledge of Seller, disclosed any material
proprietary confidential information to any person (other than to Buyer
or to other parties that executed a confidentiality agreement in
connection with the sale of the Seafood Business);
(xvi) to the Knowledge of Seller, extended payment terms to
customers other than in the ordinary course of business or permitted any
change in its credit practices;
(xvii) except as permitted under clause (iii) or (vii) of this
Section 4(q), made any loans or advances to, guaranties for the benefit
of, or investments in, any person or entity (other than customary travel
and other expense advances, salary advances and employee relocation
assistance in accordance with past practice); or
(xviii) agreed, whether in writing or otherwise, to do any of
the foregoing.
(r) Compliance with Laws. Except as set forth in
Disclosure Schedule 4(r) or 4(s), each of the Companies and the
Subsidiary is, and, to the Knowledge of Seller, has been since May 31,
1992, in compliance with all applicable statutes, laws, ordinances,
rules, orders and regulations of any governmental authority or
instrumentality, domestic or foreign (including without limitation all
environmental laws), except for noncompliance disclosed in the
Environmental Reports and noncompliance which would not have,
individually or in the aggregate, a Material Adverse Effect. Except as
set forth in Disclosure Schedule 4(r) or 4(s), no written notice (the
reason for which has not been corrected) has been served upon Seller,
the Companies or the Subsidiary since January 1, 1993 by any
governmental body of any material violation of any law, ordinance, code,
rule or regulation or requiring or calling attention to the necessity of
any work, repairs, new construction, installation or alteration in
connection with any real or personal property or equipment of the
Seafood Business. The Companies and the Subsidiary have all
governmental licenses, permits, approvals and other authorizations as
are necessary in order to enable them to own, operate, and use their
assets and conduct the Seafood Business as it is currently being
conducted and occupy and lease the Company Properties except where the
failure to obtain and maintain the same would not have a Material
Adverse Effect. All material governmental franchises, licenses,
permits, authorizations and approvals possessed by any of Seller, the
Companies or the Subsidiary and used in the operation of the Seafood
Business (including without limitation all environmental permits) are
listed in Disclosure Schedule 4(r). 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) To the Knowledge of Seller, except as disclosed in the
Environmental Reports, no hazardous substance has been disposed of,
spilled or otherwise released by any of the Companies or the Subsidiary
on any Company Property or to the surrounding environment or from any
Company Property to any site away from such Company Property in such a
way as to create any material unpaid liability of any of the Companies
or the Subsidiary under any applicable federal, state, provincial, local
or foreign environmental laws. For purposes of this Agreement, the
definition of the term "hazardous substance" shall be that 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 the term also shall include (A)
petroleum or any fraction 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, provincial, local or foreign
regulatory agency having jurisdiction over the operations of any of the
Companies or the Subsidiary at such Company Property.
(ii) 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.
(iii) Seller has delivered or caused to be delivered to
Buyer, with respect to the Owned Property, true and complete copies of
the final environmental reports described in Disclosure Schedule 4(s)
(collectively, the "Environmental Reports"), as well as all written
environmental audits or assessments or occupational health studies,
results of groundwater and soil testing, results of underground fuel,
water or waste tank tests and soil samples and communications with
environmental agencies received by Seller or any of the Companies or the
Subsidiary since May 31, 1990 that, to the Knowledge of Seller, are
presently in the possession of Seller or any of the Companies or the
Subsidiary.
(t) Employee and Labor Relations. None of Seller, the
Companies or the Subsidiary is a party to or is bound by any collective
bargaining agreements or other contracts with any labor union
representing employees of any of the Companies or the Subsidiary. No
labor strikes, lockouts or material labor disputes or work stoppages are
pending or, to the Knowledge of Seller, have been threatened since
January 1, 1993 against or affecting any of the Companies or the
Subsidiary. To the Knowledge of Seller, no union organizational
campaign has occurred since January 1, 1993 with respect to the
employees of any of the Companies or the Subsidiary.
(u) Banks. Disclosure Schedule 4(u) sets forth the name
of each bank or other financial institution in which any of the
Companies or the Subsidiary has an account, lock box or safe deposit box
and the names of all persons authorized to draw thereon or have access
thereto.
(v) No Undisclosed Liabilities. Except as set forth in
Disclosure Schedule 4(v) and except as reflected, reserved against or
otherwise disclosed in the Audited Financial Statements or the Interim
Statement, the Companies and the Subsidiary had, as of the dates of the
respective balance sheets included therein, no liabilities or
obligations that would be required as of such respective dates to be
reflected on a balance sheet (or required to be disclosed in the notes
thereto) prepared in accordance with GAAP in effect on such respective
dates (without regard to any events, incidents, assertions or state of
knowledge occurring subsequent to the dates of such respective balance
sheets) that would, individually or in the aggregate, have a Material
Adverse Effect.
(w) Inventory. All inventories reflected on the Audited
Financial Statements and the Interim Statement (including, without
limitation, finished goods, work in process, raw materials, and
supplies) were as of such date and all inventories existing on the
Closing Date will be:
(i) properly valued at the lower of cost or fair market value
in accordance with the prior practices of the Seafood Business;
(ii) valued so as to include no amounts that are not of good
and merchantable quality, salable and usable in the ordinary course of
business; and
(iii) at levels adequate in relation to the circumstances of
the Seafood Business.
(x) Disclosure. To the Knowledge of Seller, the
representations and warranties contained in this Section 4 and the
statements contained in the related section of the Disclosure Schedule
do not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make any such representations,
warranties and statements not misleading, provided that, notwithstanding
the foregoing or any other representation or warranty contained in this
Section 4 or any statement contained in the related section of the
Disclosure Schedule, and notwithstanding any projections that may have
been supplied to Buyer by or on behalf of any of Seller, the Companies
or the Subsidiary, it is understood that no representation or warranty
is made by Seller herein or in the Disclosure Schedule as to the
prospects of the Seafood Business. Notwithstanding the foregoing,
nothing stated in this Section 4(x) shall limit in any respect any other
representation or warranty of Seller set forth in this Agreement.
5. Covenants of Seller. Seller covenants and agrees with
Buyer as follows:
(a) Access. Prior to the Closing, Seller will, and will
cause each of the Companies 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 last weekend
immediately preceding the Closing Date) and upon reasonable notice, to
the personnel, properties, books and records of the Seafood Business to
enable Buyer to perform a full due diligence review of the business,
assets and operations of the Seafood Business; provided, however, that
(i) such access shall not unreasonably disrupt the normal operations of
any of Seller, the Companies or the Subsidiary, (ii) neither Buyer nor
any of its officers, employees, agents or representatives shall have
access to any personnel of the Seafood Business or any other businesses
of Seller or its affiliates other than the employees identified in
Section 27(a) of this Agreement without Seller's prior written consent,
which shall not be unreasonably withheld, and (iii) 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 Seafood 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 cause the
Seafood Business to be conducted in the ordinary course in substantially
the same manner as presently conducted and will cause the Companies 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), Seller will not permit any of the Companies 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 or 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
assets may be made by the Subsidiary to JAC at any time prior to the
Closing, and (B) distributions (as dividends, loans or advances) of cash
may be made directly or indirectly by any of the Companies 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 Companies 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 any capital stock or any option, warrant or right
relating thereto;
(iv) adopt or amend any Seller's Plan maintained by any of the
Companies or the Subsidiary (rather than by Seller) or enter into any
collective bargaining agreement;
(v) grant to any employee of any of the Companies or the
Subsidiary any increase in compensation 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 affiliate of Seller (other than any of the Companies or
the Subsidiary) shall be solely obligated; or permit any sums or other
corporate assets of any of the Companies or the Subsidiary to be paid to
or withdrawn from any of the Companies or the Subsidiary by the
directors or officers of any of the Companies 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 paid in full or
canceled 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 is prepayable at any time
without penalty;
(vii) grant any mortgage, pledge, lien or encumbrance on, or
agree to the imposition of any restriction or charge of any kind 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 Disclosure Schedule
4(m) would not constitute a misrepresentation under Section 4(m) of this
Agreement;
(viii) cancel any material indebtedness for borrowed money
(individually or in the aggregate) owing to it or waive any 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) or intercompany indebtedness permitted under clause (ii) or
(vi) of this Section 5(b), and except for other intercompany
transactions in the ordinary course of business, loan or advance any
amount to, or sell, transfer or lease any of its material assets to, or
enter into any material agreement or arrangement with, Seller or any of
its affiliates (other than any of the Companies or the Subsidiary);
(x) make any change in any method of accounting or accounting
practice or policy other than those required by GAAP or contemplated in
the Interim Statement or the schedules thereto;
(xi) purchase or otherwise acquire any assets or make any
capital expenditures which are material, individually or in the
aggregate, to the Seafood Business (other than (A) purchases of
inventory in the ordinary course of business consistent with past
practice and (B) capital expenditures which, together with all other
capital expenditures made by any of the Companies or the Subsidiary
since February 25, 1995, do not exceed $250,000 in the aggregate);
(xii) sell or otherwise dispose of any of its assets which are
material, individually or in the aggregate, to the Seafood Business
(other than sales of inventory in the ordinary course of business
consistent with past practice);
(xiii) modify, amend or terminate any of the Contracts in any
respect materially adverse to the business, assets, financial condition
or results of operations of the Seafood Business, taken as a whole,
except terminations upon expiration of a Contract's term;
(xiv) disclose any material proprietary confidential
information to any person;
(xv) extend payment terms to customers other than in the
ordinary course of business or permit any change in its credit
practices;
(xvi) except as permitted under clause (ii) or (vi) of this
Section 5(b), make any loans or advances to, guaranties for the benefit
of, or investments in, any person or entity (other than customary travel
and other expense advances, salary advances and employee relocation
assistance in accordance with past practice); or
(xvii) 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 Seafood Business which does not also relate to any of
the other businesses of Seller or any of its affiliates, except for
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 or the
contest of any Tax Claim, provided that Seller shall provide Buyer with
reasonable notice of any required disclosure, to the extent practicable,
and except for 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
Seafood Business and any other businesses of Seller or any of its
affiliates all information that relates solely to the Seafood 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 Disclosure Schedule 4(o) in effect
on the date hereof, 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 Companies 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 any of the Companies
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 second anniversary of the Closing Date, it will not, except in the
case of a Permitted Investment, directly or indirectly engage 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 manufacturing
surimi-based analog seafood products (the "Restricted Business")
anywhere in the United States (the "Non-Competition Area"), provided
that Seller may directly or indirectly own in the aggregate up to 10% of
any outstanding class of equity securities of any entity engaged in the
Restricted Business in the Non-Competition Area, the equity securities
of which are publicly traded on a domestic or foreign stock exchange or
in a domestic or foreign over-the-counter market. It is understood that
none of the marketing, distribution or sale by Seller, directly or
indirectly, of products of any nature manufactured by others (including
products manufactured for Seller, under Seller's labels or otherwise,
pursuant to co-pack arrangements) shall be deemed to constitute part of
the Restricted Business for any purpose hereof. Seller acknowledges and
agrees that the restrictions and covenants contained in this Section
5(f) are a material inducement to and consideration for Buyer in
entering into this Agreement and consummating the transactions
contemplated hereby.
(ii) For purposes of this Section 5(f), a Permitted
Investment includes each of the following:
(A) an acquisition after the Closing of an entity or all or
any portion of its equity interests or of its businesses (the entity or
businesses so acquired being herein called the "Acquired Business") if
that portion of the Acquired Business that is engaged in the Restricted
Business in the Non-Competition Area (the "Competing Business")
generated less than $5,000,000 in revenues or 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 of an Acquired Business
or all or any portion of its equity interests if (1) that portion of the
Acquired Business constituting the Competing Business generated
$5,000,000 or more in revenues and accounted for 15% or more, but 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
acquisition and the identity of the Acquired Business (which notice
shall contain a description of the businesses conducted by the Acquired
Business, including without limitation the Competing Business) before or
as promptly as practicable after the acquisition, and (3) 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.
(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 Companies and the Subsidiary, and all other
original agreements, documents, books and records relating to the
Seafood Business in the possession of Seller to the extent not then in
the possession of any of the Companies or the Subsidiary; provided,
however, that (i) subject to Buyer's rights of access pursuant to
Section 12(b) and Seller's obligations under Section 5(c), Seller shall
have the right to retain all such original Tax Returns and work papers
relating to Taxes, (ii) subject to Seller's obligations under Section
5(c), Seller shall have the right to keep and use a copy of all such
accounting books and records, and (iii) with respect to books and
records relating to both the Seafood 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), Seller shall have the right to
keep and use or otherwise transfer to a third party a copy of such books
and records, and (B) excerpts from such books and records that do not
relate to the Seafood Business may be excised from the books and records
that are delivered to Buyer.
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 all requisite corporate
power and authority to enter into 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.
This Agreement has been duly executed and delivered by Buyer and,
assuming 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. The execution, delivery and performance by Buyer
of this Agreement do not, and the consummation by Buyer of the
transactions contemplated hereby will not, (i) conflict with, or result
in any violation of, any provision of the charter or by-laws of Buyer,
or (ii) conflict with, result in any violation of, or constitute a
default under, any instrument, contract, commitment, agreement or
arrangement to which Buyer is a party or by which Buyer or the property
or assets of Buyer is bound, or 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 such conflict, violation or default
would not impair the ability of Buyer to consummate the transactions
contemplated hereby). No material consent, approval, license, permit,
order or authorization of, 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 connection with the
execution, delivery and performance by Buyer of this Agreement or the
consummation by Buyer of the transactions contemplated hereby other than
compliance with and filings under the HSR Act, and compliance with and
filings under Section 13(a) or 15(d), as the case may be, of the
Securities Exchange Act of 1934, as amended, if applicable.
(b) Securities Act of 1933. The Shares purchased by Buyer
pursuant to this Agreement are being acquired for Buyer's own account
and not with a view to, or for resale in connection with, any
distribution or public offering thereof, and Buyer will not offer to
sell or otherwise dispose of the Shares so acquired by it in violation
of any of the registration requirements of the Securities Act of 1933,
as amended, or applicable state securities laws.
(c) Litigation; Decrees. There are no judgments, orders
or decrees of any court, 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 actions, lawsuits, proceedings or 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 available cash or
existing borrowing facilities which, together with its available cash,
are sufficient to enable it to consummate the transactions contemplated
by this Agreement.
7. Covenants of Buyer. Buyer covenants and agrees with
Seller 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 (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 Seafood
Business.
(b) No Representations or Warranties. Buyer acknowledges
that none of Seller, the Companies, 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 any of Seller, the
Companies, the Subsidiary or the Seafood Business not expressly included
in this Agreement or in any certificate signed by Seller and delivered
pursuant hereto, and none of Seller, the Companies, 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 any of the Companies
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. Buyer acknowledges that (i) certain
consents to the transactions contemplated by this Agreement may be
required from parties to instruments, contracts, commitments, agreements
or arrangements of the Seafood Business which are described in Section
4(a) of the Disclosure Schedule or the non-disclosure of which therein
does not constitute a misrepresentation under Section 4(a) of this
Agreement, which consents have not been obtained, and (ii) certain new
governmental licenses, permits and authorizations may be required as a
result of the change in control of the Companies and the Subsidiary in
order for the Companies and the Subsidiary to conduct the Seafood
Business following the Closing in the same manner in which the Seafood
Business was conducted prior to the Closing. Buyer agrees that, except
as otherwise expressly provided in this Section 8(a), Seller shall not
have any liability whatsoever to any of Buyer, the Companies or the
Subsidiary arising out of or relating to the failure to obtain any such
consents or any such new governmental licenses, permits or
authorizations that may be required. Buyer further agrees that no
representation, warranty or covenant of Seller contained herein shall be
breached or deemed breached, and no condition shall be deemed not
satisfied, solely as a result of (i) the failure to obtain any such
consents or, except as expressly set forth in Section 3(a)(iv) or
3(b)(iv), any such new governmental licenses, permits or authorizations,
or (ii) any lawsuit, action, claim, proceeding or investigation
commenced or threatened by or on behalf of any persons arising out of or
relating to the failure to obtain any such consents or any such new
governmental licenses, permits or authorizations; provided, however,
that nothing stated herein shall supersede the conditions set forth in
Sections 3(a)(iii), 3(a)(vi) and 3(b)(iii) hereof. Seller shall
cooperate with Buyer in any reasonable manner in connection with Buyer
obtaining any such consents and any such new governmental licenses,
permits or authorizations; provided, however, that such cooperation
shall not include any requirement of Seller or any of its affiliates to
expend money or offer or grant any accommodation (financial or
otherwise) to any third party. Notwithstanding anything stated in
Section 8(h), any Contract or other instrument, contract, commitment,
agreement or arrangement relating primarily to the Seafood Business or
any right or obligation thereunder that is not capable of being assigned
by Seller to, or assumed by, the appropriate Company or Subsidiary
without the approval, consent or waiver of a third party shall not be
deemed to have been assigned or assumed pursuant to Section 8(h) 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
Section 8(h) as a result of such non-assignment or non-assumption,
provided that Seller hereby agrees (to the extent not specifically
prohibited thereby) to hold its interest in the benefits thereof in
trust for the appropriate Company or Subsidiary or to enter into such
other arrangements as Buyer may reasonably request in order to permit
the appropriate Company or Subsidiary to obtain the intended benefits
therefrom, and, without limiting the indemnification obligations of
Buyer, the Companies and the Subsidiary under Section 11(c), Buyer
agrees to cause the appropriate Company or Subsidiary to indemnify and
hold Seller harmless from any obligations and liabilities thereunder
(other than those, if any, for which indemnification by Seller has been
expressly provided under
Section 11(a) or 11(b) and has not terminated under Section 11(e)). In
such event Seller and Buyer agree to use all reasonable efforts
following the Closing to attempt to obtain all necessary approvals,
consents and waivers to complete such assignments and assumptions
(provided that none of Seller, Buyer or their affiliates shall be
required to expend 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
appropriate Company or Subsidiary to promptly execute, all documents
necessary to complete such assignments and assumptions if such
approvals, consents or waivers are obtained.
(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 to
ensure the orderly transition of the Companies and the Subsidiary from
Seller's to Buyer's ownership and to minimize any disruption to the
respective businesses of Seller, Buyer, the Companies and the Subsidiary
that might result from the transactions contemplated hereby. Each party
shall reimburse the other for reasonable out-of-pocket costs and
expenses incurred in assisting the other pursuant to this Section 8(b).
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.
Without limiting the provisions of Sections 11 and 12 hereof,
after the Closing, upon reasonable written notice, Buyer and Seller
agree to furnish or cause to be furnished to each other and each other's
officers, employees, agents and representatives access, during normal
business hours, to such information relating to the Seafood Business and
such other assistance as is reasonably necessary for financial
reporting, accounting and other reasonably appropriate purposes;
provided, however, that such access or assistance shall not unreasonably
disrupt the normal operations of any of Seller, Buyer, the Companies or
the Subsidiary.
(c) Use of Trademarks.
(i) With respect to all packaging materials of any of the
Companies or the Subsidiary which are owned or on order at the time of
Closing and which bear the corporate name of Seller or any affiliate
thereof other than JAC or any trade name, trademark, service mark or
logo of Seller or any affiliate of Seller other than those set forth in
Disclosure Schedule 4(l) (such corporate names, trade names, trademarks,
service marks and logos being herein collectively called the "Marks"),
Seller hereby grants to the Companies 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 packaging materials in the ordinary course of conduct of the
Seafood Business. Buyer agrees that, for so long as the right and
license granted under this Section 8(c) remain in effect, the nature and
quality of all products of any of the Companies or the Subsidiary sold
under any of the Marks shall substantially conform to Seller's
practices, standards and specifications as in effect on the date of this
Agreement, and Seller shall have access at all reasonable times to the
facilities of the Companies and the Subsidiary to assure itself of
compliance with the requirements of this provision. If Seller at any
time determines that the requirements of the foregoing provision have
not been complied with in all material respects and such noncompliance
is continuing, 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. Upon any such termination, Buyer
agrees to cause the Companies and the Subsidiary immediately to cease
all use of the Marks.
(ii) Other than as permitted under clause (i) above, Buyer
shall not, without the prior written consent of Seller, use or permit
any of the Companies or the Subsidiary at any time after the Closing to
use in any manner any of the Marks. Without limiting the generality of
the foregoing, (A) Buyer shall cause each of Multifoods Seafood and the
Subsidiary to take immediately after the Closing all corporate actions
as may be necessary or required to change its name to a name that does
not include the word "Multifoods" or any variant thereof or any term
confusingly similar thereto, including without limitation the filing
with the appropriate governmental authorities of its jurisdiction of
incorporation of a certificate of amendment to its charter reflecting
such name change, and to promptly thereafter file with the appropriate
governmental authorities in each and every jurisdiction in which it is
qualified to do business as a foreign corporation appropriate forms
reflecting such name change, and (B) Buyer shall cause the Companies and
the Subsidiary to relabel immediately after the Closing all of their
supplies (other than the packaging materials referred to in clause (i)
above) and other tangible assets bearing 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 on or prior to the Closing Date without
the prior consent of the other party, except as such release or
announcement may be required by law or the rules or regulations of any
applicable 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) Antitrust Notification. Each of Seller and Buyer has
filed 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 will
promptly file or cause to be filed 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 is, or will be, in substantial compliance with the
requirements of the HSR Act. All filing fees required to be paid by
Buyer under the HSR Act have been or will be paid by Buyer. Each of
Buyer and Seller shall furnish to the other such necessary information
and reasonable assistance as the other may reasonably request in
connection with its preparation of any filing or submission which is
necessary under the HSR Act. 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 use its best efforts to cause
the expiration or early 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 any of the Companies 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 any
of the Companies or the Subsidiary for cash advanced directly or
indirectly to Seller and all payables of any of the Companies or the
Subsidiary for direct or indirect overdrafts on Seller's bank accounts),
shall be, at Seller's election, either (A) paid in full prior to the
Closing or (B) canceled effective at the Closing (automatically and
without any repayment or other action of any of Buyer, the Companies,
the Subsidiary, Seller or their affiliates), 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 payment or cancellation.
(h) Certain Contracts. Subject to Section 8(a) hereof,
effective at the Closing (automatically and without any further action
of any of Buyer, the Companies, the Subsidiary or Seller), all of
Seller's rights, if any, under all Contracts and other instruments,
contracts, commitments, agreements or arrangements relating primarily to
that part of the Seafood Business operated by a Company or the
Subsidiary (which shall in no event include Seller's Plans) shall be
assigned to such Company or Subsidiary and, without limiting the
indemnification obligations of any of Buyer, the Companies or the
Subsidiary under Section 11 of this Agreement, all of Seller's
obligations and liabilities, if any, under such Contracts and other
instruments, contracts, commitments, agreements or arrangements shall be
assumed by such Company or Subsidiary.
(i) 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 immediately prior to the Closing 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) as of 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.
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 any of the
Companies or the Subsidiary 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 (collectively,
the "Employees"), employee benefit plans (hereafter, "Buyer's Plans")
which are those generally provided by Buyer to its existing employees at
substantially the same level of employment. Buyer represents and
warrants that true and correct copies or summaries of Buyer's existing
employee benefit plans generally provided by Buyer to its existing
employees have been previously provided to Seller and are listed in
Disclosure Schedule 9(a). Notwithstanding the foregoing, (i) each
Employee employed in Canada who was a member of a registered pension
plan immediately prior to the Closing shall become a member of a
registered pension plan to be formed by Buyer, effective on the Closing
Date, that provides benefits substantially equivalent to those provided
under Seller's registered pension plan, (ii) Buyer shall provide or
cause the appropriate Company or Subsidiary to provide, severance
benefits to those Employees entitled to severance benefits pursuant to
the severance policies of Buyer described in Disclosure Schedule 9(a),
and (iii) Buyer shall not be obligated to provide or cause the
appropriate Company or Subsidiary to provide any plans entitling
Employees (A) to benefits comparable to those provided under any
incentive plan included within Seller's Plans which is maintained by
Seller (rather than by a Company or the Subsidiary) solely for the
directors, officers and senior managers of Seller and its affiliates, or
(B) to benefits comparable to those provided under any individual
severance agreements included within Seller's Plans. Nothing in this
Section 9(a) (other than clause (i) of the immediately preceding
sentence) shall obligate any of Buyer, the Companies or the Subsidiary
to continue to maintain any of Buyer's Plans for any specific period of
time after the Closing, provided that Buyer shall maintain or cause the
appropriate Company or Subsidiary to maintain all severance plans
included within Buyer's Plans for a period of at least six months after
the Closing Date. Effective at the Closing, the Companies and the
Subsidiary shall cease to be participating employers in each Seller's
Plan maintained by Seller or any affiliate thereof (other than a Company
or the Subsidiary, such of Seller's Plans being specifically identified
as such on Disclosure Schedule 4(p)).
(b) Credit under Buyer's Plans. For purposes of
eligibility, vesting and entitlement to vacation, each Employee shall be
given credit under Buyer's Plans (including without limitation the
vacation policy(ies) included within Buyer's Plans but excluding, but
only with respect to the commencement of Buyer's contributions prior to
the requisite period of an Employee's service with Buyer or its
affiliates, Buyer's stock purchase plan) for such Employee's service
with any of Seller, the Companies, 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 actively at work
requirements, and will receive credit toward deductibles and co-payments
for expenses under Seller's medical and dental plans prior to Closing.
Each Employee shall be credited under the vacation policy(ies) included
within Buyer's Plans with all vacation, if any, accrued by such Employee
prior to the Closing Date under the vacation policy(ies) included within
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 any
of the Companies or the Subsidiary, Buyer shall pay or cause the
appropriate Company or Subsidiary to pay to such Employee the amount of
all vacation, if any, accrued by such Employee prior to the Closing Date
and not used by such Employee prior to such termination of employment.
Buyer represents that the Retirement Savings Plus Plan identified on
Disclosure Schedule 9(a) is a defined contribution plan ("Buyer DC
Plan") which meets the requirements of Sections 401(a) and 401(k) of the
Code. Buyer shall offer to each Employee the opportunity to make a
direct rollover to the Buyer DC Plan of any benefits the Employees are
entitled to receive from the Employees' Voluntary Investment and Savings
Plan of Seller.
(c) Incentive Payments. Buyer shall pay or cause the
appropriate Company or Subsidiary to pay to each Employee all incentive
payments for the 1996 fiscal year that first become due and payable on
or after the Closing Date under the incentive plans maintained by a
Company or a Subsidiary (rather than by the Seller) and described as
non-executive incentive plans in Disclosure Schedule 4(p), regardless of
whether such incentive payments were earned before or after the Closing,
provided that Seller shall cause the Companies or the Subsidiary to pay
to the Employees prior to the Closing Date or shall accrue on the
Closing Statement such amount as shall constitute a reasonable estimate
of the amount earned by the Employees under such incentive plans through
the day prior to the Closing Date and provided that nothing in this
Section 9(c) shall require Buyer to cause the appropriate Company or
Subsidiary to maintain such incentive plans with respect to performance
beyond
August 31, 1995. Buyer shall pay to any Employee terminated on or after
the Closing Date and prior to August 31, 1995 a pro-rata portion of the
amounts to which such Employee would have been entitled under such
incentive plans had such Employee been employed on August 31, 1995
(notwithstanding anything stated in the incentive plans). Nothing
stated herein shall preclude Buyer from obtaining appropriate releases
from Employees with respect to benefits to which they would otherwise be
entitled under the incentive plans.
(d) 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 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), 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. Buyer
shall pay or shall cause the applicable Buyer's Plan to pay any such
benefits or expenses covered by the group medical, dental, disability
and life insurance plans included within Buyer'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 on or after the
Closing Date, (ii) in the case of any such disability plans, are payable
with respect to 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 (iii) 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.
(e) Notwithstanding anything to the contrary in the
foregoing subsections of this Section 9, as of the Closing Date, at
Buyer's option, either (i) Seller shall assign to the appropriate
Company or Subsidiary (as designated by Buyer) all of Seller's rights
under the Group Health Care Contract issued by Prudential Health Care
Plan of California, Inc., dated July 1, 1993 (the "PruCare Contract") or
(ii) Buyer shall cause the appropriate Company or Subsidiary to enter
into a replacement contract with Prudential Health Care Plan of
California, Inc. which provides substantially the same benefits as the
PruCare Contract. The designated Company or Subsidiary shall assume all
obligations under the PruCare Contract or the replacement contract with
respect to services performed on or after the Closing Date for
Employees, dependents of Employees, persons on leave of absence for any
reason, and any former employees or other persons receiving COBRA or
similar continuation coverage, who are covered or entitled to coverage
under the PruCare Contract immediately prior to Closing. Seller shall
cooperate fully with Buyer and the designated Company or Subsidiary in
accomplishing the assignment of the PruCare Contract if Buyer chooses
that option. Nothing in this subsection (e) shall obligate Buyer or the
designated Company or Subsidiary to maintain the PruCare Contract or the
replacement contract for any specific period of time following the
Closing Date.
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(a)), as such other party may reasonably deem necessary or
desirable to give full effect to this Agreement.
11. Indemnification.
(a) Tax Indemnification. Seller shall indemnify, defend
and hold harmless Buyer and its affiliates (including the Companies and
the Subsidiary) from (i) all liability for Taxes of any of the Companies
or the Subsidiary for the Pre-Closing Tax Period, (ii) all liability (as
a result of Treasury Regulation 1.1502-6(a) or otherwise) for Taxes of
Seller or any other corporation (other than any of the Companies or the
Subsidiary) affiliated at any time prior to the Closing with any of the
Companies or the Subsidiary, (iii) all liability of Buyer or any of its
affiliates (including Multifoods Seafood) for United States federal
income Taxes of Multifoods Seafood to the extent such liability results
from the 338(h)(10) election required by Section 12(g) of this Agreement
(including income Taxes attributable to a deemed sale of assets under
Section 338(a) of the Code, but excluding income Taxes attributable to
operations of Multifoods Seafood conducted on the Closing Date or to
extraordinary transactions (other than the 338(h)(10) election)
occurring on the Closing Date), (iv) all liability of Buyer or any of
its affiliates (including Multifoods Seafood) for income taxes of
Multifoods Seafood imposed by any other jurisdiction that recognizes an
election comparable to the Section 338(h)(10) election and allows Seller
to exclude from income gain on the sale of the Shares, to the extent
such liability results from the 338(h)(10) election or any comparable
election under such jurisdiction's Tax laws required by Section 12(g) of
this Agreement (including income Taxes attributable to a deemed sale of
assets under Section 338(a) of the Code or a comparable provision, but
excluding income taxes attributable to operations of the Multifoods
Seafood conducted on the Closing Date or to extraordinary transactions
(other than the 338(h)(10) election or comparable elections) occurring
on the Closing Date), and (v) all liability for reasonable legal fees
and expenses attributable to any item in clause (i) through (iv) above.
Notwithstanding the foregoing, Seller shall not indemnify, defend and
hold harmless Buyer or Buyer's affiliates (including the Companies and
the Subsidiary) from (x) any liability for Taxes of any of the Companies
or the Subsidiary for the Pre-Closing Tax Period to the extent such
liability has been included in the final determination of Closing Net
Assets and taken into account in the calculation of the Adjusted
Purchase Price, or (y) any liability for Taxes attributable to any
action taken on or after the Closing Date by Buyer, any of its
affiliates, or any transferee of Buyer or any of its affiliates,
including the Companies and the Subsidiary, other than any such action
expressly required by applicable law or by this Agreement (a "Buyer Tax
Act"), or attributable to a breach by Buyer of its obligations under
this Agreement.
Buyer shall, and shall cause the Companies and the Subsidiary
to, indemnify, defend and hold harmless Seller and its affiliates from
(i) all liability for Taxes of any of the Companies or the Subsidiary
for any taxable period ending on or after the Closing Date (other than
Taxes of any of the Companies or the Subsidiary for which
indemnification by Seller has been expressly provided under the
foregoing paragraph of this Section 11(a)), (ii) all liability for Taxes
of any of the Companies or the Subsidiary for the Pre-Closing Tax Period
to the extent such liability has been included in the final
determination of Closing Net Assets and taken into account in the
calculation of Adjusted Purchase Price, (iii) all liability for Taxes
attributable to a Buyer Tax Act or to a breach by Buyer of its
obligations under this Agreement, and (iv) all liability for reasonable
legal fees and expenses attributable to any item in clause (i), (ii) or
(iii) above.
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 Companies for United States federal income Tax
purposes as members of Seller's affiliated group (a "Straddle Period"):
(1) real, personal and intangible property Taxes ("Property
Taxes") of the Companies 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 due and payable during the entire Straddle Period
(regardless of when such Property Taxes were assessed) 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) the other Taxes of the Companies 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 if such taxable period ended 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
any of the Companies or the Subsidiary) at any time, plus (ii) the
amount of such Taxes paid by any of the Companies 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 included 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 (x) the sum of (i) the amount of such Taxes paid by
Seller or any of its affiliates (other than any of the Companies or the
Subsidiary) at any time, plus (ii) the amount of such Taxes paid by any
of the Companies 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 included in the final determination of Closing Net Assets
and taken into account in the calculation of the Adjusted Purchase
Price, exceeds (y) the amount of such Taxes for the Pre-Closing Period,
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, defend and hold harmless Buyer and its affiliates (including
the Companies and the Subsidiary) 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
any such indemnified party (other than any relating to Taxes, for which
indemnification provisions are set forth in paragraph (a) of this
Section 11) as a result of:
(i) any breach of any representation or warranty of Seller
contained in this Agreement or any certificate signed by Seller and
delivered pursuant hereto,
(ii) any breach of any covenant or agreement of Seller
contained in this Agreement, including without limitation the covenants
of Seller contained in Section 5 and Section 9 of this Agreement,
(iii) any Third Party Claim with respect to products
manufactured by any of the Companies or the Subsidiary prior to the
Closing Date, other than those products sold by the Companies or the
Subsidiary on or after the Closing Date with respect to which Buyer or
any of the Companies or the Subsidiary, (A) because of negligence in the
packaging, storage or transportation of such products on or after the
Closing Date were primarily responsible for such loss, liability, claim,
damage or expense related to such products, or (B) in the exercise of
reasonable diligence in the ordinary course of business should have
discovered the defect in such products on or after the Closing Date and
prior to the sale of such products,
(iv) any material action, lawsuit, hearing, proceeding or
investigation which, prior to the Closing Date, was pending (with
respect to which any of Seller, the Companies or the Subsidiary had been
served or otherwise notified) or, to the Knowledge of Seller, threatened
against any of Seller, the Companies or the Subsidiary with respect to
the Seafood Business, or
(v)(A) any worker's compensation claims reported to or filed
against Seller or any of the Companies or the Subsidiary 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 liabilities claims or
automobile liability claims arising from an incident occurring prior to
the Closing Date;
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 an amount equal
to 1% of the Adjusted Purchase Price, and then only to the extent of any
such excess, (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 50% of the Adjusted Purchase Price,
and (C) Seller shall not have any liability under clauses (i) through
(v) above for any loss, liability, claim, damage or expense to the
extent such loss, liability, claim, damage or expense has been included
in the final determination of Closing Net Assets and taken into account
in the calculation of the Adjusted Purchase Price.
Buyer acknowledges and agrees that 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, warranties, covenants and agreements 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, any and
all rights, claims and causes of action any of Buyer, the Companies or
the Subsidiary may have against Seller as a matter of equity or under or
based upon any federal, state, provincial, local or foreign statute,
law, ordinance, rule or regulation (including, without limitation, those
relating to asbestos, petroleum products, PCB's or any hazardous
substances) or arising under or based upon common law or otherwise,
except to the extent provided with respect to Seller in Section 11(a)
and this Section 11(b).
(c) Other Indemnification by Buyer. Buyer shall, and
after the Closing shall cause each of the Companies and the Subsidiary
to, indemnify, defend and hold harmless Seller and its affiliates 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 any such indemnified party (other than any
relating to Taxes, for which indemnification provisions are set forth in
paragraph (a) of this Section 11) as a result of:
(i) any breach of any representation or warranty of Buyer
contained in this Agreement or any certificate signed by Buyer and
delivered pursuant hereto, or
(ii) any breach of any covenant or agreement of Buyer
contained in this Agreement or the Confidentiality Agreement, including
without limitation the covenants of Buyer contained in Section 7 and
Section 9 of this Agreement, or
(iii) without limiting the generality of clause (iv) or (v)
hereof, any claims (including without limitation product liability
claims) in respect of products sold by any of the Companies or the
Subsidiary after the Closing under any of the Marks which are brought
against Seller or any of its affiliates as a result of any right and
license to use the Marks granted by Seller pursuant to Section 8(c) of
this Agreement (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) without limiting the generality of clause (v) hereof, any
claim, action, lawsuit, proceeding or investigation relating primarily
to the Seafood Business, whether arising before or after the Closing
(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
(v) any obligation or liability of any of the Companies or the
Subsidiary or, with respect to obligations or liabilities relating
primarily to the Seafood Business, Seller, whether arising before or
after the Closing (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)), including without limitation (A) 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, (B) any obligation or liability assumed by any of the
Companies or the Subsidiary under Section 8(h), and (C) any obligation
or liability of Seller or any affiliate of Seller to pay or perform any
such obligation or liability of any of the Companies or the Subsidiary
(1) pursuant to any guaranty or obligation to assure performance given
or made by Seller or any such affiliate, or (2) that otherwise arises as
a matter of law or contract.
The Companies and the Subsidiary shall be jointly and severally liable
for Buyer's indemnification obligations pursuant to this Agreement,
including pursuant to Section 11(a) and this Section 11(c), and, if so
requested by Seller, Buyer shall cause the Companies and the Subsidiary
immediately after the Closing to sign such instruments evidencing the
foregoing obligations as Seller may reasonably request.
Seller acknowledges and agrees that 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, warranties, covenants and agreements 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, any and
all rights, claims and causes of action Seller may have against Buyer as
a matter of equity or under or based upon any federal, state,
provincial, local or foreign statute, law, ordinance, rule or regulation
(including, without limitation, those relating to asbestos, petroleum
products, PCB's or any hazardous substances) or arising under or based
upon common law or otherwise, except to the extent provided with respect
to Buyer in
Section 11(a) and this Section 11(c).
(d) Adjustments; Remedial Actions. 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) or recoverable with diligent effort by the
indemnified party 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 if
Buyer pays the premiums for such policies) with respect to such loss,
liability, claim, damage or expense, and shall be (i) increased to take
account of any net Tax cost incurred by the indemnified party arising
from the receipt of indemnity payments hereunder (grossed up for such
increase) and (ii) reduced to take account of any net Tax benefit
realized by the indemnified party arising from the incurrence or payment
of any such loss, liability, claim, damage or expense. In computing the
amount of any such Tax cost or Tax benefit, the indemnified party shall
be deemed to use all other items of income, gain, loss, deduction or
credit before using any item arising from the incurrence or payment of
any indemnified loss, liability, claim, damage or expense or of any
indemnity payment pursuant to this Section 11. Any indemnity payment
made pursuant to this Section 11 will be treated as an adjustment to the
Adjusted Purchase Price for Tax purposes and shall be allocated between
the Shares of JAC and the Shares of Multifoods Seafood in such manner as
Seller and Buyer in good faith shall mutually agree, 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.
Notwithstanding anything to the contrary stated herein, if
remedial action is required to correct a situation giving rise to any
loss, liability, claim, damage or expense for which a party is entitled
to indemnification pursuant to this Section 11, then the indemnifying
party shall in no event be obligated with respect to the costs and
expenses of such remedial action, (i) in the case of any contamination
or other condition at any Company Property the existence of which
constitutes a breach of any representation or warranty of Seller set
forth in Section 4(r) or 4(s) hereof, to the extent such costs and
expenses exceed those which would have been incurred had Buyer or the
appropriate Company or Subsidiary taken only such actions to remediate
such contamination or other condition as are required under applicable
law, and (ii) in all other cases, to the extent such costs and expenses
exceed those which would have been incurred had the indemnified party
taken only such actions to correct such situation that a person of
ordinary prudence under like circumstances who was not entitled to
indemnification for the costs and expenses of such remedial action would
have reasonably taken.
(e) Termination of Indemnification. The obligations to
indemnify, defend 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,
defend 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) or (g) 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 third party 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 notices and documents
accompanying or constituting the Third Party Claim, within ten business
days after obtaining notice thereof; provided, however, that failure to
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 and except that the
indemnifying party shall not be liable for any expenses incurred during
the period in which the indemnified party failed to give such notice.
Thereafter, the indemnified party shall deliver to the indemnifying
party, within five business days after the indemnified party's receipt
thereof, copies of all notices and documents (including court papers)
received by the indemnified party relating to the Third Party Claim;
provided, however that failure to 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, 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. 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. 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, or settle, compromise or discharge, such Third Party Claim without
the indemnifying party's prior written consent, 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 Companies 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.
Seller shall control all proceedings, including without
limitation selection of counsel, taken in connection with any Tax Claim
(except to the extent such Tax Claim relates to Taxes of any of the
Companies or the Subsidiary for a taxable period that includes (but does
not end on) the Closing Date) 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 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 any of the Companies or the
Subsidiary for a taxable period that includes (but does not end on) the
Closing Date. Each of Buyer, the Companies, the Subsidiary and their
respective affiliates shall cooperate with Seller in contesting any Tax
Claim (with reimbursement by Seller of reasonable out-of-pocket expenses
of any such person incurred in connection therewith, except to the
extent the Tax Claim relates to Taxes of any of the Companies 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 (upon Seller's request) the provision to Seller 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 any of Buyer, the Companies 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 any of the Companies 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) 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 will
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 any of the Companies or the Subsidiary that ends on or before
the Closing Date (including without limitation the final taxable year of
the Companies for United States federal income Tax purposes as members
of Seller's affiliated group), Seller shall timely prepare and file with
the appropriate authorities all Tax Returns required to be filed, and
will 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. Buyer and Seller agree to treat the Subsidiary's taxable year as
terminated on the Closing Date by reason of a change in control of its
parent corporation for purposes of Canadian Tax law.
(b) Each of Seller, Buyer, the Companies 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 relating to Taxes of any of the Companies or the Subsidiary,
including maintaining and making available to each other all records
necessary in connection with such Taxes and in resolving all disputes
and audits with respect to all taxable periods relating to such Taxes.
Each of Buyer and Seller recognizes that the other party and its
affiliates will need access from time to time after the Closing to
certain accounting and Tax records and information held by such party
and its affiliates to the extent such records and information pertain to
events occurring on or prior to the Closing Date. Therefore, each of
Buyer and Seller agrees, and Buyer agrees to cause each of the Companies
and the Subsidiary, to (i) properly retain and maintain such records and
information in accordance with the past custom and practice of such
corporation until such time as the other party agrees that such
retention and maintenance is no longer necessary, and (ii) subject to
Seller's obligations under Section 5(c) and Buyer's obligations under
the Confidentiality Agreement, allow the other party, its affiliates and
their agents and representatives, at times and dates mutually acceptable
to the parties, to inspect, review and make copies of such records and
information as such other party may deem necessary or appropriate from
time to time, such activities to be conducted during normal business
hours and at such other party's expense.
(c) Any refunds or credits of Taxes of any of the
Companies 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 any of the Companies or the Subsidiary for any taxable
period beginning on (except for refunds relating to Taxes resulting from
the 338(h)(10) election, or comparable elections with respect to other
jurisdictions, required by Section 12(g) of this Agreement) or after the
Closing Date shall be for the account of Buyer. Any refunds or credits
of Taxes of any of the Companies 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(c). 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(c) within ten days after such refund is
received (or reimburse Seller for any credit to which Seller is entitled
under this
Section 12(c) 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(c) 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. Buyer agrees that JAC shall not, and Buyer shall not permit
JAC to, carry back any item of loss, deduction, or credit which arises
in any taxable period beginning on or after the Closing Date
("Subsequent Loss") into any taxable period ending on or before the
Closing Date.
(d) 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, provincial,
local or foreign taxing authorities for such taxable years as finally
determined. For those jurisdictions in which separate Tax Returns are
filed by any of the Companies 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 ten days prior to
the due date for filing such amended Tax Returns.
(e) Notwithstanding anything to the contrary provided in
Section 11(a), all transfer, documentary, sales, use, gross receipts,
registration and other such Taxes (including, but not limited to, all
applicable real estate transfer and gains Taxes) and fees (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 and fees expressly required pursuant to the
next sentence hereof to be paid by Seller) shall be paid by the party
who customarily pays such Tax in the jurisdiction imposing such Tax, 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 stock transfer Taxes, if any, due as a result of the sale
of the Shares.
(f) Seller shall cause each of the Companies and the
Subsidiary to be released before the Closing from the provisions of any
Tax sharing agreement to which any of the Companies or the Subsidiary is
a party or by which any of the Companies or the Subsidiary is bound.
(g) Buyer and Seller shall take all actions necessary to
effect an election under Section 338(h)(10) of the Code (and any
comparable elections under state or local Tax law) with respect to
Multifoods Seafood (but not with respect to JAC), including, without
limitation, the filing of Internal Revenue Service Form 8023 ("Corporate
Qualified Stock Purchase Elections"). In connection with such election
Buyer and Seller shall jointly determine, using the purchase price
allocation to the shares of Multifoods Seafood in Section 1 of this
Agreement, the amount of the "adjusted grossed-up basis" of the Shares
of Multifoods Seafood and the "modified aggregate deemed selling price"
of the assets of Multifoods Seafood and the allocation of such amounts
among the assets of Multifoods Seafood in accordance with section
338(b)(5) of the Code and the Treasury Regulations promulgated
thereunder (the "Allocations"). 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 election 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 of Multifoods Seafood among the assets
of Multifoods Seafood 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 of Multifoods Seafood for purposes of allocating among the assets
of Multifoods Seafood.
13. Assignment. This Agreement and the rights hereunder
shall not be assignable or transferable by Buyer or Seller without the
prior written consent of the other party hereto, provided, however, that
Buyer may assign all of its rights, interests and obligations hereunder
to one of its affiliates (in which case, however, Buyer shall also
remain responsible for the performance of all of its obligations
hereunder).
14. No Third-Party Beneficiaries. Except as expressly
provided in Section 11 with respect to affiliates of Buyer and Seller,
this Agreement is for the sole benefit of the parties hereto and their
successors and permitted assigns, and nothing herein expressed or
implied shall give or be construed to give to any person, 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 August 31, 1995;
provided, however, that the failure to satisfy the conditions or
consummate the transactions contemplated by this Agreement on or prior
to August 31, 1995 did not result from the breach in any material
respect by the party seeking termination pursuant to clause (ii), (iii)
or (iv) 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 any of Seller, the Companies 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 in this
Agreement and in any certificate delivered pursuant hereto shall survive
the Closing solely for purposes of Section 11 of this Agreement until
the close of business two years following 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.
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 facsimile, 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 facsimile, 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
Tyson Foods, Inc.
2210 Oaklawn Drive
Springdale, Arkansas 72762-6999
Attention: Leland E. Tollett
Facsimile No.: (501) 290-4028
with a copy to:
David L. Van Bebber, esq.
Tyson Foods, Inc.
2210 Oaklawn Drive
Springdale, Arkansas 72762-6999
Facsimile No.: (501) 290-7967
(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.
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 word "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;
(d) the word "business day" shall mean 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;
(e) the word "person" shall mean an individual, partnership,
joint venture, corporation, limited liability company, trust,
unincorporated organization, government, or governmental department or
agency;
(f) 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;
(g) 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, the period shall end
on the next day which is a business day;
(h) all dollar amounts are expressed in United States funds;
and
(i) unless otherwise expressly provided herein, money shall be
tendered by wire transfer of immediately available federal funds.
21. Counterparts. This Agreement may be executed in
counterparts, 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 and the exhibits annexed hereto) 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.
23. Brokerage Fees. Each party hereto hereby represents
and agrees that the only brokers or finders that have acted 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 and Piper Jaffray Inc. who have
acted for Seller, and Seller will pay all fees or commissions which may
be payable to the firms so named.
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. 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. Matters
disclosed by Seller to Buyer pursuant to any Section of this Agreement
or the Disclosure Schedule shall be deemed to be disclosed with respect
to all Sections of this Agreement and the Disclosure Schedule to the
extent this Agreement requires such disclosure.
27. Certain Definitions.
(a) For all purposes of this Agreement, "Knowledge" of
Seller or a similar phrase shall mean the actual knowledge (which shall
mean the conscious awareness of facts or other information and shall not
include constructive knowledge of any matters) of any officer of Seller
or the President, any Vice President, the Division Vice President of
Operations, the Division Vice President of Sales and Marketing or the
Division Controller of any of the Companies or the Subsidiary.
(b) For all purposes of this Agreement, the term "Seafood
Business" shall mean the Companies' and the Subsidiary's business of
manufacturing, marketing and distributing surimi-based analog seafood
products.
(c) "Acquired Business" shall have the meaning set forth
for such term in Section 5(f)(ii)(A) hereof.
(d) "Adjusted Purchase Price" shall have the meaning set
forth for such term in Section 2(a) hereof.
(e) "Audited Financial Statements" shall have the meaning
set forth for such term in Section 4(f) hereof.
(f) "Buyer" shall have the meaning set forth for such term
in Paragraph 1 hereof.
(g) "Buyer's Plans" shall have the meaning set forth for
such term in Section 9(a) hereof.
(h) "Buyer Tax Act" shall have the meaning set forth for
such term in Section 11(a) hereof.
(i) "Closing" shall have the meaning set forth for such
term in Section 2(a) hereof.
(j) "Closing Date" shall have the meaning set forth for
such term in Section 2(a) hereof.
(k) "Closing Net Assets" shall have the meaning set forth
for such term in Section 2(b)(ii) hereof.
(l) "Closing Statement" shall have the meaning set forth
for such term in Section 2(b)(ii) hereof.
(m) "Code" shall have the meaning set forth for such term
in Section 4(h)(i)(C) hereof.
(n) "Companies" shall have the meaning set forth for such
term in Recital 1 hereof.
(o) "Company" shall have the meaning set forth for such
term in Recital 1 hereof.
(p) "Company Properties" shall have the meaning set forth
for such term in Section 4(j) hereof.
(q) "Company Property" shall have the meaning set forth
for such term in Section 4(j) hereof.
(r) "Competing Business" shall have the meaning set forth
for such term in Section 5(f)(ii)(A) hereof.
(s) "Confidentiality Agreement" shall have the meaning set
forth for such term in Section 7(a) hereof.
(t) "Contracts" shall have the meaning set forth for such
term in Section 4(m) hereof.
(u) "Corporate Qualified Stock Purchase Elections" shall
have the meaning set forth for such term in Section 12(g) hereof.
(v) "Disclosure Schedule" shall mean the separate
Disclosure Schedule accompanying this Agreement and made a part hereof.
All references in this Agreement to the Disclosure Schedule followed by
a numerical reference (e.g. Disclosure Schedule 4(l)) shall be a
reference to that section of the Disclosure Schedule so denominated in
the Disclosure Schedule.
(w) "Employees" shall have the meaning set forth for such
term in Section 9(a) hereof.
(x) "Environmental Reports" shall have the meaning set
forth for such term in Section 4(s)(iii) hereof.
(y) "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time and all regulations
promulgated thereunder.
(z) "GAAP" means United States generally accepted
accounting principles.
(aa) "Hazardous Substance" shall have the meaning set
forth for such term in Section 4(s)(i) hereof.
(bb) "Indemnified Party" shall have the meaning set forth
for such term in Section 11(f) hereof.
(cc) "Interim Statement" shall have the meaning set forth
for such term in Section 4(f) hereof.
(dd) "JAC" shall have the meaning set forth for such term
in Recital 1 hereof.
(ee) "Leased Property" shall have the meaning set forth
for such term in Section 4(j) hereof.
(ff) "Material Adverse Effect" shall have the meaning set
forth for such term in Section 3(a)(v) hereof.
(gg) "Multifoods Seafood" shall have the meaning set forth
for such term in Recital 1 hereof.
(hh) "Net Deferred Income Tax Liabilities" shall mean all
deferred income tax liabilities (net of all deferred income tax assets)
of JAC and the Subsidiary (but not of Multifoods Seafood), of a type
required to be recorded on the face of a balance sheet as of the close
of business on the last day immediately preceding the Closing Date
prepared in accordance with GAAP.
(ii) "Non-Competition Area" shall have the meaning set
forth for such term in Section 5(f)(i) hereof.
(jj) "Owned Property" shall have the meaning set forth for
such term in Section 4(j) hereof.
(kk) "Permitted Investments" shall have the meaning set
forth for such term in Section 5(f)(ii) hereof.
(ll) "Permitted Liens" shall have the meaning set forth
for such term in Section 4(i) hereof.
(mm) "Pre-Closing Tax Period" shall have the meaning set
forth for such term in Section 4(h)(i)(B) hereof.
(nn) "Purchase Price" shall have the meaning set forth for
such term in Section 1 hereof.
(oo) "Restricted Business" shall have the meaning set
forth for such term in Section 5(f)(i) hereof.
(pp) "Seller" shall have the meaning set forth for such
term in Paragraph 1 hereof.
(qq) "Seller's Plans" shall have the meaning set forth for
such term in Section 4(p)(i) hereof.
(rr) "Shares" shall have the meaning set forth for such
term in Recital 1 hereof.
(ss) "Straddle Period" shall have the meaning set forth
for such term in Section 11(a).
(tt) "Subsequent Loss" shall have the meaning set forth
for such term in Section 12(c) hereof.
(uu) "Subsidiary" shall have the meaning set forth for
such term in Section 4(c) hereof.
(vv) "Tax or Taxes" shall have the meaning set forth for
such term(s) in Section 4(h)(i)(A) hereof.
(ww) "Tax Claim" shall have the meaning set forth for such
term in Section 11(g) hereof.
(xx) "Tax Return or Tax Returns" shall have the meaning
set forth for such term(s) in Section 4(h)(i)(D) hereof.
(yy) "Tax Notice" shall have the meaning set forth for
such term in Section 11(g) hereof.
(zz) "Third Party Claim" shall have the meaning set forth
for such term in Section 11(f) hereof.
(aaa) "Title Commitments" shall have the meaning set forth
for such term in Section 4(j) hereof.
(bbb) "Transaction Costs" shall have the meaning set forth
for such term in Section 12(g) hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the date first written above.
INTERNATIONAL MULTIFOODS CORPORATION
(Seller)
By /s/ John E. Sampson
Name: John E. Sampson
Title: Vice President
Corporate Planning &
Development
TYSON FOODS, INC.
(Buyer)
By /s/ Dennis Leatherby
Name: Dennis Leatherby
Title: Treasurer
Exhibits and Schedules Omitted:
Exhibit A Form of Opinion of Faegre & Benson
Exhibit B Form of Opinion of General Counsel of Seller
Exhibit C Form of Opinion of Corporate Counsel of Buyer
Exhibit D-1 Audited Financial Statements
Exhibit D-2 Interim Statement
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.
